Microlending is the process of granting small loans to individuals and businesses.

The lending process, in general, involves a lengthy and sophisticated underwriting process. The lender needs to verify whether the borrower can repay the loan within the given timeframe. However, this process can often disqualify people in dire need of money.

In contrast, microlending allows people to get loans without lengthy checks.

Here’s an example.

Say, a small store owner lost a part of his business because of a storm and needs some cash to get the repairs done. They do not have access to loan services provided by their bank. The cost for repairs could be something like $500.

So, the business owner signs up with the local organization that will find them the right lender. The organization will match the lender and borrower and lay out the terms of the microloan. If they agree, the lender pays the organization that forwards the amount to the local business owner.

Once the business owner gets his store up and running, he can then pay back the lender according to the agreed terms.

Often, instead of local organizations, financial institutions can provide microloans directly.

Let’s take a closer look at how microlending works.

In this article:

How does microlending work?
How is microlending different from P2P lending?
What are the advantages of microlending?
How to improve microlending processes

How does microlending work?

Microlending grew in developing countries like India and Bangladesh, where small rural banks were established to fund local businesses. Often these banks provided funds to local women to encourage them to start their businesses.

In the US, the concept of microloans grew with the onset of the recession and inflation. With the increased tightening of the credit market, the need for smaller loans also increased.

Recently, microlending has increased with the introduction of P2P lending platforms. These platforms match lenders and borrowers based on their unique requirements and help process the loans. While microlending seems like small business loans, the users using it and what they aim to achieve are different from loans offered by financial institutions.

For instance, microlending focuses on the development of the borrower.

While microloans can be used for personal purposes, most lenders give out microloans as investments. The aim is to help entrepreneurs from rural and poverty-struck areas gain access to financial products. Investors can help these people start or expand their businesses and share the profits accordingly.

The process

Modern microlending takes place over online platforms. Here, investors can search for a borrower in need. The investor can be an individual, a non-profit organization, or even a large commercial bank.

  • An investor looks for ideas that they can invest in.
  • The investor can lend out money, sometimes as low as $25 using wire transfers, PayPal, or even credit cards.
  • The online platform aggregates funds from different investors and forwards them to the borrowers.

Over time, the borrower pays back the loan with interest. Sometimes, the loans can be without interest as well.

How much can one borrow via microlending?

“Micro” is a relative term. According to the U.S. Small Business Administration (SBA), anything below $50,000 is a microloan. The average microloan value in the US is $13,000.

However, in other parts of the world, microloans can go as low as $25. In India, the value of microloans ranges from Rs.20,000 to Rs.30,000.

You’ll be surprised to know that loans in the range of Rs.30,000 to Rs.40,000 rose by 56% between Q3 FY18 and Q3 FY19. This has been accelerated with the introduction of formal and semi-formal microfinance institutions.

Earlier, we mentioned that microlending has increased with the introduction of P2P lending platforms. While the two schemes share some common aspects, they differ in many ways. Let’s look at it.

Difference between microlending and P2P lending

Peer-to-peer lending or P2P lending is an offshoot of microlending. Microloans can be granted by individuals to other individuals and businesses. P2P does the same but through an intermediate platform.

 MicrolendingP2P lending
DefinitionMicrolending, also known as microcredit, is a process of granting small loans to business owners that do not have access to financial products. In P2P lending, borrowers can request a loan from another individual without the need for any intermediary financial institutions.
SecurityMicrofinance institutions that serve marginalized, insecure communities face risks to their staff, clients, and assets. Similarly, consumers can become a victim of ghost loan frauds, where companies create false loan agreements, collect cash disbursements from banks and never give them to the intended customer.The P2P lending platform acts as a security measure, ensuring that the money is delivered to the right person and is repaid on time. These platforms provide multiple fund transfer tools and come with alternative credit checking tools, allowing lenders to verify if the borrower can repay the loan or not.
Loan managementMost microloans are unstructured.It allows lenders to manage their loans in a more structured manner.
ProfitabilityMore profitable.Less profitable. P2P lending platforms charge an operational cost. Often, lenders incur this cost. But to make up for this cost, lenders generally increase the interest on the loans. Since multiple lenders use the same platform, they tend to keep the interest rates competitive, which are often below 10%. Therefore, borrowers must pay a higher interest rate, while lenders make less profit from the loans.

Nonetheless, microlending has been a boon for small business owners, especially in tier two and tier three cities.

In the next section, we’ll look at the advantages of microlending.

The advantages of microlending

Access to credit enables entrepreneurs and small businesses to improve their earnings and quality of life. While microlending can be a great investment option for lenders, it can also give borrowers access to the credit they truly need. The key advantages include:

Accessibility

Investors can help local or global businesses through microloans. All the funds are managed through a centralized platform, simplifying cross-border.

For small business owners, microloans are a great way to access credit without having any credit history or a bad credit score. Often the businesses must pay a high-interest rate because of the associated risks, but reliable borrowers are rewarded accordingly.

Some microlenders are taking a step further to help small businesses. An example of this is New York-based Grameen America.

Grameen America focuses on providing female entrepreneurs small loans along with financial training. They enable women living below the poverty line to learn about savings, loans, and credit building. They also report the repayments to Experian with a simple goal. To enable their clients to build up a better credit score and get qualified for more loans.

Faster loan disbursal

Microloans can be processed within minutes. Since there is no sophisticated underwriting process involved, it is possible to disburse loans faster. In case of emergencies, microloans are a suitable option.

For example, Capital Float, a Bengaluru-based microfinance company, offers collateral-free loans from ₹3 lac to 1 crore to Indian e-commerce merchants and startups. Loans get disbursed within 3 days.

Powered by latest technologies

With the increasing adoption of fintech, microloans are becoming much more accessible. Lenders can create a diverse investment portfolio by giving small loans to multiple businesses. Managing loans are also easy as it happens through a single managed platform. Online P2P lending platforms also make cross-border lending easy.

Microlending helps reduce poverty

Another advantage of microlending is that it helps reduce poverty. This advantage is perceived more at a social level than at the individual level.

Mohammad Yunus, a Bangladeshi economist, started the process of giving out small loans via a rural microfinance institution in Bangladesh. In developing countries such as Pakistan, microfinancing has helped reduce poverty.

In the next section, we’ll discuss how new-age lending platforms like CRM software can improve the microlending processes.

How to improve microlending processes

“Microfinance is a very manpower-intensive business. But, through digitization, if you’ve made your processes right—customer onboarding, customer geotagging, and digital payments—you’re less likely to get impacted by political and environmental disruptions.”

Purvi Bhavsar, MD and Co-Founder, Pahal Financial Services

Faster loan disbursal at scale can give your micro-lending institution a competitive advantage. But for this, you’ll need to improve your underlying processes.

Just like any customer-facing business, microlending processes–from loan origination to collection–can be improved using CRM software.

Let’s see how.

1. Add flexibility to the lending process

Often borrowers have specific requirements. Having a one-size-fits-all policy shuts out people who need money. By making the lending and borrowing process more flexible, you support accessibility. Flexible interest rates and repayment policies, in turn, enable the borrower to pay back the loan.

For example, Kiva, a San Francisco-based non-profit organization, provides loans starting from $25. All loans up to $15,000 are without interest. Kiva uses the crowdfunding architecture to enable microfinancing. Kiva does not look at any credit scoring but has a list of criteria that the borrower must meet to get the loans.

2. Finance wisely

With a CRM solution, you have data on who borrowed money from you before, who paid back, and who defaulted. This allows you to understand the persona of creditworthy borrowers. Thus, you get insights into the type of business you should invest in and ones that have high risks associated with them.

3. Automate underwriting

Depending on the complexity of your underwriting process, you can automate the whole or a part of it.

Recently, we asked professionals from the microfinance sector about the level of automation in their underwriting processes. 55% have partially automated, and 36% have fully automated their underwriting processes.

Poll - Have you automated your credit underwriting process

Lending CRM can help you automate your underwriting workflow and increase the speed of loan disbursal.

For instance, LeadSquared’s Lending CRM allows you to create automated workflows to run rejection filters, check credibility, and send the application to underwriters for final approval.

lending-CRM complete loan disbursal lifecycle

4. Personalize your offerings

Lending CRM helps you segment customers basis location, type of product interested in, etc. You can use this segmentation to send personalized communication.

For instance, in India, women entrepreneurs in Gujrat who want to get into dairy farming need Rs. 30,000 to get started. But local financial institutions do not offer more than Rs. 10,000. This restriction forces them to seek credit elsewhere, often at a much higher interest rate.

By bucketing them based on their requirements, you can enable more businesses and get better returns on your investments. You can even bundle multiple financial products and offer guides, training, and other relevant resources to customer segments. It will ensure your clients perform their best at their businesses.

For example, CDC Small Business Finance, a San Diego-based SBA lender, offers loans for small businesses with 12 hours of complimentary advising for long-term success. It is helpful for companies that cannot get funding from banks or other financial institutions. Loans are offered at an interest rate of 8 to 10% for three to five years.

5. Get a holistic view of your investments

CRMs allow you to have a bird’s-eye view of your business. You can use the dashboard to understand your returns on different investments. You can see which borrower is paying back on time and who are defaulting. This info can help you change your lending strategy or adjust your repayment policies.

Collections CRM - collections funnel

So, we have seen how simple tools like CRM can improve your lending processes. If you’re looking for one such solution, check out LeadSquared.

LeadSquared enables several lending and microfinance institutions like Capital Float, Lendingkart, InCred, Uni Cards, etc. to automate their lending processes. Book a demo to learn more about LeadSquared’s Lending CRM.

The top three marketing goals for healthcare organizations are: (1) increase patient volume, (2) build brand awareness, and (3) improve patient loyalty.

Achieving these goals will require taking a wide-ranging approach to crafting a digital healthcare marketing plan.

In this lengthy article, you’ll find 20 ideas to up your marketing game. Out of respect for your time here and now, it doesn’t dig deep into each one. But if you’re wondering if important elements are missing from your digital marketing strategy and looking to expand your plan, you’re on the right page.

Create patient personas and map your content to their journeys

The process of developing effective marketing content begins with understanding who you’re communicating with and how you can help them meet their needs.

Who are your ideal patients? What are their concerns throughout their journey with your practice?

Organizations need to understand the attitudes, values and preferences driving consumers’ decisions about their healthcare.

Source: Huron 2021 Healthcare Executive Researc

The answers should be documented in a series of patient personas you carefully develop to represent segments of best-fit patients. ReferralMD offers the following tips for creating patient personas:

  • Begin with actual patients you have.
  • Research their pain points, health attitudes, income levels, occupations, methods of payment, and age 
  • Access their characteristics, needs, motivations, and environment.

After documenting a persona, your next task is to map the patient’s journey. Doing so should give you insights into how you can tailor messages to best address their needs and optimize the user experience across all touchpoints.

Of course, you can’t pre-build optimized experiences for every individual. Try to make your process for creating personas and mapping messaging to the patient journey as efficient as possible by analyzing data to identify your highest volume journeys.

Maintain a helpful website

Your website is the hub for your digital marketing. Assume prospective new patients will spend time on it and optimize it to ensure they have a great experience with your online HQ.

Your website’s content, layout, and navigation are your top priorities. And, of course, your website must shine on mobile devices. Visitors should be able to find the information they seek within a few clicks.

Remember, your organization’s site must comply with all facets of the Health Insurance Portability and Accountability Act (HIPAA).

Offer chat

Patients clearly want to communicate with their healthcare providers online. The U.S chatbot market for healthcare is expected to expand enormously by 2025.

While you can’t take phone calls 24×7, you can answer the basic questions the majority of new patients will ask around the clock with a chatbot. Chatbots not only meet the needs of patients but can give your operation an immense productivity boost.

Chatbots can also be used to book appointments. (Image source

When a patient searches for a local healthcare provider via Google, they are instantly presented with the top three Google Business Profiles (formerly Google My Business) that match their search criteria. Although a “More places” link expands the results to include many additional practices, it’s obviously beneficial to land a top spot.

To appear in the local top three, you need to optimize your Google Business Profile (GPB) with accurate and comprehensive information regarding your services, build a portfolio of 5-star patient reviews, and take advantage of the many options GPBs offer such as adding photos and Google posts.

Google offers a helpful page with advice about how to optimize your Business Profile.

Drive traffic with pay-per-click

As valuable as SEO is, the competition is immense and few businesses enjoy fast results. The solution? Buy top spots on search results pages by investing in pay-per-click (PPC) advertising. 

PPC (pay-per-click) ads on Google and Bing can be precisely targeted to reach the people who are a fit for your practice and setup to serve specific geographies. Consider the following strategies for your PPC purchases:

  1. Run brand-specific ads.
This ad appeared atop the page when I searched for “Two Chairs.”
  • Run ads based on your specialty and location.
This ad appeared atop the page when I searched for “psychiatrists in Oakland.”

Generate engagement with sponsored social media ads

Recent data from Statista reveals more than 80% of U.S. adults use at least one social media site. It follows that running ads and/or sponsored posts on popular social sites is a potentially great way to build awareness, connect with prospects, generate leads, and grow your practice. Establish your ideal personas and objectives and create campaigns accordingly.

  • Here are 10 useful tips from marketing experts and practitioners for succeeding with Facebook ads.  
  • Here’s a good overview for doing the same via Instagram—with examples.
  • Here’s a helpful primer for getting started with YouTube advertising for your practice.

Connect with your community on social media

Whether your goal is to create brand awareness, drive engagement, generate calls or visits, or all of the above, developing rapport with the community on social media must now be a priority.

According to this in-depth post from Sprout Social, a healthcare practice should use social media in efforts to:

  • Educate the public
  • Help patients feel more comfortable
  • Make yourself a staple in the community
  • Help navigate the way through healthcare crises

Sprout Social also offers a strong list of ideas to inspire your social media posts:

  • Educational content for patients
  • Harness the power of health-related hashtags
  • Insights from “behind-the-scenes”
  • Patient shout-outs to spread positivity
 
 
 
 
 
View this post on Instagram
 
 
 
 
 
 
 
 
 
 
 

A post shared by Form Health (@formhealthofficial)

Form Health often populates their Instagram feed with educational content or events that deliver it. Note their use of #hastags which could increase views.

Engage patients with text and messaging

In a noisy world of media coming at patients from every direction, text messages have become the medium most likely to be seen. Text is now a perfect way to communicate with potential new and existing patients.

Communicate to patients why they’ll want to receive useful information via text and they’ll probably be happy to share their mobile phone numbers. Use text to alert your patients to time-sensitive information, reminders, and more.  


Messaging apps are also a good way to create lists for specific communities and maintain engagement. For example, you could create WhatsApp or Facebook Messenger groups and deliver tips and updates regarding nutrition (or any topic).

Capture contact information with lead magnets

It’s not as easy as it once was to get prospects to volunteer to subscribe to email lists.

Lead magnets present a chance to succeed. The goal is to offer something useful in exchange for contact information. Your offer, or “lead magnet,” might be a free consultation, a special offer, an invitation to an event or workshop, timely research, inclusion in a patient group of some sort, or valuable reading material covering relevant health issues.

Send useful email

Email marketing is a cost-effective way to maintain communication, deliver important information, automate appointment reminders, and engage patients.

Your email marketing might include newsletters, welcome emails, webinar invitations, birthday wishes, season’s greetings, and opportunities to connect via other channels. Marketing automation makes it easy to segment email lists and send personalized, relevant, and timely email.

Publish and share relevant healthcare content

The key to executing nearly every strategy in this lengthy list lies in publishing and sharing content. An informative article from Sprout Social cites a growing phenomenon of self-diagnosis—thanks to “Dr. Google,” which suggests the need for healthcare practices to educate the public. Here are a number of suggestions from the article cited above:

  • Publish educational content to keep patients in the loop.
  • Use inspirational content to motivate followers.
  • Post infographics for increased engagement.
  • Publish patient shout-outs to spread positivity.

While you’ll share content with patients via all your digital marketing channels, the most important foundation for your healthcare content is your blog—an asset that will reside on your website—giving you complete control over what is published. Your blog will enable you to:

  • Address frequently asked questions and dispel myths.
  • Showcase your practice’s expertise and experience with treatments and outcomes.
  • Nurture potential and existing patients over time. Blogs posts can be showcased in the form of a monthly e-newsletter, posted on social media channels, and even distributed with paid ads.
  • Demonstrate to search engines what your medical practice website is about and make it easier for them to serve it to the right people when they need it.

Publish landing pages

Once you have a website that delivers a great user experience and offers great content, you’ll want to create new landing pages on your website. Landing pages are most effective when they serve as the destination—on your site—from a click you’ve earned from an outside source. They generally focus on a specific service and have a singular objective expressed in a call to action designed to move patients to the next stage of their journey.

Two excellent ideas for landing pages come from a post by High Level Marketing:

  • Individual medical service landing pages
    Do you offer multiple services you hope to continuously drive demand for? Build individual service pages with useful content about the service.
  • Local healthcare market pages
    You may also offer services to several communities. You can generate better search rankings and make local connections by creating individual local pages on your website. 

Offer social proof

In his landmark 1984 book, Influence: The Psychology of Persuasion, Dr. Robert Cialdini, claimed “social proof” was one of the six key principles of persuasion. Briefly defined, social proof is the influence the actions and attitudes of other people have on our own behavior.

In the age of all things digital, the principle has become all-important as a factor for influencing the choices healthcare consumers make. In fact, it’s become a linchpin for what practices often call “reputation management.” Instead of relying on recommendations directly from friends and family, prospective patients now look for ratings and read digital reviews and testimonials.

72% of patients use online reviews as their first step in finding a new physician. The data above shows over 75% of them come from Google reviews, Healthgrades, and Yelp.

  • Claim all your listings.
    Claim your Google My Business and stay up-to-date on any review activity on the influential platforms.
  • Ask for reviews.
    Don’t assume patients will write reviews. Ask for them immediately following an appointment and make the process easy.
  • Survey your patients.
    Send satisfaction surveys to patients after they visit or engage with your practice.  
  • Respond.
    Designate a person who will monitor reviews and respond to feedback with genuine concern.

Offer patient portals and mobile apps

It’s clearly time to offer healthcare consumers more convenient—often, self-serve— solutions. And it’s no secret that technologies including patient portals and mobile apps can be bona fide patient-pleasers.

“Engaging patients in the delivery of health care has the potential to improve health outcomes and patient satisfaction. Patient portals may enhance patient engagement by enabling patients to access their electronic medical records (EMRs) and facilitating secure patient-provider communication.”

Source: National Library of Medicine
  • Personalize the experience by building portals and apps that give patients direct access to their medical information.
  • Display treatment-specific content.
  • Recommend certain services or appointments.
  • Give patients direct access to communicate with practitioners. 

Offer online appointment-booking

Many people prefer to “type” or “tap” to you, rather than call. So, when the goal is to get people to schedule appointments (when is it not?), you’ll want to enable potential patients to book themselves online.

Relatient, a player in the booming patient access space, claims self-scheduling is “quickly becoming the new front door to a physician’s practice” and offers tips for getting started here.  

Enable employee advocacy

Employee advocacy is the promotion of a brand or company by its employees. Utilizing employee advocacy programs fosters teamwork, and company morale, and enables your practice to amplify its outreach on the cheap.

Comply with HIPAA

Compliance laws and regulations have evolved in recent years and will impact your digital marketing. Make absolutely sure to understand and comply with:

HIPAA
HIPAA was enacted to protect patient privacy. The regulation mandates industry-wide standards for the sharing of healthcare information and electronic billing services. All digital marketing content needs to be HIPAA Compliant in the U.S.

GDPR
GDPR law includes 7 principles for the lawful processing of personal data and protects how doctors, hospitals, and marketers can use patient information.

CAN-SPAM
The CAN-SPAM act regulates the information healthcare organizations can deliver via email and provides patients the right to opt-out of receiving email.

Bring pros aboard to handle public relations

While doctors, psychologists and practitioners are—and should be—more concerned with their patients’ well-being than their reputations, PR can loom large for healthcare providers.

At the very minimum, an experienced healthcare public relations firm can help boost your practice by:

  • Distributing press releases to inform the public about the good you do.
  • Arranging interviews with the press about the latest healthcare issues facing your community.
  • Publishing articles about your services and their benefits.

Make data-driven decisions

Building better, more secure data structures and advancing the use of data for decision making will be paramount to enabling organizations to tackle challenges that range from consumerism to cost management to care deliver.

Source: Huron 2021 Healthcare Executive Research

Sure, effective digital marketing calls for experimenting, but to do it effectively and perpetually improve ROI calls for basing your decisions on data. While your data resides in a variety of places, the following three sources can be essential tools:

  • Healthcare CRM—A HIPAA-compliant CRM such as LeadSquared serves your practice and its patients across the entire journey and offers a goldmine for extracting insights regarding your sales, marketing, and patient engagement.
  • Google Analytics—The free program provided by Google tracks traffic, user interaction on your website, and provides a plethora of metrics you can use to make informed decisions to fine-tune your website and digital marketing initiatives.
  • SEO platforms—A vast array of applications enable you to research keywords,  track your search rankings, and simplify nearly everything in the complex search marketing spectrum.

Put essential marketing technology tools in place

With respect to tech adoption, particularly in marketing, healthcare continues to lag.

Research from Cardinal Digital Marketing indicates the most significant new marketing tech investments are in marketing automation, SEO analytics, and online scheduling.

Note that while CRM places fourth for new investments, 47% don’t use a customer relationship management solution. They claim many organizations still aren’t ready to integrate CRM with EHR. The time to do so is now.

Here’s what you need to know about integrating HIPAA-compliant CRM with EHR.

Today, customers are better informed and more cautious about spending their hard-earned money. This is especially true for big-ticket items like cars.

So, how do you bring in clients in such a competitive market?

Simple. Through smart dealership marketing tactics.

Marketing is, in general, important for any business. But it can be a make or break in the automotive industry.

In this dealership marketing guide, we’ll look at seven strategies to help you attract more clients and increase sales:

>> 7 Proven dealership marketing strategies
1. Choose the right marketing campaign
2. Use paid advertising for dealership marketing
3. Reach out to existing customers
4. Give customers an omnichannel experience
5. List your business in online directories
6. Optimize your website for search engines
7. Create business cards and flyers

>> The next step in your dealership marketing plan

1. Choose the right marketing campaign

What’s the best way to bring in customers?

Marketing.

There are many marketing campaigns to choose from—from email to affiliate marketing. To help you choose the right strategy for your business, let’s take a look at some options:

Email marketing

Email marketing is a long-standing staple in all areas of commerce. Done well, email marketing can deliver as much as $36 for every $1 spent. So, it’s a sound investment.

There are many types of emails you can send, including:

  • Surveys: 70% of businesses collect customer feedback using surveys. Why? You can use the information to deliver personalized service and a better car buying experience. This will encourage customers to keep coming back to you.
  • Promotions: Sending exclusive offers to customers is a great way to guarantee their loyalty for years to come. You can also tempt prospective customers with time-limited deals and discounts.
  • Service reminders: Sending out service reminders is a great way to show customers you care. It’s also an extra marketing opportunity.

For the best results, track an email campaign to see which types of emails work best for your clients.

Here are some car sales email templates you can refer to.

Content marketing

Content marketing is another popular choice, with 82% of companies using it in 2021. You can create content to educate customers like videos, blog posts, white papers, infographics, and podcasts. 

By creating helpful content, you can win your customers’ trust. So, content marketing can help you become the go-to place for info about the automotive industry. You can use content marketing for:

  • Boosting brand awareness.
  • Increasing customer engagement.
  • Building brand loyalty.
  • Launching a new product or service.
  • Increasing organic traffic.
  • Generating and nurturing leads.
Statistics - Types of media used in content marketing
Source

Telemarketing

Despite almost everything being online, phone calls are still a firm favorite with customers.

Why?

Many customers prefer interactions with real people. It has a more personal feel, and it’s easier to ask questions and go into detail.

This means telemarketing is still a valuable business tool. Benefits of telemarketing include:

  • Building a relationship with clients
  • Generating leads
  • Following up with leads
  • Learning about your customers

With a cloud-based phone system, it’s simple to set up auto-dialers and other advanced features. Plus, you can outsource to a telemarketing agency that can generate tangible leads for you.

You can refer to these car sales scripts to interact with your clients.

Social media marketing

85% of customers research companies on social media, so it’s no surprise that 8 in 10 companies invested in social media marketing in 2021. Social media is a great place for dealerships to advertise to potential customers. You can also engage existing customers with hashtag contests and other content (more on this later).

As part of any social media marketing plan, you need to think about what works best for your customers. For instance, videos exploded in popularity in 2020; minutes watched increased by 85%. In addition, you need to optimize content for each platform. For example, Twitter’s character limit is 280, so you’ll need to adjust content from other channels to fit within it.

Affiliate marketing

Affiliate marketing is another great way to attract customers and generate sales. 

In affiliate marketing, a customer or influencer promotes your product in exchange for a commission. Often, commissions are a percentage of the sale, so you only have to pay for results. This could be why affiliate marketing spending reached $8.2 billion in the US in 2022.

Building an effective sales funnel for affiliate marketing takes time. But there are many affiliate marketing platforms online to help you find and manage affiliates. Plus, by including links on popular blogs and social media, affiliate marketing can:

  • Boost awareness of your dealership.
  • Improve your SEO ranking.
  • Give your business the social proof to succeed.
Statistics - affiliate marketing spend - united states
Data from Statista.com

SMS marketing

In 2021, 85% of Americans owned a smartphone. The average American spends 4.1 hours a day on their mobile, which is one hour longer than they spend watching TV.

This makes SMS marketing an ideal way to reach customers and gain an advantage over your competitors. In fact, with SMS marketing, you could see a 10to 20% increase in ROI. You can send SMS messages for:

  • Service and appointment reminders.
  • Requesting feedback.
  • Promotions like part exchange deals.
  • Thanking customers for their business.

2. Use paid advertising for dealership marketing

Building your online presence and gaining ranks on search engines takes time. So, meanwhile you can invest in paid advertising. Two of the most popular paid advertising platforms for car dealerships are Google and Facebook.

Google Ads

In 2021, Google accounted for over 85% of global desktop search traffic, so it’s a great way to reach new and existing customers. Google Ads operates on a pay-per-click (PPC) basis. Ads can appear on SERPs, apps, Google Shopping, partner websites, and more. This makes Google Ads ideal for awareness campaigns like product launches.

With Google Ads, you can target keywords like car makes and models, which ensures you reach relevant customers. Also, you can use Google’s Display ads to target recent customers, site visitors, or first-time car buyers.

Facebook ads

Marketers spent 50% more on Facebook and Instagram ads in 2021 compared to 2020. This is because, like Google Ads, you can use Facebook Ads to reach and engage customers. You can target your ideal clients using criteria like age, location, and interests. Plus, with Facebook’s look-alike feature, you can target customers who only partially fit your criteria.

Facebook ads appear in several places, including a user’s mobile feed, video stream, and news feed. Where is the best Facebook ad placement? In 2021, Instream Video ads had the best click-through rate (CTR) at 0.33%. Ads in the Facebook News Feed came in second with a CTR of 0.29%.

3. Reach out to existing customers

Your customers can be powerful allies when it comes to bringing in new clients. Often, this involves them recommending you to friends and family. But many customers will go one step further and leave an online review or even post about you on social media. Let’s take a look at how reaching out to existing customers can benefit your business.

Customer reviews

76% of customers have bought a product due to someone else’s recommendation. People trust people, so good customer reviews make your business seem trustworthy. For instance, 72% of customers say customer reviews are more credible than brands talking about their products. To prompt customers to leave reviews, you can:

  • Ask them to review their experience when they visit your dealership.
  • Include a request on your landing page and other channels.
  • Send an email or text after you service their car or sell them a product.
  • Request a review at the end of an online conferencing call.

You can include reviews on your website and marketing materials to build social proof and improve SEO.

User-generated content

Like customer reviews, customers trust user-generated content (UGC) since it uses social proof. If someone shares a photo of the new car they bought at your dealership, that’s UGC. There are several ways you can encourage customers to create UGC, such as:

  • Ask them: After all, 60% of customers want more brands to tell them what kind of content to create. You could create a page of tips and branding material and share a link on your website and other channels.
  • Create a hashtag contest: These are great for engaging your customers. For instance, 64% of customers have used a hashtag or tagged a brand on social media before. You could ask customers to use your hashtag to post a picture and give the winner a free service check or other prizes.
  • Share customer posts: 64% of customers agree that when a brand likes and re-shares customer content, they’re more likely to share a brand’s content. So, like and share customer posts about you and see if they do the same.
Statistics - customer engagement with user generated content

4. Give customers an omnichannel experience

Two-thirds of companies say the growth of omnichannel and online shopping has the biggest impact on the retail industry. It’s no longer enough to simply give customers their choice of channels.

Customers want a consistent, personalized experience across online and offline channels. What’s the benefit to you? Omnichannel personalization could give you a 10-15% uplift in revenue potential.

You can connect with your customers on the channel of their choice through CRM solutions.

Take for instance, LeadSquared.

It allows you to capture inquiries from several channels like website, social media, ads, and more and communicate with customers through email, SMS, WhatsApp, and phone calls.

marketing automation - omni channel engagement

5. List your business in online directories

Another way to bring in customers is listing your dealership in popular online directories like Yelp, Yellow Pages, and Google+ Local. You should include information like your address, website, and opening hours. Listing your business can improve your SEO and make you more visible to people looking for a car or dealership.

As well as general directories, you should search for automotive business directories. Ideally, you want ones that let you list your business for free. You could also use an online reputation management company to manage your listings and update them as needed.

6. Optimize your website for search engines

For your dealership to rank on search engines, you need to use search engine optimization (SEO). After all, 75% of companies say SEO is very effective for achieving their marketing goals. You should use a keyword tool like Google’s Keyword Planner to find keywords relevant to your target audience.

Long-tail keywords can be particularly effective for SEO. Shorter keywords like “car dealership” have more competition since lots of businesses use them. Long-tail keywords like “Audi car dealerships in London” are more specific and easier to rank on search engines. So, people are more likely to find you.

Statistics - SEO tactics

7. Create business cards and flyers

Physical media like business cards and flyers are still important business marketing tools. If you haven’t already, it’s well worth investing in some business cards to display in your dealership. You could also hand them out in your local area or at car shows and other networking events. Business cards should include information like:

  • The name of your dealership.
  • The products and services you offer.
  • Your website, address, and contact information.

The next step in your dealership marketing plan

To compete in the digital age, you need to market your dealership both online and offline. Strategies like paid advertising, SEO, and business cards can boost people’s awareness of your dealership. Once people know about you, you can increase customer engagement with emails, SMS messages, and social media posts.

Customer reviews and UGC help you tap into social proof and establish yourself as a credible business. Plus, by integrating your channels into a seamless omnichannel experience, you can give customers a personalized, consistent experience. In other words, you should use a mixture of marketing strategies to raise awareness, increase engagement, and build trust. You can then enjoy loyal customers and more sales.

If you’re looking for software to streamline your dealership marketing and sales, check out LeadSquared’s Automotive CRM software. Trusted by several dealerships and car marketplaces like DSR Leasing and Cars24, it can help you with:

Book a demo to know more about LeadSquared’s Automotive CRM capabilities.

Schools need a smart parent outreach strategy to sustain enrollment growth. As students’ strongest influence—more than 50% of parents identify as equal partners in the search process—parents can serve as powerful recruitment partners.

To inspire parents toward enrollment, schools must:

  • Build strong, trusted relationships
  • Provide content tailored to parents’ needs

Let’s examine some tips and tactics for achieving both.

Who are today’s parents?

While parents differ by demographic factors and geographic region, most share several key similarities:

  • Parents are older than in previous generations
  • Parents are more highly involved in the college selection process

Today’s parents are also more anxious—a trend that fuels parents’ high level of involvement. According to Eduventures and Mongoose Research:

  • 90% admit to contacting colleges on their child’s behalf
  • 62% have completed a college application

Parents are key influencers

Parents are prospective students’ most important influencers. Studies demonstrate prospects who submit inquiries using parent email addresses are 45% more likely to apply.

“Parents continue to be the biggest outside influence for most students—and we’re finding many are exerting greater influence when it comes to their child’s college decision.

Jeremy Tiers, Senior Director of Admissions Services for Tudor Collegiate Strategies

Parents are typically most influential at the beginning of the process, helping students research and select potential schools. According to Eduventures’ 2021 Prospective Parent Survey, one out of three parents also want to hear from institutions when just starting the college search—ideally during sophomore year.

Reaching parents earlier in the process also helps:

  • Build trust over longer periods of time
  • Garner attention during a less stressful time
  • Alleviate potential anxiety

6 strategies for communicating with parents

1. Emphasize value

Per Longmire and Company’s Value Proposition survey, just one-half of students and parents nationwide are confident money spent on college the first year will be worth it—and only 20% say schools addressed how to maximize time and investment.

To build a persuasive case for enrollment, schools must lead with value. Consider emphasizing both return on investment (ROI) and successful student outcomes.

Strategies might include:

  • Distributing a student outcomes one-pager during campus visits
  • Leading with ROI data when discussing financial aid
  • Structuring marketing copy around the value proposition
  • Publishing parent testimonials illustrating ROI
  • Connecting prospects with successful alumni

2. Create targeted content

To effectively reach parents, create marketing content that speaks directly to pain points and needs. Most parents seek information about the following four topics:

  1. Quality—including school rankings and details on majors
  2. Cost—especially financial aid opportunities
  3. Student experience—such as housing and extracurricular offerings
  4. Logistics—like application deadlines

Sending content directly to parents is ideal—but keep in mind parents often read college materials for their children, too. Consider centering content strategy for both students and parents around the above four points.

Vancouver Island University addresses cost concerns by emphasizing the amount of financial aid available. The school stresses aid is available for any program—and even includes a participatory contest.

3. Utilize multiple channels

Consider taking a multichannel approach, which ensures parents hear from schools on different platforms. A combination of both active (texting, email, phone) and passive (web, print) communications is ideal.

Eduventures’ research illustrates which channels are most effective—and for whom.

Schools should consider prioritizing a combination of top performing channels, including:

  • Website
  • Emails
  • Print mail
  • Campus visits

Texting is also a proven parent outreach tactic, with 68-74% of parents indicating an interest in receiving SMS texts. For ideas and best practices for SMS texting in higher education, check out A Guide to Creating Smart SMS and MMS Campaigns.

4. Create web pages specifically for parents

A school’s website is by far the most effective channel to reach parents, with up to 80% of parents visiting sites in support of students. To best meet parents’ needs, consider creating separate parents and family sections on your website.

Ideally the parents and family page speaks to parents’ four main pain points—quality, cost, experience, and logistics.

Take UC Davis’ Parents and Families page as an example.

UC Davis addresses parents directly and affirms their value. The webpage features easy-to-access details on school cost and financial aid; student experience (campus life, events); quality (academic success, college prep); and logistics (safety, housing). UC Davis also provides three separate information options based on the type of student: freshman, transfer, or international.

UC Davis also leverages video testimonials—an especially persuasive higher education marketing tool—to build credibility.   

The 2-minute video features a variety of parents sharing their experiences with the school. Parents discuss the campus environment, the surrounding town, academic culture, and more.

Additional parents and families page content could include:

  • Frequently asked questions
  • Contact information for admissions, financial aid and/or housing
  • Important admission dates
  • A sign-up form to receive regular updates/information

5. Tailor tours and events to parents

Campus visits, both in-person and virtual, are also effective parent relationship-building tools. Face-to-face meetings and discussions help build trust and allow schools to address questions in real-time.

Consider offering separate campus tours for students and parents. Parent-only tours offer the chance to highlight aspects of the campus that may be most appealing to parents, and shape perceptions on affordability, student outcomes, and other key areas.

Schools might also consider offering programming as a resource to parents. Potential ideas include:

  • Financial aid webinars
  • Workshops on navigating the college search process
  • FAQ sessions
  • Prospective parent meet n’ greets

6. Collect parent information at each touchpoint

Train staff to archive parent information at each interaction, including one-off emails and phone calls. Students can also help by sharing parent contact information, but schools should avoid relying wholly on prospects.

One proven tactic is using a parent-specific Request for Information form (RFI). The RFI form can be embedded on a school’s website, helping collect key parent information including:

  • Name
  • Email address
  • Phone number
  • Opt-in permission to email and SMS marketing

Make sure your RFI form is mobile-friendly: up to one-third of parents report completing forms on a mobile device.

Schools might also consider hosting a parents’ email group (similar to a listserv). Take Rowan University’s Parents Connection Email Group for example.

Rowan offers parents a secure and exclusive way to receive campus news and updates. The sign-up form is located on Rowan’s parents and family webpage.

Sharpen your communications  

Prioritize details. Communicate with as much detail as possible. Specificity can help mitigate parents’ anxious mindsets—and save valuable time for schools down the road.

Address parents directly. Take a hands-on approach with parents. Provide parents with targeted information as much as possible, and clearly communicate content is intended to address concerns.

Use parents to get students excited. Excitement and enrollment are highly correlated. Help build excitement by emphasizing positive student experience. Be sure to provide experience-based content, such as hand-outs on clubs or housing life, for parents to share with students.

Hone your strategy

When reviewing your parent outreach strategy, consider the following to fine-tune your approach. Remember effective marketing strategies evolve and should be consistently evaluated to optimize results.

  • Audit communications. Start with where you are. Review past and current approaches to communications: Which mediums are most effective and which campaigns have garnered the best response?
  • Evaluate content. Dig into metrics. Based on your content’s performance, what do parents want to know? When is communicating most effective?
  • Start simple. As with any marketing effort, begin small and scale. Choose a handful of tactics to start and draft a plan for growth over time.
  • Measure and re-evaluate. The audience changes constantly. Consider setting a regular cadence for a performance review to evaluate the audience and tweak the content strategy.

Strategic parent outreach can help schools elevate enrollment and build lasting relationships with families. Through targeted and thoughtful content, schools can inspire parents—and prospective students—toward enrollment.

We all know the demand for earning a four-year degree continues to decrease. If there’s a silver lining, it would clearly be the proliferation of alternative postsecondary education pathways.

Let’s begin with a definition of “alternative pathways” from BestColleges.com:

“Alternative education pathways [are] defined as employment-related skill development opportunities that prepare a learner for work, but do not require or result in a college degree.”

These opportunities have made their way to the forefront of higher ed in recent years due to a variety of factors, including rising concerns about “degree inflation” (in which degree requirements for employment are padded or “inflated” in job postings), as well as COVID-19 and the subsequent “Great Resignation” that took shape as millions of Americans left their jobs to reassess their careers.

Let’s explore some of the top reasons why alternative education pathways are enjoying newfound popularity and why looking at tertiary education through a non-traditional lens is a useful strategy for post-pandemic-era students.

We’ve also included some prompts for how to become a non-degree champion, even if your institution is still faithful to the conventional higher ed diploma.

So, why are alternative postsecondary programs gaining momentum?

Traditional higher ed is stalling

Even before the cataclysmic events of 2020, higher ed enrollments were on a mostly downward trajectory. In fact, enrollment percentages have witnessed a near-consistent decline starting as far back as 2017, with affected sectors ranging from public two-year to private four-year institutions.

Just as COVID-19 caused American workers to re-evaluate their careers, it also appears to have inspired would-be students to re-examine their educational choices.

Research from National Student Clearinghouse points to a 4% decrease in undergrad enrollment from 2019 to 2020 and a whopping 22.7% downturn for first-time enrollees to community college. Meanwhile, a September 2021 survey from the Educational Credit Management Corporation Group (ECMC) and VICE Media signals a decisive shift in high schoolers’ academic aspirations, citing:

  • only 48% of respondents are planning to pursue a four-year college degree
  • 53% feel professional success can be achieved with just three years of education (or fewer)
  • 69% believe on-the-job experiences (via internships, apprenticeships, etc.) should be part of their postsecondary education

Such statistics suggest general interest in a standard academic path is waning and prospective higher ed students are on the hunt for something new—preferably something that prepares them for steady, gainful employment.

Quicker and less expensive alternatives carry renewed appeal

Since the pandemic, students of all ages have been leaning toward educational programs more aggressively tailored to the jobs they want: a notable departure from broader educational templates that frequently cover a variety of disciplines over a longer period of time.

Among younger students, about a third of prospective Gen Z enrollees are drawn to educational experiences delivered in one year or less (per ECMC), indicating a trend that favors vocationally driven programs like apprenticeships or shorter training “bootcamps.”

For adults already in the workforce, interest in supplemental education (which may or may not carry a degree) also appears to be on the rise. A full 33% of respondents to a Strada Education Network survey felt they would need further education were they to lose their jobs post-COVID, with 29% reporting they’d prefer to spend their educational dollars on alternative pathways such as apprenticeships or third-party provider courses online. And, according to a 2021 report on alternative education, a majority of U.S. adults believe non-traditional avenues of education yield “good return on investment”— while 55% of the general public agreed alternate ed will become a crucial part of workforce training in the coming years.

“Pathways” in such cases correspond to a variety of educational options: from technical training to certifications or “microcredentials” from online juggernauts like Coursera; immersive journeyman programs; and non-degree classes at degree-granting institutions. These opportunities are often “stackable,” meaning they can sometimes serve as the foundation for further, even higher levels of certification.

And sometimes these options can pay dividends even without the “stacking.”

Not only can non-traditional programs cost much less (one certificate at Purdue University is about a fifth the cost of a typical associate’s degree at the same institution), they can also translate into sizeable salaries. Depending on the industry, non-degreed workers occasionally see a marked increase in income if they hold a relevant certificate (compared to median annual intake if they don’t). In 2019, Gallup and Strada found the median income among non-degreed credentialed workers between 24 and 65 to be around $15,000 more than non-degreed employees without similar accreditation—all of which strongly suggests alternative pathways are far better than no education at all.*

*Note: Self-funded alternative programs, which account for many of today’s non-degree options, are ineligible for government financial aid. This means the entire cost can come out of the student’s pocket. Plus, wage premiums for certified workers don’t always hold true across industry or gender.

Schools are already getting in on the act… and so are employers

With many community colleges—in addition to academic stalwarts like Purdue and Brown—offering certifications across diverse disciplines, the advent of the non-degree has been a reality for quite some time. So much so that organizational efforts like those of the Pathways to Prosperity Network (established in 2012) have also gained ground throughout the U.S., connecting students to business and educational resources aimed primarily at labor market prep.

And if employers aren’t involved in this type of training (as many already are), there’s a good chance they’re highly interested in the kind of employees this training can produce.

Google, Apple, IBM, and Accenture, for example, have all cut back on degree requirements for their IT jobs, though many positions still demand a traditional postsecondary diploma to get applicants through the door. Still, an impressive 68% of business leader respondents to the 2021 alternative pathways report felt an increasing number of jobs on the market do not need or require bachelor-level education, with 85% citing alternative pathways as a possible cure for current “workforce skill gaps.”

85% of business leaders believe alternative ed can help ease workforce skill set and vacancy challenges.

Source: Alternative Education Pathways Report

These findings indicate a rethinking of what it takes to succeed: a new level of cultural acceptance for different forms of postsecondary learning, particularly when they’re conducted or informed by industry professionals.

As Marina Irfan, enrollment and success manager at UT Austin observes:

“Employers increasingly are seeking candidates with specific skill sets who are ready to be productive on day one. Certificate programs are built with significant input from industry experts and often focus on [those requisite] skill sets.”

Higher ed institutions have a role to play, too

Recent dips in enrollment should serve as a “wakeup call” to postsecondary practitioners:

The time to take alternative pathways seriously is now.

But, other than reconfiguring curriculums to accommodate new, non-degree programs, what can traditional institutions do to ride the alternative wave and support students seeking innovative ways to set themselves up for a sustainable career?

A few ideas:

  • If you don’t offer vocation-specific courses or industry-specific certification programs, help connect prospects and recent grads with organizations that do. Investigate job counseling services and/or partnerships with local and national businesses that direct both young and older students to effective training through real-world apprenticeships, paid internships, online tech bootcamps, extensive third-party crash courses, etc.
  • If you do provide alternative credential programs, reach out to students who might be struggling on the road to a regular paycheck. Offer guidance on employer tuition reimbursement, government-funded grants, or other forms of financial aid. It’s also advisable to establish contacts with recruiters from reputable companies so students have an in-built employment pipeline at their disposal.

Your institution can help promote alternative ed by forming partnerships, providing guidance, and spreading the word about the current non-degree trend.

  • Spread the word. Sometimes all that stands between a student and their dream job is a lack of awareness regarding their educational opportunities. Alert prospects to the benefits of alternative pathways and non-degree trade programs wherever appropriate. Encourage potential students to think of learning as an evolving pursuit that can change according to their needs and desires (as opposed to an unforgiving model where training is only delivered full-time over four years).
  • Help end the stigma. The conventional degree isn’t going anywhere, but the non-traditional path to qualified education is here to stay. And given the many advantages alternative pathways can afford today’s non-degreed workers (an estimated 50% of the working population), these programs have earned their place in the higher ed conversation. Be sure not to discount them when you review options with students looking to improve their employability.

For more on boosting employability quotients for typical four-year students, see our post on cultivating bankable skills for viable careers through old-school higher ed.


What’s one word that you feel has increased in importance over the past few years?

My answer to this question is the word “subscribe.”

Don’t we see ads about subscribing to channels, services, and products now more than ever?

We do.

In fact, Subscription Economy Index (SEI) released by Zuora found that 78% of international adults currently have subscription services. And if you ask why—convenience, cost savings, and variety are the reasons.

Statistics - Subscription service benefits

Businesses that provide their services on a subscription basis are also increasing. For example, in the United States alone, there are more than 15,000 SaaS companies.

But how do you measure the success of subscription-based business model?

Well, it’s through MRR, or Monthly Recurring Revenue.

Let’s learn more about MRR.

What is MRR?

MRR is an acronym for monthly recurring revenue. It’s a standardized measure of a company’s consistent monthly income. We define MRR as the monthly recurring income for a subscription-based business model.

For example, imagine a customer subscribes to Spotify’s premium plan for a month. After the month, they can choose to extend or terminate the subscription. So, Spotify, ideally, should calculate MRR to gauge its revenue each month.

Note that MRR and revenue are not the same. Although, the bottom line for businesses is the same, there’s a significant difference between MRR and revenue. Let’s look at them.

 MRRRevenue
DefinitionMRR is expected monthly earnings from buyers.Revenue is a measure of your earnings after selling goods or services.
GoalTrack performance of your subscription businessGenerate income statements and financial reporting for the company
PaymentsMonthly; recurring for the subscription durationOne-time; based on the number of products sold
Examples of businessesSaaS, entertainment, EdTeche-commerce, retail

As simple as that sounds, measuring MRR can be pretty challenging. Businesses make mistakes like including yearly estimated values in semi-annual subscriptions. And for that matter, excluding discounts and trial period.

To avoid such mistakes, let’s look at the precise formula to calculate MRR.

How to Calculate MRR

The precise formula to calculate MRR is:

MRR = Monthly ARPU X Total number of monthly users

MRR formula

Where, ARPU is the average revenue per user

Let me give you an example.

Imagine you have gained 300 subscribers in July, and the ARPU is $100. So, your MRR would be: 100*300 = $30,000.

Here’s an online MRR calculator. You can try it out yourself:

Online MRR Calculator


Enter Monthly ARPU ($):
Enter Total number of monthly users:

Your MRR is: $

To calculate ARPU, all you need to do is calculate the average subscription amount of the customers you acquired in a given month.

For example, let’s say you acquired 5 customers with the following MRR values.

Customer A = $10

Customer B = $20

Customer C = $30

Customer D = $40

Customer E = $50

So, your ARPU will be: $(10+20+20+10+20)/5 = $30

And the MRR will be: $30*5 = $150

Calculating MRR may look simple on the surface. But you might want to consider certain variables to make the MRR estimation as accurate as possible. Let’s look at the aspects that create discrepancies in MRR calculation.

5 Common Mistakes to Avoid while Calculating MRR

1) Overestimating your revenue

Businesses tend to include yearly or semi-annual subscriptions when someone subscribes. But this can cause major errors when calculating your monthly recurring revenue.

For example, you receive $1200 for a 12-month plan in June. The MRR should be $100 for June, not $1200. Before adding the entire value, divide it by the number of months to accurately calculate your MRR.

2) Considering one-time transaction

Imagine you’ve collaborated with another firm and collected a one-time payment of 100 dollars. This is excellent news; your bottom line will appreciate it, and your cash flow will benefit. This one-time transaction, however, should not be in your MRR. Singular purchases and payments aren’t considered “recurring.”

As a result, they don’t fit in the Monthly “Recurring” Revenue category. This is because you don’t anticipate receiving this income regularly. Including them in any MRR calculations will overstate your revenue forecasts and affect your payment model.

3) Including bookings and trials

A rookie mistake is to add your users on a trial period to your MRR calculations. Sure, most of us love to see someone subscribing to try your product. But, this does not make them recurring customers.

In general, we can’t add free-trial users to the MRR because they aren’t customers yet. And most of us can agree that there’s a solid chance they won’t convert either. So, it’s best to leave them out of your MRR numbers.

Similarly, if they convert, discount the duration of free-trial from the actual subscription duration.

Bookings, too, are a long-term commitment, similar to annual subscriptions. We can’t include the entire amount as there’s no guarantee of payment. The contracts will offer proof of agreeing to pay, but they don’t cover delinquencies.

4) Excluding Discounts and Offers

So far, we’ve covered some aspects we should not include when calculating MRR. In contrast, you must include discounted rates when calculating MRR. When users buy with a discount, including the full amount in MRR will inflate revenue.

For example, you offer a discount of $100 on a product that typically costs $350 per month. The MRR for that subscriber will be $250, not $350. You must subtract the discounted amount from the product’s original price.

5) Including delinquencies

On one side, forecasters overestimate their revenues by including ARR or one-time subscriptions. At the opposite end of this spectrum are forecasters who count in delinquencies.

Accuracy is of the utmost importance when calculating MRR. But, delinquencies should fall under a category of their own. Rather than subtracting delinquent fees, create a separate segment for it.

You must include subscription-related or recurring fees in your MRR. Transaction costs, like late charges, should be separated into their subcategory. Similarly, you must segment transaction fees and track them as an expense.

Once you put them in a separate category, you can calculate how much you earn later.

These are the common errors businesses tend to make when calculating MRR. But calculating MRR doesn’t end with knowing how to do it accurately. MRR differs depending on the plans you offer and the nature of the product.

We can typically calculate MRR using different formulas. The method will differ depending on which solution your company chooses. This brings us to the next section, where we’ll explore the different types of MRR.

Types of Monthly Recurring Revenue

MRR builds a link between the accounts and the users. As a result, their subscription behavior may be better understood. A rise in MRR shows that customer retention, plan renewals, or both have increased. On the other hand, downgrades and churn indicate a decrease in MRR.

So, you need to track the many factors that influence MRR separately. This is because we need to determine the particular reasons for its growth and decline.

Each type of MRR calculation provides unique insights into:

  • Revenue
  • Consumer behavior
  • The health of your organization

Let’s get right into the different types of Monthly Recurring Revenue.

1) Churn MRR

The money your firm loses due to subscription cancels over a given month is Churn MRR. Churn puts your Monthly Recurring Revenue at risk by causing you to lose users and money. This generally takes place through cancellations and late fees.

If you track your churn Rate each month, your team will be able to:

  • Produce a better product
  • Sell it more efficiently
  • Generate momentum through compounding growth

The accurate formula for Churn MRR is:

Churn MRR = Churned customers in one month x Revenue they usually generate.

Churn MRR formula

For example, suppose you had five customers who paid $1000 each month. If three of them quit their subscriptions within the same month, your monthly churn MRR is $3,000.

2) Expansion MRR

Expansion MRR refers to the additional revenue generated by existing customers. Customers in the subscription sector produce more revenue when one of the following activities occur:

  • Cross-sell: It refers to additional services or products your company offers with its core solution.
  • Upsell: It happens when customers upgrade from a free to a paid plan. It could also refer to switching from a cheaper to a more expensive plan.
  • Reactivating the older plan: When a customer decides to reactivate a canceled subscription.
  • Add-ons: When a customer purchases add-ons, especially recurring ones.

You can calculate the expansion MRR growth rate as follows:

Expansion MRR growth rate = X month’s MRR expansion / MRR total at the start of the month x 100

Expansion MRR growth rate formula

High Expansion MRR suggests that you were able to keep your clients by impressing and engaging them. This is beneficial to your bottom line because these sales to current clients have no Customer Acquisition Cost (CAC).

3) New MRR

The sum of MRR earned from new clients is what we call new MRR. Monthly recurring revenue is the sum of regular revenue generated by your company every month. We need to find the MRR from new clients obtained during that month. You’ll need to know the following while calculating the new MRR:

  • The total number of new clients gained for that month, and
  • How much recurring revenue does each one of those clients produce every month?

The formula for New MRR is as follows:

New MRR = The number of new subscribers X MRR earned from each new subscriber.

New MRR formula

If you get 7 new customers and your monthly plan is $100, New MRR will be $700.

It is also crucial to include customers who aren’t on a monthly subscription. In such situation, divide the total annual fees by 12 to find your monthly pricing.

New MRR is also a tool that helps entrepreneurs better comprehend Net New MRR. We’ll get into this metric in the next section.

4) Net New MRR

The total new MRR for the month is Net New MRR. New and expansion consumers minus churn gives us Net New MRR. Net New MRR shows how much your revenue is increasing or decreasing. It is helpful when comparing the current month’s MRR to the previous month’s MRR.

Use this formula to compute Net New MRR:

Net New MRR= New MRR + Expansion MRR – Churned MRR.

Net new MRR formula

When your Net New MRR is negative, it shows that you lost money. You lose money when your churn is higher than the sum of your New and Expansion MRR.

In contrast, if your Net New MRR is positive, it means you’ve gained revenue. It shows that your churn is lower than the sum of New and Expansion MRR.

For example:

Your New MRR is $650, and your Expansion MRR is $350. Your Churned MRR amounts to $200, and your Net New MRR will be $650 + $350 – $200 = $800. This is a positive Net New MRR as the churn is lower than the Expansion and New MRR.

5) Contraction MRR

Contraction MRR refers to the reduction in your current MRR compared to the last month. Your MRR tends to reduce or contract when:

  • A consumer drops a subscription and ceases paying for the product
  • A customer switches from their current plan to a cheaper one
  • A new client receives a sizeable discount
  • A client discards or removes any add-ons

It considers both downgrade MRR and churns when used for forecasting growth. The formula for Contraction MRR is as follows:

MRR of contraction = MRR of downgrades + MRR of cancellation

Contraction MRR formula

Contraction MRR can assist you figure out how successfully your company keeps consumers. It also tells you how well your service scales with the growth of your clients.

These were some of the different kinds of MRR, and each is significant to subscription businesses. Now let’s get into how we can grow MRR.

5 Quick Tips on Increasing MRR

  • Upsell, cross-sell, and promote add-ons wherever possible. MRR can grow substantially when you offer these options to your clients.
  • If buyers primarily shop online, show notifications of other buyers’ purchases. For example, if you sell perfumes, notify people browsing your website when someone makes a purchase. Doing this offers social proof to browsers and pushes them to buy.
  • Create loyalty plans to reduce churn and increase retention. A study by Bond and Visa reveals that loyalty programs heavily influence customer advocacy, retention, and spending.
Statistics - loyalty programs
  • Try your hand at providing prepaid annual subscriptions. There’s a high chance that new customers will decline this alternative. But existing customers who are happy with your product are likely to sign up for this offer.

In Conclusion

The right metrics can inform you how well your company is doing and help you expand. Monthly recurring revenue offers valuable insights to businesses using a subscription model.

One of the most important things to remember is that MRR is a momentum-based metric. It keeps you informed about your current and future financial position.

It’s tough to manage a successful firm without a consistent income stream. MRR informs business leaders on the amount of money they can reinvest each month. Salespeople can also see the growth of the accounts they handle with MRR.

Measuring MRR is a necessity to help your company grow and fix any issues in the early stages. By tracking and analyzing your MRR, you can stay on top of the data your investors care about the most.

If you’re looking for a tool to track your MRR, revenue sources, and more, try LeadSquared. It is an all-in-one suite for high-velocity sales trusted by leading businesses like BYJU’S, Uni Cards, Practo, and more. Book a demo to learn more about the platform.


FAQs

MRR acronym

MRR stands for Monthly Recurring Revenue.

What is ARR?

ARR refers to Annual Recurring Revenue. It is a sales metric that shows the money that comes in every year for the life of contract (or subscription).