Best Committed Monthly Recurring Revenue Practices

Committed Monthly Recurring Revenue

Committed monthly recurring revenue is an important thing to factor in when planning an SaaS design and a marketing strategy for it. Many overlook this element when planning for customer lifetimes, churn rates and marketing model, but they really shouldn’t. See, this committed revenue is an excellent thing to plan for and around, as it allows for a predictable, reliable revenue number for books and security of a company.

There are many approaches to committed monthly recurring revenue, and they may all be approached individually, or, carefully, together. These add up quickly, and are a viable marketing plan in and of themselves for startup companies or startup services, actually. The thing is, there are best practices for this recurring revenue, and how to go about obtaining it.

It’s less about black hat/white hat tactics with it, and more about being tasteful, and not annoying customers away with it, which is very easy to unintentionally do. It’s very possible to annoy them or convey a vibe of greed your customers will be put off by quite strongly.

The first approach to this revenue, and the first thing to focus on practices with, is advertising. Advertising is powerful online, so with the advent of practical SaaS, software can now harness this power like web has done for years. It is powered by views and clicks, so even idle shoppers will generate revenue upon visiting.

The problem is, too many advertisements can really bother a customer. It’s best to avoid things like video and flash, and to not over it on large, flash banners or things that cause lags on lower bandwidth. One option for this is to offer a completely free version of the SaaS with little to no gimping, and advertise it as “free and highly ad-enforced”. If customers expect it, they feel they willfully submit to a compromise, instead of feeling forced in.

If this means there’s not enough, consider also a flat rate access fee. A customer can get a slightly gimped version of the software for a very low per-access rate. They pay only when they need to log in and use it, and it is immensely cheap. Single digits per session.

The trick is to gimp it enough for the subscription users to feel justified in their greater expense, but not gimped enough to convert the ad-powered version users to it, and maybe later to subscriptions.

With ads powering idle shoppers and those not looking to pay, you have a fixed rate as long as your search engine rankings are good. Don’t be too greedy or obnoxious, so account for the slightly weak ad revenue by adding a middle version that’s pay per access and slightly broken. This will get users who hate ads, use the service on occasion but not enough for subscriptions.

Balance the gimp so it works in an upward flow of customer conversion, and you have built a passive engine for customer conversion and established a platform for committed monthly recurring revenue that actually works. Some flux is still to be expected, but a bottom margin is easy to derive, which is where that matters.

Omri Erel
Omri is the Head of Demand Generation, as well as the Lead Author & Editor of the SaaSAddict Blog. Omri established the SaaSAddict blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to SaaS and cloud migration.
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