The basics of subscription analytics

To successfully grow your subscription business, you need to understand how to continually improve it. Continuous improvements must be data-driven and thus, we must measure the right things. Unfortunately, many subscription businesses complicates their analytics, which causes them to loose focus. It is important to go back to the basics to succeed.

In general, we often see subscription businesses fall into one or more of the following traps:

  • Measures too many metrics, which creates confusion and lack of focus.
  • Fail to use consistent definitions and nomenclature, which also creates confusion.
  • Lack of data quality, which means people will loose trust in the numbers.
  • Focuses on too specific metrics, which means that you miss the big picture.
  • Lacks connection to the overall targets, which means you can’t evaluate performance.

To get around these traps, it’s a good idea to go back to the basics. All subscription businesses should be able to answer the following questions:

  1. How many subscribers do we have right now?
  2. How many new subscribers did we get in the last period and from where?
  3. How many did we loose the last period? For example churn or renewal, depending on your business.
  4. What is the revenue from our subscribers? For example MRR and/or ARPU.
  5. How active and engaged are our subscribers? A good leading indicator for churn.
  6. What’s our performance in relation to our goals?

When you can answer these questions, only then should you proceed to more advanced metrics and analytics. These usually include lifetime values, campaign metrics, funnel analysis, cohort analysis, and so on. All these metrics are important, but first you have to get to the basics right. Educate your organisation and preach your metrics and targets to everyone. This way you will ensure alignment in everything the organization does.

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