Does your business rely on subscriptions? Surely you regularly check how sales are going, and keep an eye on what you need to do to attract more customers and build customer loyalty. The MRR allows you to check your average monthly revenue. Do you know what it is and how much your MRR churn rate is?
What is the MRR churn rate?
MRR churn rate shows what proportion of customers have churned over a certain period of time. For a company offering a subscription model (e.g., one that distributes video content, with its own streaming platform), the formula for the monthly MRR of churn is as follows:
In other words, you take, for example, one month and check how many people have abandoned your services. If the MRR Churn is at the level of a few percent, then there is nothing to worry about, but in the long run this rate at the level of a dozen (or even worse, tens) of percent should worry you.
You can calculate the churn MRR in the short term as well as in the long term, and it is best to monitor it monthly, quarterly and annually.
A customer has cancelled his subscription – now what?
There can be many reasons for unsubscribing. With iPresso Marketing Automation, you will take specific actions to reduce MRR Churn and encourage customers to return. You have many more options than you think:
- Create a form asking why the user canceled your services – it may turn out that he forgot about the payment deadline and the subscription was discontinued, and he is happy to continue as a customer. With a high subscription MRR, it’s worth checking to see if there’s an error on the page, such as choosing a particular payment method.
- Encourage them to return with a discount code – someone who has been using your services for a long time has unsubscribed? Show him or her that he or she is important to you and create a personalized message with a discount code for another subscription.
- Compare your competitors’ offers and analyze the results of your efforts – perhaps customers have started dropping out en masse for a reason. Imagine that all of a sudden your competitors started promoting a new type of subscription, more persuasive to customers and, on top of that, cheaper.
What actions are still worth taking:
- Set up reminder emails for expiring subscriptions – suppose you have a customer who pre-pays for a full year’s subscription. Do you think he’ll remember to renew it in 365 days? All you have to do is send a short text message stating in how many days the subscription expires, and you’ll already significantly reduce MRR Churn.
- Advertise additional packages and unique content available only on your platform – show customers how much they will lose when they leave you. Send news emails that users won’t see anywhere else.
- Create a loyalty program and incentivize regular subscription payments – do you have a problem with customers who, after several paid months or years, suddenly don’t renew their subscriptions? Encourage them through a loyalty program in which they will get points for engaging and paying for additional packages. Prepare special rewards for users with the highest number of points, and the MRR of churn is sure to drop.
Summary
MRR churn is an indicator that shows what proportion of customers have dropped their subscription payments over the past month, for example. This way you can easily check whether users are willing to renew their subscriptions or whether they prefer to switch to competitors. A high MRR of churn can indicate problems with, for example, payment choices when paying for a subscription.
Using Marketing Automation, you have many opportunities to increase engagement with existing customers so that they renew their subscription and loyally choose your offer. Click here and fill out a brief – we’ll get in touch to discuss how Marketing Automation will help your business.
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