The Pay As You Go Business Model

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To Pay as You Go, or Not to Pay as You Go – That is the Question?

Let me tell you a story about an independent business who operated on a Pay as You Go (PAYG) Business model when I first started working with them through my Kick Starter Mentoring package. Whenever I hear the word pay as you go, it sends a shiver down my spine, particularly if you’re a business that runs weekly classes.

Why? Because you’re putting yourself under a lot of pressure to sell, week in and week out.  I know this because I operated a national franchise on this model, but the difference was we had at least 3-4 weeks between events to sell tickets. The problem with pay as you go, is people book at the very last minute and you don’t know your numbers from one week to the next – cue the plastic pants!

Every week you have fixed costs to meet and operating on a pay as you go model can leave you and your business in a vulnerable situation.

Now having looked at this business from a customer perspective I could see the potential in this wonderful business. The customers were getting value for money and a high-quality experience from the business owner.

They had a good social media presence, used high quality images in their content, had a great set up using fabulous resources. I could see a lot of time and effort had gone into the business, creating a wonderful experience for their customers.

However the success of this business was being hindered by the PAYG model. Now don’t get me wrong there is a time and place for PAYG, operating this model requires a constant funnel of customer leads coming into the business and you need a strong retention strategy in place to keep your customers coming back.

When I asked the owner why they operated on a PAYG model their response was simply they were scared that people wouldn’t block book with them. This as far as I was concerned was a confidence issue as I knew they would. I believed this business had something different and unique about it and we just had to show the world its true value.

One of the biggest challenges you face when you operate a PAYG model is that once you start it, it’s hard to get out of it because customers become dependent on it. I had to help this business get out of this situation.

So, what did we do. We introduced a block booking option straight away. My advice was to offer customers a blended business model of PAYG and block bookings, while we looked to phase PAYG out. We increased the price of the PAYG to make the block booking look more attractive.

We then set about brand building to showcase the worth and value of this business to its customers.

  • Created 12 themed lesson plans that could be rotated on a 12-week basis. This was going to make it easier to sell courses.
  • Created assets to go with the themes and associated assets required to drive sales.
  • Re-draw the business logo and trade marked the name to protect IP.
  • Completed the ideal customer avatar process, so we new exactly who to target with our messaging.
  • Defined the business as a purple cow. This business owner is a primary school teacher, and I knew we had to draw on that experience and knowledge to make them stand out from the crowd.
  • Started work on creating captivating content that spoke to the ideal customer.
  • Re-branded the names of the classes and age groups.
  • Took the content that they created to the stage in different formats that we knew the ideal customer enjoyed from live video, stories, reels and show cased the businesses value and the knowledge and experience of the business owner.During the summer, we had some success of converting customers onto a block booking, so I knew everything was moving in the right direction.

In May the business owner joined my Market Like A Pop Star Programme and having surrounded themselves with like minded individuals and had that network of support around them they made the bold decision to rip off the band aid in the summer and remove PAYG from the booking option for September. This was a big step for this business owner.

They worked their socks off during the summer period, continuing to brand build, by entering awards, attending community events, hosting one off special sessions, collecting those testimonials.

Finally last week all the hard work was beginning to pay off. I had a message from the owner to say that they had 6 toddlers and 8 babies booked on a block booking for the new September term. Now this is a big win for this business to have 14 bookings for a term, guaranteed income.

Now this owner can use PAYG as a tool to introduce customers to her business as a trial class, which is totally fine as we will put a strategy in place to convert them into a block booking. You see Pay as you go business model does have a role to play if used correctly.

I’m excited to see what 2023 brings for this business as I know they have the right foundations in place to grow.

So, if you’re a business owner who can relate to this or you’re stuck in the world of PAYG right now and don’t know how to get out of it, then now is the time to make changes in your business.

Learn more about working with me through my Market Like A Pop Star Programme here.

Or if you’re ready to put a new sales strategy in place then look at my Del of a Sell Sales Strategy Course here.

Next week I’m going to tell you a story about a business that I saved from bankruptcy.

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