By Ben Hedenberg
Recurring revenue is predictable, stable revenue.
By Ben Hedenberg
February 4, 2022 – We’ve all heard the saying “Money doesn’t grow on trees”. Sadly, there’s no way to plant dollar bills for your electrical business that will grow into hundreds overnight (wouldn’t that be nice?).
While I can’t gift you a money tree, after talking to dozens of our electrical customers, I can tell you that one of the best ways to grow your business is through recurring revenue.
What is recurring revenue, and why have it?
Recurring revenue is predictable, stable revenue that comes into your business at regular intervals. It helps you better maintain cash flow, reduce reliance on one-time sales and most importantly, allows you to forecast revenue so that you can make better decisions for the future of your business.
Even though recurring revenue is valuable for electricians, many electricians—especially in the residential space—often don’t think about building recurring revenue into their business model.
Homeowners assume they have a static electrical system that doesn’t need any kind of regular maintenance, and business owners I’ve spoken with over time say that the average homeowner usually calls an electrician for maintenance just once every 7 years.
As a result, some residential electricians don’t see enough demand for recurring services to justify building them into their business model. But imagine if you checked in on your residential customers every year or so. There’s definitely an opportunity there to create recurring revenue.
For electrical businesses in the commercial space, recurring service work is more common. This includes contract maintenance (e.g. moves, adds and changes, a.k.a. MACs), power use evaluations and onsite maintenance.
However, there’s often steep competition for these contracts, so it takes more time and resources to make yourself stand out.
Writing in Electrical Contractor, Marilyn Michelson explains:
Maintenance contracts at industrial, commercial and institutional facilities are growing in popularity. More contractors are performing onsite maintenance work for industrial facilities. It is clear that those industrial facilities can cut the cost of having to employ on-staff electricians, by farming out the maintenance of their electrical systems to outside contractors.
To stand out from the competition and create recurring revenue, some electricians create maintenance packages that include inspection and/or service on a monthly, quarterly or annual basis. Others create bundles out of their services and offer them at a discounted rate.
No matter how you decide to sell recurring services in your business, these are the best practices that simPRO electricians suggest.
1. Build a loyal customer base
It’s cheaper to retain customers than convert new ones.
So, any time you work with a perfectly-suited customer for your business, it’s worth going the extra mile to increase the chances that they’ll want to hire you again.
Go beyond simply completing their initial job; instead, find ways to build genuine relationships with existing customers who might need, or have, recurring work.
You can also look for repeat customers among your contacts and segment them into a list. Then, offer those specific customers certain discounts when they purchase recurring services, such as a monthly, quarterly, or yearly inspection package.
Incentivize new customers to become repeat customers by offering special discounts or referral bonuses on top of any bundled services.
2. Teach technicians how to sell recurring services
Make sure your technicians fully understand how to sell recurring maintenance or service packages.
Train them on the packages you offer. Make sure they know every detail of how the contract works and the services covered.
This makes it easy for them to answer customer questions on-the-spot, and help explain how the package helps solve their unique challenges.
For example, teach them to lead with cost savings as the main benefit, and encourage them to use the customer’s real numbers as an example.
Even when a customer isn’t ready to buy a recurring package at that moment, make sure technicians indicate that they might be ready—or could be up-sold later.
You can also send service reminder emails to specific customers, giving them a taste of the value of not having to remember themselves when they need service.
This helps you build trust with your customers because it shows that you are dedicated to them, regardless of whether they decide to purchase a recurring service package now or in the future.
The more your customers trust you, the more willing they’ll be to hire you time and time again.
3. Boots on the ground for winning contracted recurring revenue
Send someone to look for apartment buildings, retail spaces, or facility maintenance companies that might contract out electrical installation and service (e.g. malls or other shopping areas).
Then, ask for the building manager, and offer them a list of the repairs and maintenance services you provide.
The building manager often has the authority to hire you, or they may work with a facility maintenance company that contracts out electrical work. If that’s the case, they can often put you in contact with the facility maintenance company instead.
You can also look for non-electrical installation businesses that need electrical pre-work—essentially, anywhere there’s a need for power, and there is none.
While they’re not super-profitable, these are easy jobs to complete and can fill in the slow days, help you network and build relationships with other businesses in the trades that might want to work with you on projects down the line.
Let’s hear from you
Have you got tips of your own you’d like to share? I’d love to hear from you.
Ben Hedenberg is the Sales Director for simPRO North America. He possesses over 20 years of experience working with the trades, and is passionate about using technology to help improve their businesses and their lives. When he’s not meeting with business owners, you’ll find him enjoying time with his wife and four kids, and working on new projects for his 110 year-old house.