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Introduction

Main revenue sources for ISO registrars come from charges to clients for ISO 9001, ISO 13485, ISO 14001 and other management system certification services. All businesses, including ISO management systems registrars are looking for ways to grow their customer base and therefore revenues. When economic climate cools down, non-traditional revenue streams can make critical business impact on those registrars who find additional revenue streams. It is estimated that a registrar with some 1,500 certificates may generate additional revenue of near $200,000 the first year with a breakeven point at 12 months; and ROI of 580% by the end of the second year with revenue near $1,200,000. This assessment shows how an established registrar may develop additional revenue stream generated from an Internet-based service to its clients. This subscription-based service provides NC-CAPA, Documentation Management, Training, Calibration and other management system programs to registrar’s clients to increase effectiveness of their operations. This approach is already used by at least one major US registrar.


The problem:

Despite significant developments in the IT and Internet technologies, many organizations, including those of significant sizes, continue to use ineffective and inefficient paper-based processes for collecting and analyzing quality, environmental and other management systems data. Delays in availability of system performance indicators negatively affect management ability to make timely tactical and strategic business decisions. While there are numerous electronic and Internet-based solutions on the market offering computerized approaches to handling elements of and entire management systems, cost of such solutions is prohibitive for majority of small- and medium-size enterprises.


The solution:

A simple solution is to develop and offer a competitive and economical Internet-based management system application that provides an attractive margin for the provider registrar and measurable added value to the client.

Marketing:

An established registrar already has customer base with developed business relations, credibility and trust. Marketing and customer acquisition in this environment is expected to be noticeably more efficient than “starting from scratch” with a new product in the marketplace. Prospects may be offered a free trial period for 1 – 3 month. Client’s investment of time and effort to enter the data and high usability of the system will contribute to transitioning a trial user into a paying subscriber.

Differentiation – unique selling points:

The following unique selling points of this service should be considered: low cost to attract and retain wide range of customers; possible consideration of “seat number”-independent subscription fees to simplify customer cost structure and financial planning; intuitive navigation to win customer loyalty; screen-specific recorded training sessions to reduce customer support costs.


Return on Investment (ROI):

To estimate return on investment (ROI) the following assumptions were made:
Client base (prospects) – 3,000. This number is twice of the existing customer base and conservatively represents the number of locations that will have separate licenses;
- Customer acquisition rate per month – 1% of client base
- Subscription fees per location - $199
- Customer retention rate - 95% per month
- Development cost - $150-200,000
- Marketing, technical support and maintenance costs -$5,000 per month
- First year ROI for one module equals to 96%
- Breakeven point, based on the assumptions above, is reached on the twelfth month of operation for one module
- The second year ROI for one module, based on the assumptions above, equals to some 580%. Detailed cash flow analysis for the first 2 years for one module is shown in Table 1 – ROI.

Development and implementation strategies:

On the initial stage, one major management system module (such as documentation management or NC-CAPA) should be developed, validated and implemented. Initial module will include system administration, log-in and security features. Subscription services will be offered to the existing clients. Through the Registrar’s Website and Internet marketing this subscription may be offered to general public as well. While subscriber base growth for the first module, other modules such as calibration, preventive maintenance, training, auditing and others should be developed, implemented and offered to the clients generating additional revenues. Multi-lingual option may be developed to accommodate needs of non-English speaking customers.

Table 1 - ROI

Call us today to learn how your ISO certification business can benefit from this approach!