What is the MRR Movement Metric?
The MRR Movement metric represents the net change in Monthly Recurring Revenue (MRR) over a specific period. It provides a clear view of how your subscription business's revenue is growing or declining by accounting for all factors affecting MRR changes.
You can find it in the Cleeng Dashboard under Analytics.
How is it Calculated?
The formula for calculating MRR Movement is:
Net MRR Growth = New MRR + Winback MRR + Expansion MRR - Contraction MRR - Churn MRR
- New MRR: Revenue generated from new subscriptions during the period.
- Winback MRR: Revenue regained from previously churned subscribers who reactivated their subscriptions.
- Expansion MRR: Revenue gained from existing subscribers upgrading their plans or adding features.
- Contraction MRR: Revenue lost from existing subscribers downgrading their plans.
- Churn MRR: Revenue lost from subscribers who canceled their subscriptions.
How to Use the MRR Movement Metric in a Subscription Business
The MRR Movement metric is crucial for understanding the dynamics of your subscription revenue. You can use it to:
- Analyze Revenue Growth: Track the net change in MRR to assess the overall health and growth of your subscription business.
- Identify Growth Drivers: Determine which factors (new subscriptions, winbacks, expansions) are driving revenue growth.
- Pinpoint Problem Areas: Identify areas of revenue loss (contractions, churn) and take corrective actions.
- Evaluate Campaign Effectiveness: Measure the impact of marketing campaigns, coupon campaigns, and product updates on MRR movement.
FAQs
What is the significance of Winback MRR?
Winback MRR indicates the success of your efforts to re-engage churned customers, highlighting the potential for recovering lost revenue.
What does a negative MRR Movement indicate?
A negative MRR Movement indicates that your business is losing more recurring revenue than it is gaining, signaling potential problems with customer retention or acquisition.
How does MRR movement differ from simply looking at the change in MRR at the end of the month?
Looking at the end result of MRR change only shows the net effect. MRR movement displays the specific contributing factors, so you can see where the change came from.