The Significance of Avoiding Losses in Monthly Recurring Revenue

Here at Array Digital, we keep very detailed, meaningful KPIs (key performance indicators). In episode 200 of Journey to $100 Million, Erik explains a specific KPI that he was unhappy with after the second quarter of the 2019 business year.

Starting in the first quarter of 2019, we created a “change in MRR” (monthly recurring revenue) KPI. This KPI measures how much our MRR increased and decreased over the quarter. At the end of quarter one, we ended the quarter at about +$8,000 - which we were thrilled with! During the second quarter, we got a little more sophisticated and split this KPI into two pieces. We created “new MRR” (new work we had gained) and “loss of MRR” (work we lost). What we found was that in the second quarter there was a shocking loss of MRR.

We gained $25k in new MRR, but we lost $21k of MRR in the same quarter. So although we were up $4k, the amount of MRR lost was inexcusable. Every time we lose a client resulting in a loss of MRR, we call a lessons learned meeting and deconstruct what happened in order to avoid that particular mistake from ever happening again.

We never want to lose that amount of revenue ever again. So, for the third quarter of 2019, we set our KPI goal for “loss of MRR” to $10k. Erik is pushing really hard to keep these clients because our sales team is constantly bringing in new work and we want to make sure we are keeping that revenue!

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Erik J. Olson is an award-winning digital marketer & entrepreneur. The Founder & CEO of Array Digital, he is also the host of the Journey to $100 Million Flash Briefing and daily podcast, and the organizer of the Marketers Anonymous monthly meetups.

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Kevin Daisey is an award-winning digital marketer & entrepreneur. He started his first company when he was just 23, and is the Founder & CMO of Array Digital. Kevin is also the co-host of the Journey to $100 Million Flash Briefing and daily podcast, and the co-organizer of the Marketers Anonymous monthly meetups.