Recurring Revenue Deals, Upgrades, Downgrades, Churns, Renewals and Line Items
My company sells both recurring revenue items as well as one-time revenue items. A deal could have just recurring revenue line items, just one-time revenue line items or a combination of recurring and one-time revenue line items within one deal. Also, upgrades, downgrades, churns, or purchases of new line items can happen in the middle of a contract. I know there is Hubspot's RR functionality but I don't think it works best and I also do not think it's easy to report using it. I'm taking an example of a case and explaining my understanding of what needs to be done if I use the RR functionality. Please correct me if I'm wrong.
Example:
1) On 01 Jan 2023, a Customer A purchases 2 products within a deal where product 1 is a recurring item for $10K MRR purchased for 24 months and product 2 is one-time item for $2K. For this I create a deal #1 with RR deal type as 'New' and RR amount as '$120K' (in ARR). I leave RR inactive date and RR inactive reason empty at this point.
2) On 15 Feb 2023, the customer upgrades product 1 by $1K MRR. Now I create a deal #2 with RR deal type as 'Upgrade' and RR amount as '$132K' and leave RR inactive date and RR inactive reason empty at this point. After this, I locate deal #1 and update RR inactive date as '15 Feb 2023' and RR inactive reason as 'Upgrade'.
3) On 01 Jun 2023, the customer downgrades product 1 by $2K MRR. Now I create a deal #3 with RR deal type as 'Downgrade' and RR amount as '$108K' and leave RR inactive date and RR inactive reason empty at this point. After this, I locate deal #2 and update RR inactive date as '01 Jun 2023' and RR inactive reason as 'Downgrade'.
4) On 01 Jan 2025, the customer renews product 1 for 1 year. Now I create a deal #4 with RR deal type as 'Renewal' and RR amount as '$108K' and leave RR inactive date and RR inactive reason empty at this point. After this, I locate deal #3 and update RR inactive date as '01 Jan 2025' and RR inactive reason as 'Renewal'.
5) On 01 Jan 2026, the customer churns. Now I locate deal #4 and update RR inactive date as '01 Jan 2026' and RR inactive reason as 'Churned'.
My questions:
1. Is my understanding correct?
2. How do I report using this outside Hubspot? Seems quite complex to me as I need to look at both close date and RR inactive date to decide whether to count a deal within a time period or not.
3. In the example above, I would report $132K as Upgrade in Feb 2023 but really the upgrade was only for $12K in Feb and the new deal for $120K was closed in Jan 2023. But wouldn't hubspot's RR report show all of $132K as existing revenue in Feb 2023?
I want to be able to report two things:
1. Show the gross revenue added/removed every month broken down by - new ARR added, upgrade ARR added, downgrade ARR, churn ARR.
2. Show the accumulated ARR of the customers for the company at the start of every month.
I have an another solution in mind which might not be 100% but I want to hear from all of you first. Also, sorry I know this is a long read but I want it to be as descriptive as possible. I looked everywhere but could not find anyone discussing this online.
Recurring Revenue Deals, Upgrades, Downgrades, Churns, Renewals and Line Items
@Tesore@BAmico@BGerolla Hi team, I would love to have some ideas from subject-matter experts on this post. Any idea from our Brazilian partners? Thanks
Recurring Revenue Deals, Upgrades, Downgrades, Churns, Renewals and Line Items
@SStevenson@Swevive I have a similar problem as well and my biggest issue is that I don't like creating a new deal for a renewal/upgrade/downgrade because I want to keep all the history, notes, etc. from the last deal.
When you create a new deal do you copy any information from the previous deal?
Currently I have not been using a single deal and just extending the close date to the next renewal date. However, that doesn't work great for tracking because there is no historical tracking to see what renewed since we aren't recording anything in Closed Won, but rather only Churn is recorded in Closed Lost. This is being tracked on Finances end but it would help to also track this in HubSpot
Recurring Revenue Deals, Upgrades, Downgrades, Churns, Renewals and Line Items
@NSaley Thanks for sharing your views and furthering this discussion. In my company, we are currently not creating deals for downgrades/churns. We create new deals for renewals and new business deals and the close dates on these deals once the deals are moved to "closed won" are locked and not changeable. And in the renewal deals, we are not copying any information from the previous deals but because the renewal deal is associated with mostly the same contacts and the same company as the previous new business deal, the information we need is easily available.
It is interesting that you use "closed lost" stage for churned deals. We use "closed lost" stage to denote deals that we did not win, that is, the ones that we did not sign a deal with, the ones that were lost in the middle of the sales process.
Recurring Revenue Deals, Upgrades, Downgrades, Churns, Renewals and Line Items
We have two pipelines - a sales pipeline and then a customer success pipeline.
Sales uses Closed Lost for deals that we did not win during the sales cycle. Then once the deal is Won, a new deal card is added to the CS pipeline for the ongoing support and tracking of the license. It is in this pipeline that we use Closed Lost for Churned. The Sales pipeline stages are similar to a typical sales pipeline (identified, solution selling, contract closing, won, etc.). However the CS pipeline the stages are based on the license renewal (6months to renewal, 4-6 months to renewal, 1-3 months to renewal, <30days to renewal) and move along the stages automatically via a workflow and the license renewal date (close date in HubSpot).
I did some additional reading last week and stumbled upon an interesting idea that I am going to try. I have created a workflow that copies the key license details from the deal in the Customer Success pipeline and marks it as Closed Won/Renewed in the CS pipeline if the license renews. Then the original deal card moves to the appropriate stage of the CS pipeline based on the updated close date (renewal date).
This should allow me to better track renewals and churn - but also keep all the historical details that are only attached to the deal card and not the company/contact cards.