When I speak with the executives of recurring revenue companies, we discuss common goals like attracting new subscribers and keeping churn rates low. I always ask how they measure their progress toward those goals — and I’m sometimes surprised by the answers. Not every business that relies on recurring revenue has access to the real-time, advanced subscription analytics necessary to not only monitor their financial health but to make strategic and informed decisions about how to improve performance and profitability. What about your company? Are you realizing all of the recurring benefits of advanced subscription analytics?

Metrics that matter

Beyond allowing you to high-five the sales team for last month’s performance or shake up the marketing team when conversion rates drop, subscription analytics should guide both front and back-office teams to improve business operations and maximize subscriber lifetime value. 

There are many critical subscription metrics we recommend companies monitor surrounding acquisition, revenue, and retention. Below are the five benefits we see merchants realize as they begin incorporating subscription analytics into their decision-making processes.

5 recurring benefits of subscription analytics

1. Improve acquisition

Which products and plans are attracting and engaging subscribers? Is there a better way to bundle your offerings? Are your marketing and acquisition investments generating positive results? Customer acquisition is expensive but critical. Access to subscription metrics such as Customer Acquisition Cost (CAC), Payback Period, and LTV:CAC (lifetime value to customer acquisition cost) will help you determine if your acquisition efforts are hitting the mark — in both the short and long term.

2. Increase free trial conversions

How many customers that take advantage of your free trial offers become paying subscribers? The Trial Conversion Rate (TCR) is a subscription metric that measures the rate at which people who sign up for a free trial version of your product or service become paying subscribers. A higher TCR means faster company growth — and a lower customer acquisition cost — so it’s definitely worth measuring.

3. Minimize churn

Churn keeps subscription company execs up at night, and you can’t manage what you can’t measure. There are also different kinds of churn and causes that need to be kept track of to protect recurring revenue. You can use these metrics such as Subscriber Churn, Churn MRR, and Cohort Analysis to proactively identify the subscribers with the highest risk of canceling their subscriptions or prevent involuntary churn from payment failure, which can translate to millions saved for your business.  

4. Manage cash flow

Projecting cash flow can be tricky for recurring revenue businesses as you have to consider both expected revenue and churn. Subscription analytics provide insights to help you more accurately predict cash flow — and metrics surrounding Monthly Recurring Revenue (MRR) are the heroes here. You can build on the common MRR with additional metrics including, New MRR, Expansion MRR, Reactivation MRR, Churn MRR, Contraction MRR, and, finally, Net MRR.  

5. Track subscription profitability

Ultimately, your subscriptions must be profitable, and without access to the right analytics, this can be harder than you think. Use subscription analytics including Lifetime Value (LTV), Payback Period, Subscriber ROI, Average Revenue Per Customer (ARPC), and Gross Margin Percentage to better understand the true impact of subscriptions on your bottom line.

Access to accurate, timely subscription analytics is a game-changer for businesses like yours. With your finger on the pulse of subscriber acquisitions, revenue, and retention, you can move quickly and pivot when conditions change. 

 At Recurly, we make it our business to help you grow your subscription business, and we’re always working to do that better. Because we believe in the recurring benefits of subscription analytics, we’re making some big changes to Recurly’s Advanced Analytics functionality that will boost speed, depth, and flexibility. 

Stay tuned for more details soon.