The Most Lucrative Business: Repeated Purchases | Hacker News Reader

The Most Lucrative Business: Repeated Purchases

woothemes.com

34 pointsmaguay15 comments

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.

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.

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.

> 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.

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.

I think it's the free updates that get WooThemes at least part of their loyalty. While some like the subscription model, many more want to buy a theme and know it will always work. With WooThemes, they can. In fact, they can buy a theme and know that it will keep getting better. That makes a big difference to many.

Then, if they like the theme and keep being impressed at the updates and added features, they're much more likely to recommend WooThemes, buy another theme from them, or upgrade to a subscription model to get all the themes.

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?!

I agree. It simplifies message so much that it's hard to take it seriously.

Expect a follow-up to this post detailing some ideas & potential strategies for adding continuous value to existing users.

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.

Spot-on! The original post was geared towards promoting this philosophy and adding weight to the suggestions with a bit of quick math. I guess there's a whole bunch of strategies one can adopt to tap into this sales channel though, which is why we left that for a separate post.

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

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&#...

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.

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.

Reply on news.ycombinator.com