How to Align Marketing & Net Revenue Retention (NRR) Strategies To Increase The Profit Of Your SaaS Company

Everyone in the market knows that subscription-based businesses are increasing day by day. The market saturation level is already high and entrepreneurs have to think twice before they make entry into the market. Now that the companies are many and competition is fierce, it has become difficult to maintain the brand recall value.

A decrease in brand recall value directly affects customer retention and net revenue retention. However, marketing is one of the most effective tools that can help you maintain not only the brand recall value but also the brand awareness so that the net revenue can be retained.

In this article, we are going to help you in aligning the marketing strategy with Net Revenue Retention (NRR) strategy so that your SaaS subscription business always remain profitable. You will also find a discussion on some important metrics you need to monitor through your SaaS subscription management software to improve your NRR strategy along with the marketing strategy.

Also Read: Scale Your SaaS Business Growth With Service-Based Revenue

Customer Acquisition & Customer Retention

Customer acquisition is obviously very important for every SaaS business but customer retention is even more important.

If the customer retention rate is low, then it is just like having a torn shopping bag in which you try to add fruits but evidently they fall from the hole.

If you succeed in retaining your already acquired customers, it will boost the confidence of your incoming customers and leads. This way, customer retention fuels your revenue retention efforts. When subscription businesses compete, they need to compare and learn all aspects of the business of the competitor. For instance, Netflix’s customer retention is 74 percent, however, Hulu which is competing with Netflix observed a retention rate of 67 percent.

Coming towards the role of marketing strategy in acquiring and retaining customers, it should be designed in a way that your SaaS subscription customers not only get on board but pursue a journey of at least a decade with you.

Marketing can lure customers to subscribe to the SaaS services, but how can it help in keeping the customer on board? Marketing is a continuous process. It does not end with customer acquisition rather the next target of the marketing strategy is to engage the customer in a way that he would stay on board. So, the targets of marketing strategy change at every stage. From customer acquisition to customer retention, the marketing team’s focus shifts from increasing the customer base to revenue retention which is not possible without retaining customers.

Also Read: Collaborations And Partnerships—A Winning Formula For Your Subscription Business

Upselling & Cross-selling

Upselling and cross-selling is the need of the SaaS products and services providers. SaaS products need to be updated with time so that new and advanced technologies can be incorporated. Also, the cross-sell and upsell play role in retaining customers.

Just imagine that a big enterprise is the customer of your SaaS product and it decides to cancel the subscriptions of your SaaS product, your sales team will probably not be able to compensate for this by onboarding new customers because it takes time to turn a new customer into a loyal customer.

Upselling means you offer the newer version and additional features for the same SaaS product that can enhance the functionality of the existing SaaS product. However, in cross-selling, you try to sell other products to the same customer because they can improve the growth of his business. Upselling and cross-selling of the SaaS product are the best ways to satisfy customers and retain your revenue.

But how would the customer know that you offer the new version of the SaaS product or you have something more to offer that can boost the performance of the SaaS product that the customer is already using? Here comes the marketing strategy.

To market the additional products and recent versions of your SaaS product is one of the stages of the marketing strategy. Marketing resources need to market the related SaaS product in a way that the customer knows the exact worth of these add-ons.

Also Read: Exploring The Modern B2B Marketing Trends To Unleash The Potential Of Your Subscription Business In 2021-2022

Attracting Investors

SaaS companies need investors. And investors invest with a business that is already meeting its revenue targets which is impossible without net revenue retention. Investors also invest where there is the margin to earn a Return On Investment (ROI). So, if you are hunting investors to expand your SaaS subscription business, then you need to focus on revenue operations (RevOps) so as to achieve revenue targets.

Experts propose a formula to calculate NRR. You will have to subtract not only the churn but also the SaaS business expenses from the total revenue to find NRR.

If your NRR value comes out to be satisfactory, there will not be issues in finding and signing the deal with investors.

Nonetheless, investors are not the next-door neighbours rather sales and marketing teams devise plans to find reliable investors.

The marketing team not just formulate a plan to hunt investors but they know effective means of communication with the investors. Some of the prerequisites to attract investors include effective networking, active projection of results, and pitching ROI etc.

Monitor Metrics through Subscription Management Tools

There are certain metrics that if you monitor, chances are high that you can retain net revenue. The most important ones are the Annual Recurring Revenue (ARR) and Monthly Recurring Revenue (MRR). Subscription management tools like SubscriptionFlow allow users to track the performance of MRR and ARR. You can set monthly and yearly revenue targets. Revenue generation is dependent on churn and customer acquisition. Customer satisfaction can reduce churn and an effective marketing strategy can bring more leads and customers. In the end, MRR and ARR targets will be achieved. Relevant reports on the performance of these metrics contribute to performing revenue operations and achieving revenue targets.

Also Read: Did Your 2021 Churn Prevention Strategy Produce Results? This Is The Right Time To Plan A New One

In conclusion, you can only expect Net Revenue Retention (NRR) when your sales and marketing executives focus on customer engagement for both the new and existing customers. The factors that are crucial regarding NRR have been discussed in this blog. Follow this article to align your marketing strategy with the Net Revenue Retention strategy to maintain the profit. If you still need help or if your subscription business strategies are not helping in achieving revenue targets, then SubscriptionFlow experts are available whom you can call any time.