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Why recurring revenue does matter in B2B SME?

While revenue recurrence might seem like a significant picture metric that impacts the business high-level, it's just as crucial to individual sales reps as it is for management.

Revenue recurrence is the most critical metric for financial growth. There are other important metrics like growth rate, retention, average sales price, and rep productivity. Still, the most critical parameter is the amount of monthly recurring revenue; customers are willing to put on their credit card or pay through an invoice.

1. Tracking Performance

How large are the deals that you're closing? Revenue recurrence allows salespeople to see the size of the accounts they manage. If you earn a commission based on the monthly recurring revenue you close, your take-home pay could be impacted depending on the proportion of high and low revenue recurrence customers you've sold.

Are you struggling to hit your revenue recurrence quota each month? Take a look at the deals with high revenue recurrence you've closed.

Are there any similarities between the clients that have purchased from you?

  • Was there anything you did throughout the sales cycle that positively impacted the sale?

  • Reflecting on these details will help you modify your sales approach for the opportunities in your pipeline. And hopefully, your analysis will result in you closing high-revenue recurrence deals.

2. Sales Forecasts

Just as reps can look at their performance, sales managers and leaders can look big picture and see how the team is doing as a whole.

By looking at the total revenue recurrence, they can make more accurate sales forecasts and projections. And this helps the sales team plan for growth in the short-term and long-term.

3. Budgeting

Without a steady income stream, it's challenging to run a successful business. revenue recurrence tells business leaders how much money is coming in each month that can be reinvested.

Will you be able to hire more business development representatives this month? Can you run that lead generation campaign? The amount of revenue you're bringing in is one of the deciding factors in these situations.

If you're struggling to make ends meet, you can also identify any trends in revenue recurrence over time that might indicate financial trouble.

But, if monthly recurring revenue is trending upwards, revenue recurrence can be a source of motivation for your sales team. As your sales reps build momentum and close high revenue recurrence deals, they'll be engaged in their roles and eager to close more.