This is a question I think you should ask about your company. When someone buys something from you, are they done? Do they come back and buy again and again? If not, you’re building a business where you’re going to have to work awfully hard.
There are two reason you want to make sure your customers come back to visit. First, it’s how you build a sustainable business. Second, it will make your company salable when its time to leave.
Repeat sales are the trick.
This is the first step along the way of building a great business. You need to have repeat business. It doesn’t matter what business you’re in. You can and need to have repeat business.
If you own a contracting company, you need to build a pipeline of repeat business. If you own a car dealership, you need the same thing. Here’s the problem when you don’t create repeat business: you spend all of your time trying to find new sales. When you have repeat business you eventually get to the point where most of your sales comes from people who have done business with you before.
Better yet have recurring revenue.
Even better than repeat business is recurring revenue. Recurring revenue means that when you wake up on January 1st, a significant amount of your business is already booked for the year. Businesses that have recurring business make more money and are worth more if they’re sold than businesses that have to figure out where their next sale is coming from.
Companies that have a high percentage of recurring revenue get to concentrate on things besides creating new revenue. If you have a business where with a significant amount of recurring revenue you can concentrate on making your company tactically world class. You can then concentrate on developing strategies that take advantage of your intellectual capital.
Companies that are focused on strategic development make more money and are more easily run. Isn’t this a place where you want to be?
Your goal is to build a tribe.
Repeat sales and recurring revenue are great. What would your business look like if you were able to build a tribe? What do you think that would bring to your business? Do you think that having a tribe would make it easier to find new customers?
What tribes bring to the party.
I can tell you that a tribe will do a very important thing for you. If you can develop a tribe (a group of raving fans who are customers) they will spend a lot of time singing your praises. If you have a business with recurring and or repeating revenue you can concentrate on helping your customers bond with each other. (Think Apple)
When you help your customers create a community you are helping them feel even more connected to what your company does. Customers who feel connected will spend lots of time and effort recruiting others to join them. We all want to our friends to buy into things we think are cool. That’s exactly what a tribe can do for you.
There’s a natural progression that your company needs to take. First, find out a way to create repeat business in your company. See if you can figure out a way for that repeat business to move into a recurring revenue stream. Finally, find a way for your customers to create a community around what it is that you do. Putting all three together is how companies create lasting value that richly rewards its owners.