The 5 recurring benefits of advanced subscription analytics
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 at their 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 their revenue stream.
What about your company? Are you realizing all of the recurring benefits of advanced subscription analytics?
The recurring benefits of insights on subscribers and subscriptions you can act on
You should expect more from your analytics dashboards. 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.
The best part is these aren't one-time benefits. Improving your revenue per user and customer lifetime value (among other key metrics) pays off over and over with a growth rate your company will feel every time you close the financial books.
Start measuring subscription performance
There are many critical subscription metrics we recommend companies monitor surrounding acquisition, revenue, and retention.
KPIs for Growing your Subscription Model-based business
Below are the five benefits we see merchants realize as they begin incorporating subscription analytics into their decision-making processes. If your revenue business model relies on monthly subscriptions, you can expect these recurring benefits to improve your business.
1. Subscription metrics will improve your acquisition efforts.
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. Tracking trial conversion rate illuminates your growth potential.
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 for any subscription business.
3. Measuring and identifying voluntary churn leads to better customer experiences.
Churn keeps subscription company execs up at night, and you can't manage what you don'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. Studying monthly recurring revenue (and customer churn) helps you manage cash flow.
Projecting cash flow can be tricky in a recurring revenue business model. You have to consider both expected revenue and churn in a given time period. Subscription revenue 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 such as
Subscription revenue models thrive (or dive) based on how well they manage their customer lifecycles and how to build new business out of their loyal customers while adding to their subscriber base. Revenue analytics is one of the best ways to uncover smart ways to expand your business while strengthening its foundation. As you track customer behavior alongside your MMR, you'll discover changes that pay off in real annual revenue.
5. Follow these revenue analytics to build subscription profitability
Ultimately, your subscriptions must be profitable. Without access to the right analytics, determining whether your revenue model is profitable can be harder than you think. To better understand the true impact of subscriptions on your bottom line, measure your subscriptions revenue model with these analytics:
Lifetime Value (LTV)
Average Revenue Per Customer (ARPC)
Gross Margin Percentage
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 customer retention, you can move quickly and pivot when conditions change.
Analytics to track recurring revenue that builds your subscription business
The right analytics tools will unveil new opportunities for business decisions that will build monthly revenue as well as pay off your marketing efforts.
At Recurly, we make it our business to help you grow your subscription business, and we're always working to do that better.
The smart way to calculate recurring revenue
Adding your recurring revenue for the month including gains and losses may seem simple. However, you're missing crucial business signals if you're not taking advantage of analytics tools that show you Expansion MRR (gains from active subscriptions contributing more to your MRR than last month) and churned MRR (as in the losses from canceled subscriptions). Without those details, your recurring revenue calculations only can give you an aggregate revenue.
Start managing your subscription business with Recurly.
You'll uncover new opportunities to develop your business while optimizing your subscription business. Opportunities, by the way, are already there. You only need the right platform dedicated to helping you uncover new subscription profitability, foster long-term success, and strengthen your revenue analytics.
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.