“The problem is that many people who are new to subscriptions think analyzing the business has to be complex. But actually, it doesn’t,” says Kohan. “A very good businessman told me many years ago, ‘You have to find one number that manages your business.’ For example, in the hotel business, you’ll find that all the best operators focus on one metric: the occupancy rate. That’s because they know that occupancy rate tells you the whole story of the business—it’s like the vital sign, the gas gauge. If you understand that number, you can make a pretty accurate decision about everything else.” So what about the subscription model? Is it possible there is one metric that tells the story? Well actually, for AIMS360, there is. It’s called monthly recurring revenue (MRR).

Kohan admits that it took him a while to figure out how important MRR was. And, “once I figured it out for myself, I had to convince everyone else at my company — especially those who came from a more traditional business background who were accustomed to measuring business against an entirely different set of metrics. You have to make everyone else have the same ‘aha’ moment.” One major battle was with the AIMS360 sales team. Says Kohan, “Sales are focused on the conversion, the decision by the customer to adopt our software. And of course, that is extremely important. To get a customer on board, you often have to bring in extra services as part of the deal. AIMS360 provides an excellent services component as part of our implementation. But once that’s done, the monthly subscription becomes the relationship, and the relationship is the revenue, the lifeblood of the company. So I had to teach our staff that the most important metric isn’t conversions, its MRR. That’s the measure of how successful our company is at maintaining our customer relationships.”

Kohan provides this example of how AIMS360 uses MRR in daily operations: “We display a customer’s MRR in our help desk system. So when a rep is talking to a customer who is having an issue with our products, they are constantly reminded of how much revenue that customer is bringing into the company.” This is important, Kohan notes, “Because it can be tempting to treat customer service after the sale as a lower priority. And let’s be honest, people calling a help desk are not usually in a good mood! But that MRR number reminds our staff how much that customer means to us as a company. It drives home the point that every customer relationship is really, really important.”