A subscription-based business model is becoming increasingly popular, as it provides recurring revenue and a predictable stream of income. A key part of a successful subscription business is understanding and tracking the right metrics and KPIs. In this article, we’ll discuss the most important subscription model metrics and KPIs, and how to track them.
What are subscription metrics and Kpis?
A subscription-based business is one that charges its customers a recurring fee in exchange for access to a product or service. This type of business model has become increasingly popular in recent years, as it allows companies to build a more predictable revenue stream.
There are a variety of metrics and KPIs that can be used to measure the success of a subscription-based business. Below are some of the most important ones:
1. Churn rate: The churn rate is the percentage of customers who cancel their subscription within a given period of time. This metric can be used to measure customer satisfaction and determine whether or not customers are finding value in the product or service.
2. Revenue churn: Revenue churn is the percentage of revenue lost due to customer cancellations.
Defining subscription metrics
When you’re working on a subscription business, it’s important to track your metrics and key performance indicators (KPIs). This will help you determine whether your business is healthy and growing. There are a few key metrics that you should track in order to understand how your subscription business is doing.
First, you’ll want to track customer churn. This measures the percentage of customers who cancel their subscriptions within a given time period. By tracking churn, you can work to reduce it and keep more customers locked in to your service.
Another important metric is revenue churn. This measures the percentage of revenue that’s lost due to cancellations or downgrades within a given time period. Again, tracking this metric can help you understand where you’re losing money and work to fix it.
You’ll also want to track monthly recurring revenue (MRR).
Determining which subscription Kpis to track
When it comes to subscription metrics, there are a few key KPIs that you should be tracking. Here’s a guide to the most important ones:
1. Churn rate: This is the percentage of customers who cancel their subscriptions within a given time period. It’s important to track churn rate both for individual subscriptions and for your entire customer base.
2. Revenue churn: This measures how much revenue your company loses when customers cancel their subscriptions. Tracking revenue churn can help you identify which products or services are causing the most losses.
3. Customer lifetime value: This measures how much money a customer is worth over the course of their relationship with your company. CLV is calculated by multiplying the average customer lifetime by the average monthly recurring revenue (MRR) generated by each customer.
Measuring subscription success
In the early days of a subscription business, it can be difficult to determine whether or not your venture is successful. For information about subscription box ideas to start in 2022 then subbly is best platform for ideas. However, there are certain metrics you can keep an eye on to help you measure your subscription’s success. Below are three essential metrics to track:
1. Customer churn rate
2. Monthly recurring revenue (MRR)
3. Customer lifetime value (CLV)
Churn rate is the percentage of customers who cancel their subscriptions in a given month. This metric is important to track because it can indicate whether or not customers are satisfied with your product or service. If the churn rate is high, it means you’re losing customers faster than you’re acquiring them, and you’ll need to find a way to fix that.
Subscription businesses need to track different metrics and KPIs than other businesses. The three most important subscription model metrics are churn, lifetime value, and CAC. These metrics help you understand how your business is doing and whether or not it is becoming more or less profitable over time.
Hamza Fazal is a reporter for The Hear UP. After graduating from the University of Abbottabad, Hamza got an internship at the NPR and worked as a reporter and producer. Hamza has also worked as a reporter for the Medium. Hamza covers health and science for The Hear UP.
Great Resignation: How to beat Great Resignation with Employee Experience
The world was forever changed in late 2019 when the Coronavirus made its appearance. Countries shut down. Streets were empty. Companies held as best they could or were forced to close their doors. Many would believe that such an event would lead to employees wanting to hold on to their jobs. Typically, large numbers of resignations signify a good economy and abundant availability of jobs allowing people to follow passions instead of necessity.
Post-COVID employee experience is much different.
For two years, and some a bit more, people were forced to spend time alone, realigning the importance of human interaction, well-being, and happiness. This drive for more personal fulfilment, satisfaction, and growth stemmed The Great Resignation.
No longer were employees basing staying with jobs out of need or comfortability. Now they look for work-homelife balance, greater satisfaction and better employee experiences, or they will leave. So how do companies face this? How do they increase employee retention and improve employee engagement?
The secret is in employee experience.
Holistic Employee Experience
There are, of course, no quick fixes for the Great Resignation, small wins can motivate and drive longer-term goals for your organization. The Great Resignation—and COVID by extension—taught many employees that life meant so much more. That the daily grind working in offices with long commutes, stress, lack of rest or relaxation, and the hustle of strenuous work weeks while normal was not conducive to happiness and mental well-being.
But this shift can be used as a blueprint for better employee experience!
Companies who work on being human-centric in ideals, strategies, and decision-making can improve greatly their chances of stemming mass exodus. Post-covid employee experience is now the new golden standard, and it looks at taking a more comprehensive and holistic view of experiences.
How can you be more holistic and how does it help?
- Think beyond probationary periods – Your employees are more important than the first 30, 60, or 90 days of employment, and yet many companies stop professional development and training after these dates. Normalize career growth, evaluations, employee 360 reports, and feedback loops to keep learning and advancement in the scope of your employees. While doing this, you’re also keeping your strategies and Key Performance Indicators—KPIs—fresh as you go.
- Communication is key – Talk to your employees about what they need, want, desire, and what their ambitions may be. Learn your people like you want them to learn your company. With transparent and open communication, you are engaging with your employees and creating an environment of consistency, openness, and inclusion—aspects employees’ desire.
- Employee-centric Corporate Culture – It may seem like the best idea is to center your company culture around the company’s values, vision, and strategies, but this is only half the battle. Integrating employee experience into the fabric of company culture ensures the company is as focused on their employees’ happiness as their own. It creates a bond to grow engagement, which has an effect on employee satisfaction and experience. As these rates increase, so to can employee retention numbers and customer experiences.
- Life and work-balance Erasure – Should your employees have to ask for more work-life balance? No, they shouldn’t. When built directly into work environments or expectations, it becomes something standard instead of something to be sought after. Examples of this could be:
- Flex hours
- Unlimited PTO
- Work-from-home or hybrid offerings
- Expanded benefits to include mental health and free resources
- Altered work hour schedules
Rise of Human Experience
Human Experience is a viewpoint that blends aspects of customer experience with employee experience, important in a post-COVID world. Instead of viewing them as separate entities entirely, companies can connect metrics and measurements of both to view a more comprehensive experience. Employees are customers—or potential ones—and as such, so too can customers become employees. With this view, it refocuses employee experiences in direct answer to the needs stemming The Great Resignation.
Ways you can use CX strategies within EX:
- Employee Journey Mapping – Like in customer experience, companies can work on mapping journeys for positions within the company overall, building in professional development and growth from the outset. They can then alter these journeys through personalization when an employee fills that role.
- Monitoring metrics – connect goals, milestones, and trajectories with metric directly linked to KPIs. Think employee net promoter score (eNPS), employee experience (EX), employee satisfaction (ESAT), and employee engagement (EE), for example, as they can correlate with operational success as well as customer success with your organization.
- View of employees – view your employees with the importance you view your customers. You cannot survive without either, and just as you court customer loyalty for more profitable relationships, so to can employee relations boost revenue, growth, and expansion.
Remote and Hybrid Work
One of the lasting effects of COVID was the desire to work from home or have the flexibility to. According to Gallup, nearly half of full-time working Americans—45%—are still working remotely. White collar workers have even higher percentage, coming in at 70%. After the shutdown, many leaders were surprised to find employees still wanted to work remotely. The Pandemic exposed an internal need for conducive work environments and flexibility.
The office and all it entailed wasn’t as attractive as some leadership believed.
It was agile leadership who switched to maintaining remote or hybrid options who won out against competitors. Record job openings only further highlight how living is more important, and work can no longer be focused on only paying bills. Organizations who shift better with their employees retain talent better.
Remote work is not the only fix, but it does show how views of work’s place have vastly changed.
Act on Meaningful Feedback
Closing the loop between you and your employees is more important than ever before. Simply hearing them is not enough. Active, empathetic listening pair with actions on a consistent basis is the wining combination. Employees not only want to know they are heard but that their input is valued.
Regularly checking in with your employees, and not only attaching it to their performance, creates a culture of partnership.
Ways to gain meaningful feedback to inspire data-driven action:
- Employee 360 Review [LN1] [SP2] – not to be confused with an employee evaluation, the 360-degree review is a way for all employees to gain feedback from peers, subordinates, and managers to assist employee self-evaluation.
- Pulse checks – a powerful anonymous survey tool. Pulse checks are in between annual reviews and keep the feedback coming for HR initiatives, but it can also inform business strategies that are employee-focused as well.
- Surveys – From satisfaction to engagement, the best thing you can do is ask your employees. Working from assumptions can lead you down costly mistakes. By asking directly you can get their true opinions—think of using anonymity to influence candid responses.
The biggest takeaway from this is: employee experiences is an important part of operational success. The evolution of its importance and what it means cannot be discounted. Doing so can led to higher employee turnover rates and you won’t retain your best talent. As employee experience continues to change, the forward-thinking companies with innovative leadership will make it to the top.
[LN1]Would it be okay to tag our template here?
Yes, we can [SP2]
Khalil ur Rehman is a proud born and raised in Abbottabad. Khalil has worked as a journalist for nearly a decade having contributed to several large publications including the Yahoo News and The Verge. As a journalist for The Hear Up, Khalil covers climate and science news. [email protected]