Reactivation MRR

Reactivation MRR is like a rollercoaster ride. It starts with the anticipation of a new customer, the excitement of customer acquisition, and the thrill of expansion MRR. However, as with any rollercoaster, there are highs and lows.

The highs come from existing customers bringing in new monthly recurring revenue or MRR. In contrast, the lows come from trying to reactivate those customers who have churned out - leaving their net MRR at risk of stagnating or even declining.

With this in mind, businesses need to understand how to strategically approach Reactivation MRR to keep their revenue growth rate on track.

In this post, we will explore what Reactivation MRR is, why it’s important, and how businesses can use tactics to maximize their efforts when attempting to reactivate existing customers - all while keeping an eye on their net MRR growth rate.

What is a Reactivation Strategy?

Reactivation strategies are tactics marketers use to re-engage customers who have become inactive or dormant. This can be done through email campaigns, customer service, and other marketing channels. These strategies are important because they allow marketers to reach out to customers who may have stopped interacting with the company or product for some reason.

Customer Reactivation

Customer reactivation involves reaching out to inactive customers to encourage them to interact with the product or brand again.

This could involve sending out emails, offering discounts, or using other incentives. When executed correctly, customer reactivation can help return customers who may have been lost permanently.

Customer Activation

Customer activation is the process of getting new users engaged with a product or service after they’ve signed up.

This includes onboarding new users and providing them with information about how to use the product effectively and get value from it quickly. It also involves providing support and resources so that users can make the most of their experience with the product or service.

Dormant Customers

Dormant customers are those who haven’t interacted with a business in some time - usually longer than 6 months - but still remain on its mailing list or database of contacts without taking any action, such as making purchases or engaging with promotions and offers sent by the company.

For businesses to recapture these lost customers, they need an effective reactivation strategy in place that will engage them once more and encourage them to take action on their products and services again.

Inactive Customers/Subscribers

Inactive customers/subscribers are those who may not be completely dormant yet but no longer actively engage with a business’s products and services by purchasing items online or taking part in promotional activities such as downloading content from the website etc.

Companies need a strong reactivation strategy that will entice these contacts back into taking action again if they want them as active participants in their marketing efforts.

Customer Reactivation Strategies

There are several strategies companies can use when attempting customer reactivation:

  1. **Re-Engagement Email**: Sending out emails specifically designed for re-engaging inactive contacts is one of the most popular techniques used by marketers today; this type of email should contain interesting content tailored towards enticing people back into taking action on your products & services again, like special offers & discounts, etc.
  2. **Customer Activation Strategy: **A well-thought-out activation strategy should cover all aspects of onboarding new users, including providing support & resources so that they know how best to get value from your products/services quickly; this could involve creating helpful tutorials & FAQs which will help answer any questions potential customers may have before signing up for your services/products, etc.
  3. **Customer Reactivation Campaign** – Reactivating a subscription in Software as a Service (SaaS) means that customers have renewed or continued their subscription after an interruption. Renewal of subscriptions can be done manually or automatically, which is essential for any SaaS company's success. It is also important to understand the concept of Recurring Revenue (MRR).

Recurring Revenue (MRR)

Recurring Revenue, also known as MRR, is the revenue that a company receives from its customers repeatedly.

This type of revenue is common with subscription services, such as those provided by SaaS companies. As opposed to one-time payments, recurring revenue helps to ensure long-term financial stability for the company.

Reactivation MRR

Reactivation MRR refers to the amount of money that is generated when customers renew their subscriptions after they had previously been inactive.

Companies need to focus on reactivation MRR because it can help them retain existing customers and increase customer loyalty over time.

If everything else fails and payment for your SaaS subscription fails, you will need an effective strategy to try and get your customers back on board again.

Subscription Billing

Subscription billing refers to repeatedly managing customer payments for services or products, such as monthly or annual fees. This type of billing allows companies to predict their income more accurately and plan out future expenses accordingly. Automated billing systems make it easier for companies to manage payments from multiple customers at once without having to keep track of each one individually manually.

Churn MRR & Customer Churn

Churn MRR refers to the amount lost when existing customers decide not to renew their subscriptions after they have expired.

Customer churn occurs when these same customers choose not to continue using a product or service due to dissatisfaction with quality or price, among other factors.

Companies should focus on reducing customer churn by providing high-quality products and services at competitive prices to retain existing subscribers and maximize profits over time.

Subscription Model & Deferred Revenue

The subscription model consists of selling access rights rather than physical goods, allowing businesses to generate predictable income streams over time instead of relying completely on one-time purchases from new clients every month or year.

Deferred revenue occurs when money has been received from a customer but has not yet been earned by providing services or products; this type of revenue must be reported on balance sheets until it has been fully earned by delivering promised services/products according to contract terms and conditions set out between both parties involved.

Subscription Revenue & Customer Success

Subscription revenue refers specifically only to income generated through recurring payments made by subscribing members; this differs from one-time purchases made by new buyers, which do not guarantee consistent cash flow throughout the months.

What are the Different Types of MRR?

  1. **Monthly Recurring Revenue (MRR): **This is the most commonly used type of MRR and refers to the monthly amount a business earns from recurring customers. It includes any subscription fees, usage fees, or other forms of recurring revenue.
  2. **Net New MRR:** Net new MRR is the monthly revenue added from new customers. It is calculated by subtracting any churned customers’ revenue from the total monthly recurring revenue.
  3. **MRR Churn:** This refers to the number or percentage of customers who cancel their subscriptions in a given month. It is also sometimes referred to as “customer churn” or “cancellation rate.”
  4. **Churn Rate: **The churn rate is calculated by dividing the number of canceled subscriptions in a given period by the total number of active subscriptions at the start of that period.
  5. **Calculating MRR:** To calculate your company's monthly recurring revenue, you need to add up all sources of subscription-based income for a given month, including upgrades, downgrades, and cross-sells/upsells. This should include any discounts or credits applied during that period and any one-time fees associated with those transactions.
  6. **Total MRR:** Total MRR is an important metric for tracking your company's growth over time since it includes all sources of subscription-based income such as upgrades, downgrades, and cross-sells/upsells for a given month.
  7. **Monthly Revenue:** Monthly revenue refers to all sources of income earned during a specific time frame (usually one calendar month). This includes one-time and subscription payments made during that period but does not include discounts or credits applied during that time frame.
  8. **Annual Recurring Revenue (ARR): **ARR is an important metric for measuring your company's long-term growth since it considers all sources of subscription-based income over an extended period (usually one year). It can be calculated by multiplying your current monthly recurring revenue by twelve months or by adding up all sources of subscription-based income for an entire year, including upgrades, downgrades, and cross-sells/upsells minus any discounts or credits applied during that time frame.
  9. **New Customer:** A new customer is someone who has never purchased from you before but may have signed up for a free trial or demo before becoming a paying customer.

10. **MRR Calculation:** To calculate your company's monthly recurring revenue accurately, you need to consider all sources of subscription-based income, including upgrades, downgrades, and cross-sells/upsells minus any discounts or credits applied during that time frame plus any applicable taxes on those transactions to get an accurate picture of what your company earns each month through its ongoing subscriptions services.