- Hey there. I'm Dan Martell,
serial entrepreneur, investor and creator of SaaS Academy.
This video I'm gonna share with you some strategies on
increasing your monthly reoccurring revenue so that you
can have a huge impact on your ARR,
your annual reoccurring revenue.
And be sure to stay to the end where I share with you how to
get access to my Precision Scorecard methodology so that
you can get clear on your outcomes,
measure those backwards and have your team accountable for the
right metrics to grow your business.
(upbeat music)
So maybe you're frustrated because you're like,
"I just need to grow my monthly reoccurring revenue.
"My MRR is not growing, it's flat!"
And you want strategies to make this happen.
Now I coach dozens of incredible founders and one of the first
things that I do with them to really have an impact on their
business is to tweak these changes
to their pricing and then their product.
Many founders when they start off they're just small and
they're getting going and they've got features and
they get a customer and then 10 customers and 100 and they're so
friggin' pumped that they've got customers that they never
revisit how their plans are structured or their pricing or
anything to ask themselves, you know,
"I've obviously created more value for my customers since we
"started but nothing's changed when it comes to the pricing or
"the structure, the way that people enroll.
"We probably have new customers that are a hundred times bigger
"and we haven't done anything."
And what I want to share with you guys in this video is the
six areas that you could be looking at in
your business to increase your MRR.
Number one, raise prices.
Now I know this sounds so friggin' flippant.
You're like, "Duh, Dan. I could raise my prices."
I know that.
The truth is is have you done it.
Have you gone through a price increase?
You know recently I was coaching one of my clients and they were
charging $6 a month for a tool
that literally ran their customer's business.
And I asked him, "Why have you ever changed your pricing?"
And they were worried they would lose a bunch of customers.
But if you just think about it it's pure economics.
If I take my pricing and I potentially change it
and this is really simple. You just look at the market.
You know, what's a competitive set look like?
You're a $6, you know you go to $25
and it's not a crazy number but you four X the pricing.
Let's just say worse case you lose,
maybe, and my experience not as much,
you lose 10-15% of your customers.
You've gone up four X and you've only lost 10-15% of your
customers so net-net you are way further ahead.
And the main reason is you need to do this is
so that you can invest in innovation.
You can invest in your team.
You can actually build a lifestyle that supports the
business so that you don't want to sell it every six months
because you're just not having a good time.
So number one, make sure you raise your prices.
Number two, ditch the free plan.
Many founders start off by offering free because they just
want anybody, anybody please use my product.
So they make it really easy.
There's no friction.
You just sign up, you can use it, it's for free.
The challenge is they don't set any limits,
any trial like any cut offs to that free plan
so that people just keep using it and using it.
And they're using server resources,
they're hitting up support, and yes you can argue that this is a
marketing thing but I'm gonna tell you most of the founders
that I coach are bootstrapped founders.
And at the end of the day,
they're investing personally their time in support. Okay?
They're answering their 1-800 number,
going right to their cell phone.
And I don't know about you but if I've got people that are
asking me for my support, I want to know that we're aligned and
the best way to do that is get rid of the free plan.
Go straight to a paid.
Maybe do a free trial, no credit card on file if you want.
I prefer a credit card on file.
And then that way you know that when you're serving your
customer and you're activating, you're making sure they
get the most of their trial that there's a high likelihood
they'll become a paying customer.
Number three, unbundle the features.
There's a very good chance that you kept adding and stacking and
stacking and people asked for new requests and you just kept
adding new features that right now when you look at your plans,
for the most part it could be, I've seen this happen very often
that it's just one plan with a bunch of stuff.
You need to look at unbundling them and really asking yourself,
"What does a customer at this stage,
"of this size, of this industry look like?
"What do they need to be successful
"without giving them too much?
"And what does the next stage look like?"
So just by unbundling it's gonna have
a huge impact in your business.
And the cool part is you could even look at adding add-ons.
So taking something, for example,
like a QuickBooks Sync or maybe some kind of like other
integration that's native.
Not a Zapier connection but something native to your
solution and having that as an add-on so that you can get an
extra $20 a month per customer that needs that but know that
hey, that's probably an enterprise customer
so you can price it accordingly.
But if somebody's at the lower end and they really want it even
though they don't need as many seats,
they can have the lower end plan but have that add-on.
So unbundling features is a great opportunity to increase
your monthly reoccurring revenue.
Number four, removing unlimited features.
This is probably bane to
revenue opportunity to most startup founders
is having a value driver,
some kind of, you know, it could be the number of accounts.
At one of my clients recently moved from a all-you-can-eat and
unlimited accounts underneath their different
plans to a per-seat pricing.
The reason why is when they went to the market and did the
research, they hired an incredible company to come in
and do that research.
They found that they would prefer to buy under that
mechanism because it allows it to be more predictable in
regards to their cost structure.
So even though they were trying to be this altruistic,
"Hey, there's three different plans and we're not gonna ever
"restrict you on a specific number of accounts that you have
"on our product so we just want you to be successful,"
is actually against what the customers,
how they expected to buy that kind of solution.
So actually removing unlimited and making it structured so
there's a number of accounts per different plan.
This is, I mean I've seen this with companies like Wistia
with the number of videos.
You can do it on other data points.
It's really whatever,
when you look at your customer's usage, 'kay?
Amongst all your customers there's probably really clear
breakdowns where somebody transitions from this level
activity to the next tier of activity and that's where you
want to start adding some constraints in the upper end of
their usage that kind of forces them into
the next plan that you might offer.
So make sure that you remove unlimited features
if that makes sense.
Number five, move upmarket.
It is very rare that I've seen companies that start at the
enterprise level move to mid-market.
Or even less rare that somebody's at a mid-market level
and moves down to SMB.
What typically happens is when a product starts you start at the
SMB, the small and medium business level,
because you don't have the feature set
to serve a mid market customers.
But over the years, over two, three,
four, five year period you'll probably get some of these
medium sized companies come into your product and ask you for
some features and you build them and then all of a sudden you
realize that, hey, maybe 5-10% of our customer base are
actually mid-market customers but yet all of your marketing,
all of your packaging, all of your plans and your support is
really still just selling and serving to an SMB customers.
Moving upmarket, making a deliberate decision to say,
"You know what? We're gonna kind of like,"
not get rid of but just kind of hide
this smaller plan, move more to mid-market,
change our marketing, change our positioning,
change our pricing structure, change our sales and our
essentially our go-to-market strategy
for that mid-market customer.
Maybe start building an outbound sales team to target
those key accounts that we want.
That's how you move upmarket.
And what's great about it is the larger the customer the churn
number comes down,
the annual contract value for an account goes up
and your MRR goes through the roof.
So just moving upmarket is such a natural way if you've been in
the market for three to five years,
you've probably already got those customers.
Just waiting for you to move up and start adding
and focusing on them as a segment.
Number six, maximize upselling.
So I call this farming.
There's so many opportunities in your product for you to look at
activities that happen from an account point of view and offer
expansion revenue opportunity.
Meaning that there's some feature that they might hit a
limit or they're on their way to hitting a limit and then you
could be like, "Hey Joanne, I noticed that you guys have
"already used four out of your five accounts.
"Let me know if you want to discuss about moving to our next
"plan because all of a sudden the per-account pricing gets
"cheaper and you also get these extra benefits."
So actually getting really good at notifications for you,
for your customer success team to identify opportunities for
upselling other add-ons, other plans to your existing customers
is a really low hanging fruit for anybody to expand their
monthly reoccurring revenue by just offering it.
Most people don't even know they've come up or they might be
hitting these levels and they just need somebody to talk to.
And you can be that person.
You just got to reach out, chat with them and get them excited
about that next level of support,
next level of implementation, of value that you're gonna
unlock in your product, in those integrations,
those add-ons and get them onboard.
But you need to learn how to maximize your upsell.
So six simple tweaks you can make
to really increase your MRR.
Number one, raise prices.
This is a no-brainer.
You've added more value, you should be capturing more value
in your pricing structure. Two, ditch the free plan.
Get people that want your support that are gonna use your
product to pay you for it.
They're gonna value it more.
Three, unbundle the features.
There are things that you're offering that should definitely
be standalone, potentially as an add-on that people could
buy on another monthly basis.
Number four, remove unlimited features.
There is a value pricing axis that should be understood and
your unlimited features is holding you back from allowing
customers to move up the value chain in your plans.
Number five, move upmarket.
When you started you were probably serving an
SMB customer, a mid-market.
It is time to move upmarket to capture
higher annual contract values, have lower churn and
overall allow for increased expansion revenue.
And number six, maximize your upselling.
Become great at identifying those opportunities that
customers would naturally want to have a conversation about
moving to the next level service with your product.
As you mentioned in this video I want to share with you an
exclusive resource called the Precision Scorecard.
It's a framework I created to allow my clients to get clear on
not only their targets but their actuals on a monthly and weekly
basis and in it, you can click the link below to download your
copy, I provide the metrics for below a million in ARR and above
a million so that you can just map those to the funnel
structure that I offer in that format to get clear,
to hold your team accountable for these specific numbers that
they should be hitting on a weekly basis that's gonna map up
to their monthly targets and
eventually hit your quarterly goals.
Click the link below to download your Precision Scorecard and
if you liked this video, smash that like button.
Be sure to subscribe to my channel and if there's anybody
you care about that you feel I could serve,
feel free to share this video with them.
As per usual, I want to challenge you to live a bigger
life and a bigger business and I'll see you next Monday.
Here's the money shot.
Stay to the end.
Duh-duh-duh duh-duh-duh.