Expand MRR for Your SaaS Business Growth in 2021

MRR is the Monthly Recurring Revenue that a SaaS or subscription business earns every month with the subscription billing. MRR is the most attributing metric to monitor and report the sales, profit, and revenue growth.

MRR is not a single metric. It is in fact a whole set of metrics that are used to calculate the different aspects of the monthly recurring revenue.

We already have covered the MRR in length in our previous pieces that can be visited again here:

What is MRR, And, Why Is It Inevitable for Measuring Recurring Revenue for Subscription Businesses?

In this article, we will take on why expanding MRR is important for the SaaS and subscription business and how it can be expanded by expanding the recurring revenue coming from the sources of the existing customers.

Why MRR Is Crucial for the Recurring Revenue Growth?

MRR or Monthly recurring revenue is the calculation of month-wise recurring revenue generation. For the SaaS companies, it is an up-to-date measurement of the subscription business health to assess earnings, profits, and losses.

MRR is also a great way to ensure demand and supply predictability and stable reliability of the flow of cash with an intact customer base. The detailed insights into the MRR streaming allow the SaaS subscription management teams to identify the ways as well that can let them earn more revenue without increasing the cost of acquisition and cost of retention.

The growth of Expansion MRR depicts customer retention with more opportunities for upsells, cross-sells, or re-sells. Expansion MRR holds great significance because its increasing numbers help development, marketing, and sales departments to identify the customer needs and attract more customers for upgrades or reselling.

Also Read: Learn How the Best Recurring Billing System are Helping SaaS companies Track these SaaS KPIs and Metrics

Ready to learn about some of the quick and certain tactics that can help in landing and expanding more MRR, read on:

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Make Data-Driven Informed Sales and Marketing Business Decisions

Data-driven business decisions help sales and marketing departments to concentrate their efforts in the right directions and avoid slow silos. The SaaS businesses have more knowledge of their customers as they are available with more user, subscription, and above all, the MRR data that can help them in developing the customer engagement and revenue-building approached.

Seal Service Gaps to Mitigate Revenue Leakages

MRR also helps to bridge the gaps in the services and repair the revenue leakages by identifying the bottlenecks in the subscription revenue accumulation. Analyzing the frictions paves the ways for the data-driven engineering of the solutions and supports the retention of the customer with valuable services.

Start a Referral Program and Offer Perks and Promotions.

Referral programs are considered the most productive customer engagement strategies. The more your customer is engaged, the less they are prone to cut the subscription cords for your SaaS. In addition, the perks and promotions for the existing customers in the forms of coupons, vouchers, and discounts also keep the customers pleased and connected.

Optimize Pricing and Plans

Offering your customers optimized plans and pricing increases the chances of plan upgrades, up-sells, cross-sells, add-on subscriptions, and re-subscriptions. This is how without spending extra bucks on customer acquisition or retention, subscribers can be pushed for plan upgrades.

Segments Customers

Not all your customer base is enough potential to continue paying you for the rest of the life. Monitoring and measuring the product and customer metrics time-to-time experiences you segment the customers into multiple categories and offer them the benefits, accordingly without compromising on your recurring revenue. The more potential sources of the recurring revenue are given the value, the longer they serve the revenue growth goals of the SaaS company.s

Refine Leads

Segregation of the leads is as important as the segmentation of the customer is. Quality leads are more likely to convert. The most potential lead is the freemium subscriber. Converting a freemium subscriber to the paying subscriper is also a way to increase the MRR.

Focus on Minimizing Churn and Increasing Lifetime Value

Churn is when the paying customer for any reason parts ways with the business. The most affecting factor on the stability and the growth of the MRR is the churn rate. SaaS focusing on customer relationships and making data-driven business processes management are more likely to increase the lifetime value of their customer and reduces the churn to keep their MRR stable and growing in an upward direction.

Enhance Customer Experience

Customer experience is not one-time interaction from one person or a department, it is an overall experience of a customer with the SaaS product, concerned individuals, or the company. Leveraging the real-time data of the customers helps the revenue operations to streamline their processes and offer more effective solutions to the SaaS and their subscribers by enhancing the overall customer experience.

Also Read: What Is CMRR and How Does It Help the SaaS and Subscription Businesses In Forecasting the Recurring Revenue?

Expansion MRR—The Prime Driver of the Recurring Revenue Growth

Expansion MRR is the calculation of the recurring revenue earned in a month through the existing customer base without outlaying or dedicating extra resources over them to increase the net monthly recurring revenue and acquire negative churn.

In other words, we can say Expansion MRR is simply the portion of the recurring revenue a company generates in a month. It can be defined as the subset of the MRR. The Expansion MRR rate is a key performance indicator used to learn about the growth in a company’s month-to-month recurring revenue streaming accelerated due to existing customers.

The Different Revenue Sources of the Expansion MRR

As the additional revenue source when the expansion MRR increases, it increases the overall monthly recurring revenue as well. But, it is important to understand how the expansion MRR contributes to the MRR.

Boosting the following revenue resources will help the SaaS to add more expansion MRR to their Net MRR:

Plan Upgrade

It is the best way to attract and influence the existing customer to increase the recurring revenue contribution by updating the subscription to the plan with higher pricing and more features. Plan-upgrade increases the per person revenue rate. Converting the freemium subscribers to the paid customers is also upselling or plan-upgrade.

Cross-Selling

Attracting existing customers to subscribe to the additional products or services related to the existing product or service is the cross-sell or cross-platform subscription.

Add-Ons

Subscribers using the products or services may be offered extra features or add-on services that can add value to their subscriptions and also add more recurring revenue to their MRR.

Re-Subscription

Though it is not directly considered the revenue source of the expansion MRR when the customer is on the brink of the end of the subscription term, it can be offered a luring deal to re-subscribe beforehand and sustain stable growth rates with the existing customer.

Also Read: Three Core Metrics to Measure Subscription Business Growth

Subscription Management Software and the Ways to Add More Expansion MRR in the Recurring Revenue Streaming

Subscription Management Software is the place where you can find all the hacks, tricks, and tips to effectively manage, measure, and monitor all the data points that can help you to increase the expansion MRR for your business.

With SubscriptionFlow, SaaS and other subscription companies can not only reap the benefits of automated billing and payments, but they can also leverage the data and analyze, predict, and formulate the data-driven approaches to add more expansion MRR to the overall MRR. Some of them are: