

The Most Lucrative Business: Repeated Purchases - maguay
http://www.woothemes.com/2011/01/the-most-lucrative-business-repeated-purchases/

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rkalla
The article isn't buried in numbers, but the message is in there: don't stop
adding value.

I've been a WooThemes customer for 3 years or so. I have bought 10 or 12 of
their themes and the one reason I do it is because they never stop updating
old themes. They have themes (like FreshNews) that they launched the company
with years ago, and to this day it still gets regularly monthly updates to
bring it in line with all the other themes.

This was something (as a customer) that I didn't expect and as a developer, I
have a hard time figuring out how the maintenance cost isn't crushing their
dev schedules (something like 30 themes total to maintain now).

BUT, this is exactly why I stuck with them and kept buying their themes as
opposed to going to another strong alternative like Thesis. They just kept
adding value.

From my customer-brain perspective, there was NEVER a point I felt taken
advantage of, NEVER a point that I doubted my investment (short or long term)
in using their product because they were clearly willing to stand right behind
it in full support for the long haul.

You don't see this a whole lot... most folks release something (e.g. Mobile
app, Web service, desktop util, open source project, etc.) and move on to the
next big idea. The compulsive maintaining of all their company assets as they
moved forward, regardless of what new opportunities came their way, was the
only hook that mattered to me and has kept my wallet open.

Ignore the starry-eyed unicorn wording around WooThemes... that's not
important (buy what works for you). I am just trying to share what happened in
my mind when I went to spend a decent amount of money on a product incase it
helps anyone else out there in the software/service game.

------
jacquesm
If you haven't caught on to 'don't stop adding value' and you're running a
business you probably shouldn't be.

Milking the cow is good for when you're going to retire or when a product is
at the end of its life-cycle and you have moved on to newer (hopefully)
greener pastures.

The most direct implementation you can get of repeated purchases is the tried-
and-true method of the subscription, and if you haven't cast your product in
subscription form yet then I'd recommend you look at that to see if it is a
possibility for you, it's by far the easiest money you'll make.

~~~
adii
Only about 40% of WooThemes' revenue is subscription-based, yet that hasn't
stopped us from adding continuous value to once-off purchasers / customers
either. IMHO it's not just subscription-based businesses that has the
opportunity of "never stopping to add value".

Another note is that when we release an update to a product, all existing
users of that products gets the new version free of charge. That's immense
value. We're updating products that are 3+ years old without asking our
existing users for one extra dollar.

~~~
jacquesm
> We're updating products that are 3+ years old without asking our existing
> users for one extra dollar.

Obviously, you're the expert here, but wouldn't you consider rolling that
service into your subscription package and increasing the number of
subscribers a bit.

I don't think any customer even expects you to give them free updates on stuff
they bought more than 3 years ago, 'lifetime' free updates are really friendly
but it sounds like money left on the floor.

Of course it's excellent PR, and if there is no potential upside to doing this
differently then kudos to you for being so friendly to your customers.

~~~
adii
This may be a chance missed.

What we've seen though is that our subscription-based business is growing
faster, which means that the 3-old product that gets updated makes the
subscription plans more lucrative. So we're seeing a bunch of existing users
upgrade to a subscription and new users prefer a subscription over an
individual product.

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zeteo
Some trivial arithmetic, topped by the not-so-insightful conclusion

"In our opinion, this is one of the easiest ways to grow your business [...].
Just add value."

Is this HN front page material these days?!

~~~
zacharycohn
It might not seem so insightful, but it's something a lot of people forget and
don't do. I'm building my current start up around this idea, but I see plenty
of people who don't.

~~~
zeteo
I agree that, at core, there is a good idea. But the presentation, in this
case, does not do good justice to that idea.

------
adolph
I think Seth Godin's book _Permission Marketing_ covered this ground well.
Godin says that the highest level of permission is the "Intravenous Level"
exemplified by services like spring water delivery. It takes building and
continuously maintaining customer trust to retain this level of permission.

Book exerpt link:
[http://books.google.com/books?id=qgtgVsBTVEcC&pg=PA100&#...</a>

------
JacobAldridge
I'm working with a client at the moment that has this issue, only they're
talking price points from £100,000 to £2,000,000. They don't have 40,000
clients, but they do have a retention problem.

The Source issue (which I won't share, since I have a reasonably small client
base) is what we're working with them around; the outcome through which we
sold the project used similar arguments and math to that presented by the OP.

------
mise
The way I see this happening is to keep communicating with customers with a
mailing list. One list for prospects, and one for customers. This is still
marketing effort, but seems to be one way to go.

Another, I guess, is to keep selling to customers as they are using your
app/service online.

