What is MRR (monthly recurring revenue)?
MRR is an acronym for monthly recurring revenue, a key business metric that calculates the total amount of revenue a business generates from recurring purchases over a one-month period. Along with other key performance indicators, such as annual recurring revenue (ARR), customer lifetime value (LTV), and churn, MRR is one of several key subscription business metrics.
How does MRR growth benefit a subscription business?
MRR helps measure predictable revenue on a month-to-month basis. By increasing their MRR steadily over time, companies with a subscription business model can benefit from a steady, reliable stream of recurring revenue. And by tracking MRR over time, subscription businesses can more accurately predict their subscription revenue, more effectively identify customer pain points, and retain their subscribers.
What types of businesses should track MRR?
Any business operating under the recurring revenue model should track their MRR. This includes both B2B companies (such as SaaS businesses) and DTC operations.
Recurring revenue can not only take the form of subscriptions, but also paid membership programs. We recommend that businesses who offer either of these product offerings track their MRR to identify any patterns in customer behavior and continually hone your efforts.
Strategies to increase MRR for your subscription model business
To increase monthly recurring revenue, focus on making your subscriptions as flexible, convenient, and compelling as possible for your customers. Let them easily make updates to their subscriptions, like skipping a delivery or swapping a product. Empower them to easily search your site by product type or name, price, category, and more. Provide them with multiple choices for their billing interval, and implement strategies like cross-selling and upselling with personalized product recommendations.
By centering your customers’ needs and preferences in these ways, you can increase satisfaction for your customer base while bringing in a steady stream of recurring revenue for your company.