Unlike one-off sales, recurring revenue is predictable and continues over time. Taking into account your recurring income and monitoring the main KPIs associated with it will facilitate the analysis of your overall business strategy, and optimize it over time. Because as long as you measure this type of indicator, you will have appreciable visibility on the trends of your business.

Thus, by using the results of the analysis of your recurring revenues, you will be able to adjust your business strategies, improve your financial performance, and optimize the way you serve your customers.

Recurring income: what is it?

Recurring revenue is the backbone of businesses that operate on a subscription system, like SaaS. In this system, customers buy a cloud software service, for example, which they pay monthly. These regular cash inflows allow this type of business to forecast their future income precisely, and therefore to have medium and long-term visibility for their business.

Key things to look for when analyzing your recurring income

To start analyzing your business’s recurring revenue, take a look at it from the simplest point of view possible, and take the height. In other words, watch how your Norway WhatsApp Number List recurring income evolves at the overall business level.

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Typically, recurring revenue is measured across the enterprise over a period of one month (MRR, Monthly Recurring Revenue) or one year (ARR, Annual Recurring Revenue), but ultimately this is what is essential is to be able to bring out a trend: is the curve of your recurring income following an upward curve on your analysis graph, or is it flat?

After calculating your recurring income and drawing a trend across your business, you will need to explore in more detail the factors that will drive your recurring income.

In any business that is heavily impacted by recurring revenue, like SaaS, you have put options and business strategies that mean you can increase your revenue in some areas and see it decrease in others. You must therefore take these variations into account when you analyze your recurring income over time.

What you can do is segment your trend analysis into several constituent components, as follows:

  • Acquisitions
  • Unsubscribes
  • Upgrades / switch to a more efficient version
  • Downgrades / downgrade

Unsubscribe revenue streams

As you can guess, these four revenue streams are highly unlikely to contribute equally to the overall progress of the business. Perhaps your business is growing well, and your net recurring revenue is stable at time T, but the number of customers downgrading your service is swelling, which in the medium term can create a windfall. opposite in the dynamics of your business.

To know which revenue stream you need to focus on, it is essential to create baselines and established goals relative to your business model and customer base. Some companies experience high churn rates because they serve a volatile market. Others may register very small quantity upgrades because their service or product does not offer huge upgrade possibilities.

Each income stream has its own levers and coefficients of friction. Once you understand how each of your income streams works, you can identify areas where it will be possible to focus your efforts and make an impact.

To analyze your unsubscribe income stream

You can divide it into subcategories. Ideally, you should look at this data over time, across your different segments, and across the customer lifecycle.

When looking at your churn rate over time, examine how your income is performing each month, and identify any outliers or months that marked the start of a profound change. What happened during this period? Are there seasonal trends related to the industry in which you operate? Have you changed your product? Have you suffered the consequences of a global event, such as the Covid-19 pandemic?

You need to be able to know exactly what type of customer has unsubscribed, and when. To take it a step further, try to group these customers into key segments, and ask yourself the following questions: What are the main characteristics of these customers? Why did they unsubscribe? People can opt out for all kinds of reasons: maybe they no longer find value in your department, or their contract has increased.

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