What You Should Know About Subscription Business Model Metrics.
Subscription business model metrics are not the easiest to understand for many people. Even those who have are familiar with the concept don’t understand all parts of it. Don’t sweat it though if you are struggling to understand this because this article is all about that. Video content streaming services are quite popular in America and more than two-thirds of the households in the country have subscribed to that. The subscriptions keep increasing and now e-commerce boxes and game service subscriptions have been added to the list. There are quite a number of service and everyone will end up subscribing to at least one of these. On the same note, this is a great opportunity for those in business.
Even so, the only way to win in matters to do with subscription business models is getting a good grasp of the metrics as a business person. You will be able to use the metrics to determine the amount of success you have achieved if you understand them, and the information is also crucial when making improvements. For starters, there is the monthly recurring revenue(MRR). It is a key KPI. Basically, it is the sum total of the revenue made through the subscription service. Starting a subscription service is with the hope that you will be getting a consistent revenue flow. Even so, you need to be reviewing this metric every month to see just how well things are going.
In addition, you ought to be monitoring the MRR in the event of major changes to the subscription service you are running or if you have just started a new marketing campaign. Actually, you can tell how the other metrics are doing by just looking at the MRR. Even so, there is always the opportunity to do better. For those who have a complex payment model, things can get quite complicated in matters to do with calculating the MRR. In keeping it easy you should avoid including incentives and special deals in that case. Also, you need to include first-time payments on the calculations are well.
Another metric you need to keep in mind, in this case, is the churn rate. Subscribers will opt-out at some point. You have to deal with the dreaded churn at some point. Ex-customers are referred to as churn. Don’t forget that this number won’t give much data on its own. You should calculate the percentage of the churn in relation to the subscribers you have. By keeping the churn rate low you will always have a great turnover as far as the revenue goes and this is where your focus should be at.