In many ways, as-a-service is the Holy Grail of business models. Compared to a transaction-based business model, it sets companies up for desirable cash flow and customer stickiness while dramatically increasing business valuation.
It’s a good thing.
Think about the recurring payments you make month-in-and-month-out to your internet service provider, your cell phone company, Netflix, your gym … the list goes on.
Many companies, especially those that traditionally have used a transaction-based revenue model, think they’re relegated to the sidelines, that their customers aren’t candidates for an as-a-service offering.
That thinking is often limiting since many traditional companies simply fail to envision what an as-a-service model might look like for their organization.
Here are some reasons why fully considering an as-a-service-model is important for your business:
1. It improves cash flow
Sure, transaction payments are large and satisfying (and by the way, nobody is saying you have to walk away from those), but your accounting department probably prefers consistent and predictable revenue.
2. Predictability is a good thing
Much like your accountants like consistency, you should, too. If you’re responsible for strategic planning in your organization, it’s much easier to plan with revenue locked up under contract.
It keeps your customers close. Nothing spurs customer stickiness quite like a recurring service that you offer and your customer pays for. You’ll stay engaged and remain their go-to solutions provider.
3. It effectively grows your business
With an as-a-service model in place, companies’ value skyrockets. Ask any investor and they’ll tell you, despite your impressive reputation, it looks bad if your revenue comes in dribs, drabs and bursts. Nobody is saying it’s easy. But, believe us, it’s worth it for the future of your business.
Take our 4 question quiz below to rate how well you understand an as-a-service versus transaction-based business model.
If you fail to get all four questions right, you probably need a tune-up in order to give your business a fair shake.
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