Recurring Revenue Rate

by May 27, 2019

The amount of recurring revenue a company receives may increase, stay the same, or decline for a given period. Recurring Revenue Rate indicates the percent change in the amount of recurring revenue at the end of a specified period compared to the recurring revenue at the beginning of the same period.

Recurring Revenue Rate

Recurring Revenue Rate provides an indication of how much recurring relationship value has been retained, grown or been lost.

Recurring Revenue Rate can be applied to a specific timeframe (e.g. quarterly, annually, etc.) or applied to tracking Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR).  This is critical for tracking the financial health of recurring revenue relationships such as service contracts and subscriptions.

Unlike Contract Renewal Rate, where 100% is the maximum performance level, Recurring Revenue Rate can exceed 100% indicating that the value of an existing relationship, or the net value of all recurring relationships, has increase from the previous period.

Example:

For Period = Q1

Recurring Revenue Rate = Recurring Revenue at End of Term / Recurring Revenue at Beginning of Term

Recurring Revenue Beginning Q1 = $100

+ Recurring Revenue Added in Q1 = $50

$45 from new customers

$5 from expansion of existing relationships

Recurring Revenue Lost in Q1 = $30

$25 due to customer churn

$5 due to downgrade of existing relationships

= Recurring Revenue End Q1 = $120

Recurring Revenue Rate = 120% (20% growth)

Related Articles

Treat Your Service Portfolio as a Product Line

Service and success programs are a significant source of revenue. To assure that they yield their maximum revenue potential, treat service portfolios as strategic offerings in the corporate portfolio by assigning dedicated program management resources.

read more

Your Support Value Proposition is Out of Date

In a subscription economy your support value proposition is likely out of date. If your value proposition is based on promising access to update and service level response its time to for support value proposition refresh.

read more

Success Marketing and Portfolio Management

Technology service programs are evolving to offer new value and benefits such as use and adoption assistance and resources to help attain successful outcomes. As technology service programs change service marketing must evolve beyond selling the initial service engagement and focus on sustaining and growing relationship value.

read more

5 Principles for Service Success in 2020 and Beyond

There are many approaches to achieve service success and each company must chart its own unique course. Regardless of the path, there are five principles that all companies must embrace. Every company must have an established CX plan, attainable goals, well-defined service programs, optimized service capabilities and the means to measure and improve performance. These five principles establish the foundation from which to define, execute and achieve tangible, positive service outcomes.

read more

Pin It on Pinterest

Share This