In our previous blog post we discussed how SaaS businesses can work out a realistic revenue generation target. 

If you read that blog post and followed our advice, you will now have a specific number or recurring revenue target. You can use that figure as a benchmark to determine the gap between current and desired revenue numbers.

At this point, you will probably be wondering how exactly you can increase MRR month to month. Before we answer that question, here’s a quick recap of what is MRR and why it matters. 

Table of Contents

Monthly Recurring Revenue: A SaaS Definition

Three Things Proven To Grow MRR

Turn Website visits into Revenue

Generate More Sales Opportunities

Optimise Your Entire Sales And Marketing Conversion Funnel

Keep Track Of What Affects MRR

Monthly Recurring Revenue: A SaaS Definition

MRR stands for monthly recurring revenue. It's a standardised metric that quantifies the predictable revenue a business can expect to earn on a monthly basis. This metric is particularly useful for SaaS businesses given the recurring nature of their business model, which in many cases relies on subscriptions.

MRR calculations are straightforward. Imagine you have 20 customers who each pay £50 / month for their subscription to a SaaS product. In this case 50 x 20 = £1,000, which is your MRR.

Determining your current and desired MRR can simplify the process of improving ARR (Annual Recurring Revenue). Both metrics are important, since meeting targets here can boost customer lifetime value and other KPIs that are crucial to your bottom line.

 

The 3 Things That Are Proven To Grow MRR

There is no magic formula to grow MRR or ARR, as growth strategies work best when they are customised taking into account the nature and goals of your subscription business, as well as the needs and pain points of your customer base. Having said that, there are three tactics that we know work especially well for SaaS businesses whose primary leads come from online sources.

 

    1. Increase traffic

In principle, more website traffic can lead to higher MRR revenue, as long as your efforts are focused on attracting qualified leads who are more likely to become paying customers. Higher MRR income won’t necessarily come from boosting traffic for the sake of boosting it, but rather from targeting the right customers for each of your SaaS offerings.  Ultimately, there are two ways to increase traffic,  Organically (SEO and Social Media) or Paid (e.g. Facebook, Linkedin and Google Ads).  Concentrating on getting these up to speed will have a massive impact.

    1. Optimise Conversions

More website traffic will not generate revenue unless site visitors are compelled to convert. Conversion can mean different things, from requesting a product demo to committing to one of the pricing plans offered.

    1. Generating more sales opportunities

Creating multiple sales opportunities along the buyer’s journey can help meet MRR targets. As we will discuss later, every stage of the sales funnel should be optimised for conversion, from awareness building to decision making.

 

This is where the skills and knowledge of your sales team come into play. When sales and marketing teams work together, they can boost recurring monthly revenue by generating more sales opportunities from existing and new customers. This type of alignment is known as Smarketing, which involves establishing fluid communication between both departments, promoting deeper involvement with each other’s activities, joint goal-setting and metrics tracking, and providing tools and software that simplify data sharing and evaluation.

 

Turn Website Visits Into Revenue

Increasing website traffic is usually thought of as a quantitative strategy, but quality traffic is as important as the quantity of visitors, if not more. Remember that the end goal is to increase your recurring monthly revenue, and to do that you need to attract the right audience to your site.

There are several marketing strategies you can use to improve the quality of your website traffic. PPC campaigns are an effective paid strategy that can bring targeted traffic to your site. Similarly, a robust SEO strategy can boost your online visibility and help attract qualified prospects. Ideally, you will want to combine PPC and SEO to drive paid and organic traffic.

For even better results, consider aligning SEO with a solid inbound marketing strategy. This is what SpotDev's GamePlan delivers: a growth-focused plan that brings data, strategy, and content together to generate quality website traffic with the best MRR revenue potential.

 

Optimise Your Entire Sales And Marketing Conversion Funnel

Getting a site visitor to convert requires coordinated action spanning your entire online presence. Every decision should be geared towards improving conversion rates and giving visitors a good reason to buy your product or service. In other words, don’t just optimise for capturing customer emails or closing a sale at high contract value - optimise across the whole sales cycle from beginning to end. Also, make sure you address the unique characteristics of customer A and customer B throughout the buyer’s journey.

Like MRR, conversion rates are metrics that need a point of reference or benchmark. You may be wondering what exactly constitutes a good conversion rate. Many SaaS businesses aim for 5%-7%, but this isn’t set in stone. We have covered this topic in detail in a previous blog post, where we explain all the factors that come into play for effective conversion rate optimisation.

 

Generate More Sales Opportunities

Attracting and converting visitors into leads is great, but increasing your recurring monthly revenue requires going a step further. To put it another way: winning a client is not the end of the story; it’s just one more step in the sales cycle. Diversifying revenue components is one way of generating additional sales opportunities and to eliminate excessive reliance on a single product or customer segment. If you operate a subscription revenue model, this could mean cross-selling, creating pricing tiers, add-ons for existing customers, or parallel products that address emerging pain points.

There are several things you can do to fill up your sales pipeline. Some SaaS companies can benefit from shortening their sales cycle. Strategic cross-selling can also be helpful. But the best tactic is to adopt an integrated and cohesive approach, which is what SaaS Salesfunnels was created to do. This multi-step process involves a custom approach to launching a decision-level funnel or to fine-tune it with optimal performance in mind. What’s more, it eliminates guesswork and can save thousands of pounds in unnecessary expenses.

Lastly, we want to draw attention to the importance of having a sales enablement programme. This requires the smooth collaboration between sales and marketing teams and a strong focus on delivering value. SaaS businesses that have adopted sales enablement report significant growth in up-sells and cross-sells, a shorter sales cycle, and time-efficiency increases.

 

Keep Track Of What Affects MRR

Growing your MRR is a tried-and-tested way to break down your ARR target into more manageable monthly goals. Increasing qualified website traffic, optimising conversions throughout the entire sales funnel, and deploying customised strategies to generate more sales opportunities can help SaaS businesses boost their MRR numbers and reduce churn MRR rates.

If you’d like to find out which of these three strategies can deliver the best results for your company, download our one-page sales planner to get started. We also encourage you to read through the next blog post in this series “Why tracking monthly recurring revenue (MRR) is important” .

Further Reading

The benefits of HubSpot for SaaS businesses