Key Strategies to Achieve Relentless Growth for Recurring Revenue Models

Are you running a subscription-based business? Keep reading! We’ve put together a toolbox of strategies to make your life a lot easier.

Mastering subscription-based models can result in a significantly higher customer lifetime value (CLV), access to a continuous flow of? data, as well as a loyal customer base. However, managing recurring revenue models can be a lot more challenging than standard transactional models.

Check out Subsbase’s 4 strategies to stay ahead of the recurring revenue management game.

1. Data-Powered Product Strategy

Everything about your recurring revenue product, from UI to product segmentation, should consider target market data in its development. Using insights to resonate with your target market is the first step in the right direction.

Your foundation should be a set of detailed user personas. Outline the characteristics, habits, incentives, needs and expectations of each different user type.. Use this data to develop key differentiators and useful features in your product.

To stay on track, collect and analyze qualitative data such as user feedback, and quantitative data such as performance metrics. Here are a few crucial metrics subscription-based businesses should keep an eye on:

• MRR (Monthly Recurring Revenue): Predictable monthly income from subscriptions.
• Churn Rate: Percentage of customers who cancel their subscriptions within a given period.
• ARPU (Average Revenue Per User).
• CLTV (Customer Lifetime Value): Total revenue a customer is expected to generate throughout their relationship with your business.
• Feature Adoption: Which features users are engaging with and how often.
• Daily/Weekly/Monthly Active Users.

2. Find the Pricing Sweet Spot?

Pricing can make or break your subscription business. Price too high and you’ll have a hard time converting. Price too low and you’ll risk your ROI. Pricing that’s too complex can be confusing, and pricing that’s too rigid can limit product modularity.

Coming up with a number requires you to answer a few questions first. What’s your Customer Acquisition Cost (CAC)? What’s your Required Rate of Return (RRR)? How are competitors pricing? The answers to these and other questions set the foundation for your pricing strategy.

Once you have your numbers, it’s time to build a pricing model that best fits your business goals. Here are a few that are common for recurring revenue businesses:

• Fixed Price: Charging customers an unchanging fee for access to your services, regardless of their usage.
• Volumetric Pricing: Price per unit decreases as the purchase quantity increases.
• Metered Usage: Billing customers based on their actual usage or consumption, often seen in utilities.

Experiment until you find your pricing sweet spot! You can add a freemium tier, or offer hybrid pricing. Promotions, limited time offers, and referral programs are also great tools to help subsidize prices and generate interest.

3. Churn: Inevitable, But Not Uncontrollable?

Don’t fear the churn! Embrace it! Constantly analyzing churn can help you build a more versatile product. Require users to submit feedback when unsubscribing, look out for patterns, and address them before they turn into trends.

Don’t let them go easy! Leading SaaS companies offer last-gasp promotions to retain users, or a promo code to be used upon account reactivation.

Finally, be adaptable and objective. If you are seeing growing churn associated with a clear inconvenience among a growing number of users, tackle it. Even if it means change to your product, pricing, or positioning.

4. Gear Up For the Future and Stay Ahead of the Game?

As your user base expands exponentially, so will the scale of your operations and challenges. It’s imperative you’re prepared to handle the volume. Here are a few tips:

• Automation is tech’s best friend: Explore tools like Subsbase to automate labor-intensive workflows such as billing, invoicing, data analysis and reporting.
• Community spaces and brand heroes: Establish virtual community spaces on the relevant networking platform (Discord, Facebook, Telegram, Reddit) to engage directly with your users and give them a space to connect. You can also recruit first believers as brand heroes and encourage them to create 3rd party content such as tutorials.
• Set your sights two steps ahead: Maintain a vision for the future. What does expansion look like for your business? Is it regional/global expansion to new markets, or is it vertical integration across your own value chain?
• Product-first for long-term growth: Stay true to the product. As your business scales, your main priority should always be maintaining an industry-leading product. You’re going to need better UI/UX, more formidable security, higher investment in stability, new features, and much more product development to stay ahead.

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