Understanding Subscription Business Model Metrics.
Many people struggle to understand subscription business model metrics. Even among those who at least have an idea of what is only understand some bits and not everything. Don’t worry though if you wish to know more about it because this article talks about just that. At least 2/3 of the households in the US have a subscription to one service in streaming video content. The subscriptions keep increasing and now e-commerce boxes and game service subscriptions have been added to the list. Given the many options available now, a lot of people have gone ahead to make this choice. This is a model that benefits business people if they take advantage of that.
Nonetheless, there is no other way around succeeding unless you grasp the nitty-gritty of subscription business model metrics. Without this understand you won’t be able to truly understand the success of your subscription or even make improvements that are backed by research. One of the metrics you need to understand if the 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. However, you need to take note of this metric on a monthly basis to see whether there is growth or not.
In the event that you have done major changes in the subscription service or even started a new marketing campaign that is powerful you need to check on the MRR. Even without checking the other KPIs, you can tell whether the results are good or not based on how the MRR looks. However, there will always be room for you to improve on this. Nevertheless, it won’t be easy to calculate the MRR if you have a complex payment model. When you don’t have incentives or special deals on the subscription-based revenue model you can do better. On the same note, you should include taking note of first-time payments when you are computing the revenue.
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. It has to be analyzed with other indicators for you to get useful information though. You should do a comparison between those who are in the service compared to the churn. 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.