Dan Martell - How To Increase Your Monthly Recurring Revenue (MRR)

00:00:00.160 Hey there, I'm Dan Martell, serial entrepreneur, investor

00:00:02.160 and creator of SaaS Academy.

00:00:03.840 In this video, I'm gonna share with you some strategies

00:00:06.640 on increasing your monthly reoccurring revenue

00:00:09.840 so that you can have a huge impact on your ARR,

00:00:12.560 your annual reoccurring revenue.

00:00:14.080 And be sure to stay at the end where I share with you

00:00:16.160 how to get access to my precision scorecard methodology

00:00:19.920 so that you can get clear on your outcomes,

00:00:22.560 measure those backwards and have your team accountable

00:00:25.880 for the right metrics to grow your business.

00:00:30.000 So maybe you're frustrated because you're like,

00:00:43.020 I just need to grow my monthly reoccurring revenue.

00:00:45.680 My MRR is not growing.

00:00:47.080 It's flat.

00:00:47.980 And you want strategies to make this happen.

00:00:50.300 Now, I coach dozens of incredible founders.

00:00:52.800 And one of the first things that I do with them

00:00:54.860 to really have an impact on their business

00:00:57.380 is to tweak these changes to their pricing

00:01:00.880 and then their product.

00:01:01.720 Many founders, when they start off,

00:01:03.980 they're just small and they're getting going

00:01:05.660 and they've got like features and they get a customer

00:01:07.920 and then 10 customers and 100

00:01:09.120 and they're just so friggin pumped that they've got customers

00:01:11.660 that they never revisit how their plans are structured 0.66

00:01:14.700 or their pricing or anything to ask themselves,

00:01:17.960 you know, I've obviously created more value

00:01:20.740 for my customers since we started,

00:01:22.440 but nothing's changed when it comes to the pricing

00:01:24.940 or the structure of the way that people enroll.

00:01:27.640 We probably have new customers that are 100 times bigger,

00:01:31.180 and we haven't done anything.

00:01:32.240 And what I want to share with you guys in this video

00:01:34.320 is the six areas that you could be looking at in your business

00:01:37.820 to increase your MRR.

00:01:40.120 Number one, raise prices. 0.91

00:01:42.520 Now, I know this sounds so friggin' flippant.

00:01:44.520 You're like, duh, Dan, I could raise my prices. 0.92

00:01:46.600 I know that.

00:01:47.560 The truth is, is have you done it?

00:01:49.160 Have you gone through a price increase?

00:01:50.940 You know, recently I was coaching one of my clients,

00:01:53.000 and they were charging $6 a month for a tool

00:01:56.840 that literally ran their customer's business.

00:02:00.240 And I asked them, why have you ever changed your pricing?

00:02:03.440 And they were worried that they would lose

00:02:05.340 a bunch of customers.

00:02:06.180 But if you just think about it, it's pure economics.

00:02:08.640 If I take my pricing and I potentially change it,

00:02:11.920 and this is really simple, you just look at the market,

00:02:14.060 you know, what's a competitive set look like?

00:02:15.560 You're at six bucks, you know, you can go to 25

00:02:17.800 and it's not a crazy number, but you 4X the pricing.

00:02:21.700 Let's just say, worst case, you lose, maybe,

00:02:25.100 in my experience, not as much.

00:02:26.880 You lose 10 to 15% of your customers.

00:02:28.940 You've gone up 4X and you've only lost

00:02:32.240 10 to 15% of your customers.

00:02:33.620 So net, net, you are way further ahead.

00:02:36.380 And the main reason is you need to do this

00:02:38.220 is so that you can invest in innovation.

00:02:40.280 You can invest in your team.

00:02:41.780 You can actually build a lifestyle

00:02:43.960 that supports the business so that you don't want

00:02:45.700 to just sell it every six months

00:02:47.200 because you're just not having a good time.

00:02:48.700 So number one, make sure you raise your prices. 0.62

00:02:51.260 Number two, ditch the free plan.

00:02:53.620 Many founders start off by offering free because they just

00:02:57.060 want anybody, anybody, please use my product.

00:03:00.400 So they make it really easy.

00:03:01.700 There's no friction, you can just sign up,

00:03:03.080 you can use it, it's for free.

00:03:04.380 The challenge is they don't set any limits, any trial extent,

00:03:08.280 like any cut-offs to that free plan so that people just keep

00:03:12.520 using it and using it and they're using server resources

00:03:15.460 or they're hitting up support.

00:03:17.680 And yes, you could argue that this is a marketing thing but I'm

00:03:20.520 going to tell you, most of the founders that I coach are

00:03:22.960 bootstrapped founders and at the end of the day, they're

00:03:25.400 investing personally their time in support, OK?

00:03:28.560 They're answering their 1-800 number,

00:03:30.320 going right to their cell phone.

00:03:32.060 And I don't know about you, but if I've got people that are

00:03:34.940 asking me for my support, I want to know that we're aligned.

00:03:37.760 And the best way to do that is get rid of the free plan,

00:03:40.640 go straight to a paid, maybe do a free trial,

00:03:42.700 no credit card on file if you want.

00:03:44.220 I prefer a credit card on file.

00:03:46.020 And then that way, you know that when you're serving your

00:03:48.540 customer and you're activating your work,

00:03:49.880 making sure they get the most of their trial,

00:03:51.840 that there's a high likelihood

00:03:53.360 they'll become a paying customer.

00:03:55.460 Number three, unbundle the features.

00:03:58.780 There's a very good chance that you kept adding

00:04:01.220 and stacking and stacking and people ask for new requests

00:04:03.960 and you just kept adding new features.

00:04:05.860 That right now when you look at your plans,

00:04:09.060 for the most part, it could be,

00:04:10.300 I've seen this happen very often,

00:04:11.900 that it's just one plan with a bunch of stuff.

00:04:14.380 You need to look at unbundling them

00:04:16.500 and really asking yourself,

00:04:18.040 What does a customer at this stage of this size,

00:04:21.620 of this industry, you know, look like?

00:04:24.220 And what do they need to be successful without, you know,

00:04:27.020 giving them too much?

00:04:28.020 And what does the next stage look like?

00:04:29.880 So just by unbundling, it's gonna have a huge impact

00:04:34.560 in your business.

00:04:35.400 And the cool part is you could even look at adding add-ons.

00:04:40.300 So taking something, for example, like a QuickBooks Sync

00:04:43.240 or maybe some kind of like other integration that's native,

00:04:46.260 Not a Zapier connection but something native to your

00:04:48.600 solution and having that as an add-on so that you can get an

00:04:51.900 extra $20 a month per customer that needs that but know that,

00:04:55.340 hey, that's probably an enterprise customer so you can

00:04:58.500 price it accordingly but if somebody's at the lower end and

00:05:01.140 they really want it even though they don't need as many seats,

00:05:03.580 they can have the lower end plan but have that add-on.

00:05:05.940 So unbundling features are a great opportunity to increase

00:05:08.980 your monthly reoccurring revenue.

00:05:10.760 Number four, removing unlimited features.

00:05:14.160 This is probably the biggest bane to revenue opportunity to

00:05:19.560 most startup founders is having a value driver, some kind of,

00:05:26.400 you know, it could be the number of accounts.

00:05:28.240 One of my clients recently moved from a all-you-could-eat

00:05:32.440 unlimited accounts underneath their different plans to a per

00:05:35.520 seat pricing.

00:05:36.280 The reason why is when they went to the market and did the

00:05:39.420 research, they hired an incredible company to come in

00:05:42.480 and do that research.

00:05:43.360 They found that they would prefer to buy under that

00:05:46.320 mechanism because it allows it to be more predictable in

00:05:48.740 regards to their cost structure.

00:05:50.260 So even though they were trying to be this like altruistic,

00:05:53.500 hey, there's three different plans and we're not going to

00:05:55.640 ever restrict you on a specific number of accounts that you have

00:06:00.240 on our products, we just want you to be successful.

00:06:01.780 It was actually against what the customers,

00:06:04.120 how they expected to buy that kind of solution.

00:06:07.020 So actually removing unlimited and making it structured so

00:06:11.280 There's a number of accounts per different plan.

00:06:14.680 This is, I mean, I've seen this with companies like Wistia,

00:06:17.820 with the number of videos.

00:06:20.520 You can do it on other data points.

00:06:22.860 It's really whatever, when you look at your customer's usage,

00:06:25.660 okay, amongst all your customers,

00:06:27.600 there's probably really clear breakdowns where somebody

00:06:30.460 transitions from this level activity to the next tier of

00:06:34.780 activity and that's where you want to start adding some

00:06:37.700 constraints in the upper end of their usage that kind of forces

00:06:40.980 them into the next plan that you might offer.

00:06:43.940 So make sure that you remove unlimited features if that makes

00:06:46.720 sense.

00:06:47.420 Number five, move up market.

00:06:49.960 It is very rare that I've seen companies that start at the

00:06:53.700 enterprise level move to mid-market or even less rare that

00:06:58.100 somebody's at a mid-market level and moves down to SMB.

00:07:01.360 What typically happens is when a product starts your start at the

00:07:04.640 SMB, the small medium business level because you don't have the

00:07:07.400 feature set to really serve a mid-market customers.

00:07:09.880 but over the years, over a two, three, four,

00:07:12.220 five-year period, you'll probably get some of these

00:07:15.160 medium-sized companies come into your product

00:07:17.280 and ask you for some features and you build them

00:07:19.960 and then all of a sudden you realize that,

00:07:21.260 hey, maybe five to 10% of our customer base

00:07:23.660 are actually mid-market customers,

00:07:25.500 but yet all of your marketing, all of your packaging,

00:07:27.860 all of your plans and your support

00:07:29.860 is really still just selling and serving

00:07:32.040 to an SMB customers, moving up market,

00:07:35.040 making a deliberate decision to say,

00:07:37.840 you know what, we're gonna kind of like, not get rid of,

00:07:41.880 but just kind of hide the smaller plan,

00:07:44.320 move more to mid-market, change our marketing,

00:07:46.920 change our positioning, change our pricing structure,

00:07:49.860 change our sales and our essentially our go-to-market

00:07:52.960 strategy for that mid-market customer.

00:07:55.360 Maybe start building an outbound sales team

00:07:57.660 to target those key accounts that we want.

00:07:59.800 That's how you move up market.

00:08:01.960 And what's great about it is the larger the customer,

00:08:04.300 the churn number comes down,

00:08:06.040 the annual contract value for an account goes up

00:08:11.080 and your MRR goes through the roof.

00:08:13.020 So just moving up market is such a natural way.

00:08:16.260 If you've been in the market for three to five years,

00:08:19.320 you've probably already got those customers and just waiting

00:08:21.720 for you to move up and start adding and focusing

00:08:25.160 on them as a segment.

00:08:26.960 Number six, maximize upselling.

00:08:30.140 So I call this farming.

00:08:31.500 There are so many opportunities in your product for you to look

00:08:35.240 at activities that happen from an account point of view

00:08:38.640 and offer expansion revenue opportunity,

00:08:41.520 meaning that there's some feature that they might hit a limit

00:08:44.620 or they're on their way to hitting a limit

00:08:46.020 and then you could be like, hey, Joanne,

00:08:47.980 I noticed that you guys have already used four

00:08:50.080 out of your five accounts.

00:08:51.860 Let me know if you want to discuss about moving

00:08:53.800 to our next plan because all of a sudden

00:08:55.300 the per account pricing gets cheaper

00:08:56.860 and you also get these extra benefits.

00:08:58.500 So actually getting really good at notifications for you,

00:09:02.200 for your customer success team

00:09:03.740 to identify opportunities for upselling,

00:09:06.380 other add-ons, other plans to your existing customers

00:09:09.420 is a really low-hanging fruit for anybody

00:09:12.680 to expand their monthly reoccurring revenue

00:09:14.720 by just offering it.

00:09:15.820 Most people don't even know they've come up

00:09:18.820 or they might be hitting these new levels,

00:09:20.860 and they just need somebody to talk to.

00:09:22.700 And you can be that person.

00:09:23.700 You just gotta reach out, chat with them,

00:09:25.760 and get them excited about that next level of support,

00:09:28.340 next level of implementation,

00:09:30.360 of value that you're gonna unlock in your product

00:09:33.740 and those integrations, those add-ons and get them on board.

00:09:36.340 But you need to learn how to maximize your upselling.

00:09:38.920 So six simple tweaks you can make to really increase your MRR.

00:09:43.080 Number one, raise prices.

00:09:44.920 This is a no-brainer.

00:09:45.920 You've added more value.

00:09:47.320 You should be capturing more value in your pricing structure.

00:09:50.860 Two, ditch the free plan.

00:09:52.960 Get people that want your support that are going to use your

00:09:55.500 product to pay you for it.

00:09:56.860 They're going to value it more.

00:09:58.260 Three, unbundle the features.

00:10:00.800 There are things that you're offering that should definitely

00:10:03.460 be standalone, potentially as an add-on that people could buy

00:10:07.060 on another monthly basis.

00:10:08.640 Number four, remove unlimited features.

00:10:11.560 There is a value pricing axis that should be understood and

00:10:15.780 your unlimited features is holding you back from allowing

00:10:18.700 customers to move up the value chain in your plans.

00:10:21.820 Number five, move up market.

00:10:24.340 When you started, you were probably serving an SMB

00:10:26.720 customer or mid-market.

00:10:27.780 It is time to move up market to capture higher annual contract

00:10:31.820 values, have lower churn, and overall allow for increased

00:10:35.860 expansion revenue.

00:10:36.760 And number six, maximize your upselling.

00:10:39.400 Become great at identifying those opportunities that customers

00:10:42.860 would naturally want to have a conversation about moving to the

00:10:45.900 next level of service with your product.

00:10:48.640 As I mentioned in this video, I want to share with you an

00:10:50.640 exclusive resource called the Precision Scorecard.

00:10:53.800 It's a framework I created to allow my clients to get clear on

00:10:57.280 not only their targets but their actuals on a monthly and a

00:11:00.780 weekly basis and in it, you can click the link below to

00:11:03.920 download your copy, I provide the metrics for below a million

00:11:08.620 in ARR and above a million so that you can just map those to

00:11:13.060 the funnel structure that I offer in that format to get

00:11:16.560 clear to hold your team accountable for the specific

00:11:20.200 numbers that they should be hitting on a weekly basis that's

00:11:22.700 gonna map up to their monthly targets and eventually hit your

00:11:25.980 quarterly goals.

00:11:27.440 You can click the link below to download your precision

00:11:29.440 scorecard and if you like this video, smash that like button.

00:11:33.420 Be sure to subscribe to my channel and if there's anybody

00:11:35.720 you care about that you feel I could serve, feel free to share

00:11:37.920 this video with them.

00:11:39.380 As per usual, I want to challenge you to live a bigger

00:11:41.120 life and a bigger business and I'll see you next Monday.

00:11:44.160 Is the money shot state of the end?

00:11:47.560 Dun, dun, dun, dun, dun, dun.

Dan Martell - January 14, 2019

How To Increase Your Monthly Recurring Revenue (MRR)

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