Understanding Subscription Business Model Metrics.
On matters to do with subscription business model metrics, it is not a cup of tea for everyone. Even the large number of those who claim to understand it only know of some parts and not all the metrics. However, 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. There are other services that have made their way into the field as well, like e-commerce boxes and even gaming services. There are quite a number of service and everyone will end up subscribing to at least one of these. 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. For starters, there is the monthly recurring revenue(MRR). It is important when it comes to performance indicators. 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. Nonetheless, don’t forget to do a monthly review of the revenue you have collected through the subscription service.
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. Nonetheless, don’t just relax because you have hit your target because you can always set new targets and start working towards achieving them. 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. Understand that the subscribers can also decide to 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. You want this churn rate to be as low as possible.
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