If you're like most CEOs, then you're always on the lookout for new and innovative ideas to grow your business.
But ideas aren't worth much if they're not put into practice.
That's why we've put together a handy list of 7 simple and practical ideas to help you grow your MRR.
These ideas are actionable, realistic, and proven to work.
And who knows? Maybe one of them will turn out to be the next big thing in your organization.
Let's dive right in.
What is MRR?
Before we dive into the list, let's get one thing straight.
MRR is the abbreviation for monthly recurring revenue — it's a key performance indicator for most SaaS businesses.
MRR is the total revenue from any number of customers who sign up and pay you monthly.
For example, if you have 1,000 customers who pay $1,000/month, then your MRR is $1M/month.
In short, MRR is a simple way to predict your future cash flow and adjust your strategy accordingly.
Why is MRR Important?
MRR matters because it's a simple and accurate metric that helps you understand how your business performs over time.
MRR also tells you how much money you're making from existing customers, which is crucial information for any business.
Some other benefits of understanding MRR include:
- Spot potential threats: Knowing what your current MRR is can help you spot potential problems, such as a sudden drop in revenue.
- Identify growth opportunities: You can also use MRR to identify new revenue opportunities, such as expanding into a new market or introducing a product.
- Manage your finances: MRR is also used to help forecast future financial milestones, such as cash burn rate, churn rate, and revenue projections.
As a CEO, one of your duties is to make smart decisions. And MRR provides important insights that can help you do just that.
7 Practical Ideas to Grow Your Monthly Recurring Revenue
Now that we're all on the same page, let's take a look at 12 simple and practical ideas you can use to grow your MRR.
1. Offer a Free Trial (But Do It This Way)
Even though free trials can be a hassle, they're still one of the best ways to attract new customers.
The key is to give users a quick win.
This way, they can see how awesome your product is, and understand the value of paying for it.
For example, Dropbox uses this approach by offering new users 2GB of free storage, which is usually enough for most people.
This helps them use Dropbox for their personal needs, which makes them more willing to pay for a business account.
By giving prospective customers a taste of your product, you can boost your chances of turning them into customers.
A few things to keep in mind include:
- Offer an incentive: The incentive doesn't have to be something material. It could be a discount, an extended trial period, or special access to new features.
- Draw a line: Don't give away too much for free, or else you'll cheapen your product in the eyes of customers.
- Solve a problem quickly: Free trials work best for products that solve a pain point or provide instant gratification.
2. Find Your Growth Channel
In the book “Traction: How Any Startup Can Achieve Explosive Customer Growth,” Gabriel Weinberg and Justin Mares recommend looking for growth channels.
A growth channel is simply a distribution strategy that's proven to work.
For example, many businesses find success by focusing on SEO and content marketing.
Others leverage Facebook or Twitter ads to attract customers.
There's no “one-size-fits-all” growth channel that works for every business, which is why finding the right one for your company is crucial.
The best way to identify your growth channel is through experimentation.
There are many ways to do this, but following the example set by Dropbox is one way to do it.
Back when Drew Houston and Arash Ferdowsi started Dropbox, they needed to find ways to grow their user base.
To do this, they discovered that giving away free space on Dropbox helped new people sign up and spread the word about Dropbox.
This led to a snowball effect, which ultimately drove growth in their user base.
It's important to note that finding growth channels isn't just about giving away free stuff.
There are many other ways to find a new source of growth.
Whether it's a new marketing tactic, building a referral program, or investing in PR, you need to find a way to reach new customers and keep them coming back for more.
You might also consider:
- Customer interviews: Ask existing customers what brought them to your product. This might give you valuable insights on how to attract new users.
- Marketing experiments: Try out different strategies and see what works best for your business. For example, if you're targeting a specific demographic, try to find the most effective channels for reaching them.
- Study your competitors: Look at how other companies in your market are attracting new users. Then, try to imitate their strategy for your own business.
These are just a few ways to find your growth channel.
The key is to experiment with different options until you find the one that works best for your business.
3. Build a Referral Program
Referral programs are one of the most powerful strategies you can use to grow your user base and convert existing users into promoters.
The basic premise is to reward customers who refer your product to their friends and colleagues.
Getting back to Dropbox, they give away free space on Dropbox for each referral a new user makes.
It's a win-win situation that encourages existing customers to find more people who can benefit from your product.
Aside from rewarding existing customers, referral programs also provide another key advantage: They're highly scalable.
Since referrals are powered by your existing customer base, you don't have to pay for advertising or other expensive acquisition strategies.
Instead, the relationship is driven by the personal connections between your product and potential customers.
There are a few key strategies to make this work for your business:
- Make your product shareable: Make it easy for people to talk about your product. For example, you could make share buttons prominent on your site or create inspiring imagery that people can use to share your product with their friends.
- Give customers a reason to refer: Your referral program won't work if people don't have an incentive. So, make sure you give customers a strong reason they should refer others to your business. This might include a discount for referrals, extra space on the house, etc.
- Optimize continuously: It's important to continually optimize your referral program. You can test different incentive structures or messaging to see what works best for your business.
4. Test Different Pricing Structures
Pricing is often the trickiest part of running your business.
On one hand, you need to find the sweet spot that will maximize your revenue. On the other, you don't want to lose customers by setting your prices too high (or low).
A common mistake is to use a one-size-fits-all approach.
Businesses should develop a unique pricing structure that's based on customer segments.
For example, a business might have several different tiers of pricing for their SaaS product.
The basic plan targets individual users and startups, while the business plan is for companies with over 100 employees.
Another strategy is to offer a free or freemium version of your product, which is ideal for acquiring users.
Then, you can transition those users to paying customers as they grow and need more features.
You can also implement usage-based pricing, which is ideal for SaaS businesses.
Under this model, users pay a subscription fee based on how much they use your product.
This model can be particularly effective because it's scalable and encourages customers to use more of the product (instead of just paying for a basic plan and not using all of its features).
It's important to constantly try new pricing strategies to find one that works best for your business.
While this might sound like a cliche, testing is the only way to determine the best pricing model for your business.
5. Build a Flywheel
In some ways, the term “growth hacking” is a misnomer.
After all, you can't hack your way to growth.
Instead, it requires you to build a strategy that's sustainable and scalable — like how a wheel keeps spinning after you hit the gas pedal.
In this case, a flywheel is a great analogy because it describes how momentum builds over time.
Take Amazon as an example.
When they launched, they had a great product and solid strategy.
Specifically, they chose to focus on customer satisfaction.
In its early days, Amazon was just a bookstore.
Then they started offering CDs.
And other products.
Over time, they built a flywheel: Satisfied customers led to more product offerings and greater market share. This, in turn, led to more customer referrals and greater market awareness.
This cycle helped Amazon become the largest e-commerce company in the world.
But Amazon isn't the only company that's grown using the flywheel strategy.
For example, Slack started as a chat product used by teams to collaborate. Then they opened up the platform to third-party integrations, which led to an even wider user base.
And they're not stopping there; Slack is adding new features (like video chat) to keep the flywheel spinning.
The lesson here is that growth hacking requires you to find creative ways for your business to generate momentum.
6. Make Feedback a Priority
Growth hacking is all about learning how to get more users, but you can't do that without listening to your customers.
This is especially true in the early days of your business when you're still trying to figure out what users want or who your target audience is.
As Reid Hoffman once said:
“If you're not embarrassed by the first version of your product, you've launched too late.”
You need to get out of the building and talk with your customers.
For example, instead of settling for data from surveys, why not interview a few users?
This will give you real-life insight into their problems and how your product can help.
Then, brainstorm ways to incorporate this feedback into your product.
You should also regularly survey your customers to find out how they feel about your product, what features are most beneficial to them, and other valuable information.
This data can not only help you create a better product, but better marketing as well.
Constant feedback is critical to learning and growing — and the same principle applies to your marketing.
7. Get Personal
Your customers are people, not just numbers.
You need to communicate with them on an individual level.
For example, if you're selling a product to CMOs, sending them an email blast about your latest sales stats won't really resonate.
Instead, you should create personalized emails based on the information you already know about them (i.e., their company size or what they've purchased from you in the past).
When creating these emails, you want to personalize them as much as possible.
For example, use their name in the subject line and copy (not just the name), and use dynamic content to create personalized email copy.
The key here is to be efficient — don't send a bunch of garbled, personalized emails that will only confuse customers.
Instead, focus on one or two specifics you want to highlight and craft a clear message based on your data. For example, if you know a company that just hit 100 employees, that's an important milestone worth celebrating.
You can even segment and personalize your blog posts or social media updates. For example, on LinkedIn you can target users based on their first name, company size, job title, location, etc.
The same goes for your blog posts. If you write about topics that are relevant to specific industries (e.g., marketing, HR, etc.), then target those posts to readers in your niche.
Just keep in mind; don't over-do it.
Modern customers are sophisticated and have high expectations.
They know when you're playing games with them.
Not only do they want a personalized experience, but they also want honesty.
The Bottom Line
MRR is a crucial metric for measuring the health of a business.
Get in the habit of checking your average MRR per user and you'll have a leg up on the competition.
But that's not enough; smart growth hackers go beyond the numbers and consider how to get more users while also improving their product.
They do this by getting feedback from customers, communicating on an individual level, and staying authentic.
The best part?
These strategies are all relatively simple.
The key, of course, is implementation.
Take some time to review your marketing efforts and find opportunities to incorporate these tips.