Recurring Revenue Master Plan

If you are a full service VAR, you likely have back office administration, warehouses and inventory in place. You certainly do not want to lay off employees by changing your business model overnight. You also want to maintain a good relationship with your bank. Banks may be unwilling to loan money without hard assets or inventory.

Recurring Revenue Master Plan

You can still be just as profitable—and likely more profitable, as inventory and back-office administration expenses will decrease over time—but your bank may not understand MRR right away. A good place to start is with new sales—and not necessarily all new sales. I recommend keeping your traditional core business in place, and set up new growth under the MRR model.

As you transition to MRR, your focus will shift to becoming a trusted advisor and consultant. You may be used to selling your own solution, but when you partner with Intelisys, you will be selling solutions from multiple Supplier Partners, so your focus naturally becomes finding the best solution for the customer. About the Author Michael Ketchum is Vice President, Finance, for Intelisys , and is responsible for managing all aspects of financial management, accounting and commissions. Your email address will not be published.

Increasing ARPU is one of the most cost efficient ways to improve profitability because it enables a company to expand revenues from existing customers, an inherently easier route than growing the customer base. Churn and Retention Rates Formula: For Bob Harden, Principal at The Harden Group, among the most crucial metrics for recurring revenue businesses are retention and churn rates.

At the same time, underestimating the impact of churn on a business can cost a company dearly. Consider the subscription wine business. So ideally, what should ROI be per customer? ARB shows the big picture over time of how recurring revenue efforts are performing.

How to Master the Recurring Revenue Model

But a CFO can also use it more granularly. For example, management can track recurring revenue generated from new sales versus renewals, or from upsell and cross-sell. Conversely, it can also apply ARB to monitor revenue losses from downgrades, churn, and so forth. Recurring revenue metrics are invaluable to a business and highly influential with investors and analysts.

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