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How to Focus Monthly Recurring Revenue to Ensure Success

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How to Focus Monthly Recurring Revenue to Ensure Success

April 07, 2016

  By Susan J. Campbell, TMCnet Contributing Editor

In every business, the most popular word is revenue. Without it, the business doesn’t exist. It has to be the focal point of every campaign as organizations strives to deliver a strong return on investment (ROI) and increase profit margins. In telecommunications, it helps to have a solid relationship with a master agent to ensure offerings are positioned for success.

To that end, telecommunications providers need to focus on monthly recurring revenue. According to this blog by master agent Telarus (News - Alert), monthly recurring revenue is an important focus as it is revenue that is likely to continue in the future. As a revenue stream, it is consistent, predictable and can even be counted on with a high degree of confidence in the future.

There are three main types of monthly recurring revenue, including new recurring revenue that comes as a result of new customer acquisitions. There’s also expansion monthly revenue that stems from up-selling and cross-selling. On the negative side, there’s churn, or revenue lost from customers who have left and gone to the competition.

Aside from customer churn, there are benefits to monthly recurring revenue. It makes it much easier to manage your budget as it’s more predictable. With more visibility into what’s coming in the next few quarters, business leaders can make better decisions in a shorter amount of time. Expenses are also better managed with a higher degree of accuracy with monthly recurring revenue. Plus, these models make it much easier to reach out to customers more frequently and contribute to the building of a more loyal customer base.

As you build a strong monthly recurring revenue model, it’s also important to build the elements within that model for sustainability. For instance, it’s important to expand on up-sell and cross-sell opportunities. To do so, listen to your customers. They are the best source of information when it comes to wants and desires in order to drive greater adoption. At the same time, focus on value so the customer doesn’t spend so much time examining net cost.

Finally, it always helps the bottom line when you can decrease churn. If customers are leaving, it’s important to know why and make adjustments where necessary. It’s not uncommon for customers to leave because they think the competition will care more about their business – so pay attention to them. Customers will also leave due to perceived value – so make sure you continue value-based conversations.

To truly survive in this intensely competitive market, you need to stay ahead of these issues and take a proactive approach to customer acquisition and retention. In doing so, you’ll protect your opportunity for long-term recurring monthly revenue.

Edited by Rory J. Thompson
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