5 Steps To Find The Monthly Recurring Revenue In Your Business, With Roland Frasier

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You're listening to Business Lunch with Roland Fraser. This is your seat at the table. Thank you for joining us today. This is Darren Clark, the producer of the show and we're so glad you've tuned in for our snack sized episode with Roland Fraser. He's talking today about multiplying your profit by utilizing monthly recurring revenue. It's a great episode. But before I hand you over, don't forget to hit that subscribe button. And, and for show notes and more, go to businesslunchpodcast.com okay, here's Roland.

So now I'm going to talk to you about one of my favorite things. This is mrr, which is monthly recurring revenue. This is an insight that we got when we were talking to Spectrum Equity. Spectrum Equity is a growth capital firm. So they're a firm like they invested in Lynda.com and then helped Lynda.com sell to LinkedIn for a billion dollars. So we're like, okay, well these guys probably know what they're talking about. They came and they said, okay, we're going to look at your company, we're going to value it. There's all these factors that people look at and how to increase or decrease valuation. But the thing that we're willing to do for sure is on your monthly recurring revenue, this is for Digital Marketer. On your monthly recurring revenue, we'll give you four to five times your mrr. Four to five times. But on all the other revenue you've got that isn't recurring, we're going to give you one time. It's like, well, that's kind of interesting. So at the time, this is a few years back, at the time, Digital Marketer Lab, One component of DM was doing $600,000 a month. And so that meant that if it wasn't recurring, it was worth $7.2 million. But if it was recurring, it was worth $36 million. So it was worth $28.8 million more simply because people were paying us month, month, month, month. That's a big deal. That's a big deal. $28 million will buy you some cool stuff. So what static income could we turn to? Mrr? That's the question. And that's the question you should be asking yourself. So over the next couple years, we took 5.4 million of static income and turned it into $27 million of value simply by changing all of it from static to monthly recurring. So here's how we did it. Digital Marketer sells trainings. We were selling a la carte training. So we were selling courses one at a time. You might sell courses, you might sell a product, whatever. But you're going to ask yourself, how can I turn that from a one time sale to a monthly recurring sale or to a subscription business? And you can even sell cars on a subscription business. I believe Cadillac just started doing that for 1500 bucks a month. Right. Even cars. So whatever you're selling can be turned into recurring revenue. So we ended a la carte trainings and then we said let's focus on growing the things that are already mrr. And then let's convert all the stuff that isn't MRR into mrr. So here's how you can do this. The first thing is to convert one time payments into auto ship or mrr. So if you're selling anything online, this is a friend of ours who owns an organic dog food company. She owns an organic dog food company. She was having a hell of a time making it, but because she was selling a bag of dog food at a time and she did offer multiples, which you should if you don't. But she couldn't get a consistency of income. So she started this thing. True Dog Love Club, I think it is. And so she offered a whopping 7% discount if you would go on to auto ship and also offered free shipping. Why do you think that it was actually a big deal to do that? The price was $21 plus before the deal. But if you take the deal, it's sub 20. It takes it down to 19 bucks. That's a huge deal. People look at 20. My wife does this. How much is that house? Well, it's $2 million. I'm like, no, it's not. It's 2.999999. But she sees 2 million, right? And she's a very, very smart person. Right. But people think that way. So getting them down into that $19 thing maybe made all the difference, turned her company completely around. Just that one thing. Just that one thing. So this is something else for you to think about too. There's a company called Vital Choice. So Vital Choice sells salmon stuff like salmon burgers. And everybody wants to eat salmon all the time because salmon's amazing, right? Well, it's amazing, but I don't know about eating it all the time. Are they eating it all the time because they've got to have salmon all the time or are they eating it because maybe they want some health benefits? They're probably eating it because they want health benefits. So he very brilliantly and you should think about how can you do this in your business too. Said, hell, they probably don't want to eat salmon all the time. They probably want to eat other stuff but still get the oils and things that are good. So I'm going to sell salmon supplements. So he added salmon supplements and he did it right. He did the ability to buy multiples and he did auto ship. So he's got mrr and then that became half his business. But what about this? What's missing? Auto ship. Auto ship. So when I did this presentation a couple months ago and he saw it, he said, I'm missing millions of dollars because I don't allow auto ship on my burgers, all my food, half my business. I don't allow auto ship. Look at every single page, every offer that you do and be sure when you do this, that you offer that everywhere. The second way you can do it is add services. So you might say, well, how can I create in a franchise business? How can I create MRR in services? So our buddy owns one of the fastest growing franchises in America. It's called I Love kickboxing. He sells a franchise for 50 to $75,000. And that sounds like that's awesome, right? If he's selling four or five hundred of these a year, he's making a ton of money, right? But he's not because it cost him about 90% of that amount to get the customer, right? 90% to get the customer. So he has not really a fantastic amount of money in the franchise fee. But what he did brilliantly was say, how could I make my customer more successful and also help me create mrr? And so what he did was he cut a deal with Groupon to put a program in place throughout the country to generate 1,000 customers, which cost him about 25 grand to generate 1,000 customers for each new franchisee, each new person that buys this thing from him to get them enough people. Because he figured out that if they get 1,000 people in, enough will stick to make the company profitable. So he wants to get him 1,000 people in the first month. 25 grand it costs to do that. So he said, well, I'll just tack on 25 grand, but I'm going to actually require them to enter into a marketing contract with me to make them successful for $25,000 a month. Pays for it first month. The rest of it is a whole lot of profit. In addition to the stuff that he does for them. He still does stuff for them, but now he's got this recurring revenue that's way more money than he can make just selling the franchises. Even though you'd think that he was making all the money with the franchises. Which the other thing about this is where can you look for extra revenue from the customers you've already got? Right. The third thing is to turn one time sales into a SaaS or a box. Boxes are really hard, but they can be amazing if you do them right. They're hard because shipping can eat you up. But if you can nail shipping and there's a few ways that you can do that, you can really make money with it. Okay, fourth way, memberships, associations and buying clubs. So we sell physical products on sewing.com, makeup, tutorials.com, dIY projects.com, survivallife.com, all of the websites that we've got. And then in second base, in second base after the offer that you, that you take first, this is our penny offer which converts like crazy. And by the way, if you're doing free plus shipping offers, try a penny plus shipping offer. It's different. And you can also do Google shopping ads. You can do Google shopping ads for penny, but you can't do them for free. How about that? People at Google, when we started doing that and they approved it, they were like, you guys are stupid. How come you keep buying this stuff? Right? Make a lot of money doing that. So anyway, that's our offer. In second base. On every single thing that we sell is an association for monthly recurring revenue. It's either a buyer's club or an association or a membership or a newsletter. All of them are monthly recurring revenue. And this is kind of a cool way that you can do this. This is one of our Buyers Club offers. So this is a $20 a month offer to join our Buyers Club where you can get access to products and we can give products for less than you see them advertised for anywhere else. Because map or minimum advertised price constraints don't apply to private memberships. So if you build a private membership of people. One of our buddies just sold his company, Revolution Golf to NBC Golf for an undisclosed sum. An undisclosed sum means you now have jet money. You can buy a jet. Okay, he sold it for an undisclosed sum. And his whole thing was he went out and he cut deals with Callaway Golf and all these other folks to buy clubs from them and then offer them to his millions of members. But they weren't millions to start with. They were hundreds of thousands. When he cut that first deal to offer those Callaway and branded golf clubs for, for less Than anybody else could advertise them for because map didn't apply to his buyers club. And he charged his people 50 bucks a month to be in the buyers club. He changed it off and on, but at the time, 50 bucks a month to be in the buyers club. If they wanted to buy the golf club and the other cool stuff at this ridiculous discount for what anybody else could sell them for, then they had to stay in the club. And he built the company based on membership. So here's the kind of cool thing that we do with the buyers club. So it's $20 a month to be a member of the buyers club, but we give you a $20 voucher every single month. So it's free. Well, it's not free. Right. You're still paying the $20. And if they come and spend the $20 in our store, we're making margin on the things that they spend it on. So yay. And also if they come and spend the $20 in our store, they're also, on average, going to buy about $80 worth of stuff. So it's a really great thing to think about getting your people into your store and buying more stuff to create some sort of buyers club or membership. We also do associations. And if you decide that you want to do an association and make your association look giant, There's a company called abenity a b e n I t y. Abenity has already gone out and cut deals with everybody. Abenity's already cut the deals for discounts with target and firestone and verizon and disneyland and all these other companies. And ABenity charges us $450 a month no matter how many members. We have to provide all of those benefits to our members. So if you want to look like you're just huge and connected and credible as hell, go pay Abenity 450 bucks a month and start an association and offer it and create monthly recurring revenue for your business. Number five, adding certifications to training. So over the last couple years, digital marketer experienced a real challenge with this guy in china named leo. And I'm sure because leo is the most common name in china, that that's his real name. Leo offered group buys, which means he stole our stuff over and over and over and over and then offered it to people for a whole lot less than we sold it for. So we can't really stop leo from doing that because leo's in china, and it's really a pain in the ass and expensive and hard and impossible to enforce to go china and get him. We can shut him down on PayPal and all these other things, but eventually it's just too much work for the effort. So what we did was we said how can we make money recurring on a monthly basis and also not have Leo be a pain for us? And so we added certifications to our training. Leo can't do that. If you take our training and you get a certif and you get certified and you say I'm certified in this and you click on the little link that lets them check. Leo can't sell that. Only we can sell that. So certification is a fantastic way to protect your intellectual property. Plus make additional money so you can do this with everything from events to courses to membership site OnePays. It's just find the monthly recurring revenue Find the monthly recurring revenue in your business. It will change your business and it will increase the value on average between four and five times.

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