As different variations of subscription business models have become more popular, metrics such as ARR (Annual Recurring Revenue) and MRR (Monthly Recurring Revenue) have become common in the workplace. However, there are additional metrics that are critical to helping you measure the health of your business while providing you with opportunities to act and prevent churn–ultimately growing your revenue and maximizing your customer lifetime value (CLV).
The metrics we’re going to look at today are reporting on your subscription business on a monthly basis. By using metrics that are measured monthly, you empower your organization to react more quickly and reduce the impact of negative trends and maximize positive trends. So, with that said, let’s dig into six monthly metrics that can help you ultimately reduce churn and maximize revenue.
Read: 5 Key Subscription Analytics Every SaaS Company Must Measure to Support CLV Growth
Subscription MRR or MRR
- Subscription MRR or MRR measures the recurring monthly revenue from subscriptions.
This provides visibility into the health of your customers' recurring payments and helps predict future cash flow.
- Churned MRR measures the MRR lost due to churn in any given time period. It is often calculated against MRR to express a percentage that quickly shows the impact churn has on the business.
Often churn rate only shows the number of customers that churn in any given timeframe, however, churned MRR will give color to your churn rate. By providing this context, churned MRR allows you to see the value of the different churned accounts as well as any trends that may be occurring among different customer segments.
- Reactivation MRR shows the MRR from accounts that have churned and then reactivate their subscription at some point across any given period of time.
Knowing your reactivation MRR can help you understand the customer acquisition cost of your MRR. If you notice a consistent upward trend with this metric, it may be wise for your team to prioritize retention as opposed to depending on various customer win-back tactics that inevitably come with a cost.
- Revenue lost from accounts that downgrade or cancel their subscription
Contraction MRR is a crucial MRR metric to help you understand the health of your existing customers and revenue trend. By comparing contraction MRR against your Expansion MRR (discussed below), you can see trends regarding customers churning or expanding their spend with you, thus informing your efforts around maximizing your CLV.
- Expansion MRR is the total amount of new recurring revenue from existing clients only
Expansion MRR allows you to measure the effectiveness of your efforts to grow your CLV and expand existing customer revenue.
- Net MRR combines baseline metrics of New MRR (new monthly recovering revenue) + Expansion MRR + Reactivation MRR – Contraction MRR – Churned MRR.
Net MRR combines multiple metrics to measure the financial health of your company, ultimately showing the trajectory of the growth of your business.
Monitoring these monthly metrics will empower your team to better understand the health of your business and take action to reduce churn – ultimately growing your CLV and revenue.
Cleverbridge recently launched subscription analytics to support our clients. If you’re looking to improve your subscription business, Cleverbridge has been supporting clients for nearly two decades. Our clients have seen their businesses excel and have experienced exceptional growth. Want to learn more about how Cleverbridge can help you see exceptional growth results (made easy), contact us using the button below.