Monthly Recurring Revenue (MRR)
The predictable monthly revenue a SaaS company generates from subscriptions. In affiliate marketing, MRR driven by affiliates is a key metric for measuring program ROI and is often the basis for commission calculations.
Foundations of Monthly Recurring Revenue
Monthly Recurring Revenue (MRR) is the total predictable monthly revenue from subscription customers. Calculate MRR by summing all active subscription fees across customers each month.
Example: 100 customers at $100/month plus 50 customers at $200/month equals $15,000 MRR.
MRR is the most important metric for SaaS companies because it predicts financial trajectory and sustainability. The MRR growth rate (month-over-month percentage growth) indicates business velocity, and MRR exposes churn: if MRR drops despite new customer acquisition, churn is eroding growth.
MRR Composition and Movements
Break MRR into components:
- Existing MRR from the prior month.
- New MRR from new customers.
- Expansion MRR from upgrades and upsells.
- Contraction MRR from downgrades.
- Churn MRR from cancelled customers.
Example: $100,000 existing + $10,000 new + $5,000 expansion − $2,000 contraction − $3,000 churn = $110,000 new MRR.
Healthy B2B SaaS companies achieve positive Net MRR Growth, where (new + expansion − contraction − churn) > 0. Typical benchmarks:
- Strong growth: 10-15% month-over-month MRR growth.
- Mature: 3-10% growth.
- Declining: less than 3%.
Affiliate programs primarily contribute through New MRR, as affiliate-sourced customers become paying subscribers. Quality affiliate programs also impact Expansion MRR if the customer cohort has high upsell rates, and reduce churn by driving customer fit.
Optimizing MRR Through Affiliates
Recruit affiliates driving high-ACV customers to directly increase New MRR. A single $1,000/month customer adds more MRR than ten $50/month customers, so focus the affiliate program on customer quality, not just quantity.
Track MRR sourced by affiliates separately, for example: 'affiliates contributed $30,000 of $100,000 new MRR this month.'
Measure the affiliate program CAC payback period. If an affiliate customer costs $500 to acquire and pays $100/month, payback occurs in 5 months. For B2B SaaS with long customer lifespans, affiliate-sourced customers often have 12-36 month payback periods, making them highly valuable.
Setting and Hitting MRR Targets
Optimize retention of affiliate-sourced customers, since every customer lost reduces both New MRR and future Expansion MRR. Implement customer success programs that address affiliate-sourced customer needs.
Achieve target MRR growth rates by allocating appropriate budget to the affiliate channel. For 15% MRR growth on an existing $100,000 MRR, you need $15,000 in new MRR. Calculate the affiliate contribution needed to reach this goal and budget accordingly.
