Everyone’s probably asking you to get into a subscription model that makes the most profit for your business. This isn’t the easiest task given you need to balance the needs of your readers and your revenue needs overall. To know if you’re moving ahead with your efforts, it’s a good idea to measure the success of your news subscription business.
In order to measure the same, you need to look for subscriptions outside of just the category of “revenue”. Subscriptions tell us so much more about our businesses. It shows reader loyalty, brand awareness, and retention rate of your content. The retention is reflected by your subscriber loyalty. If it becomes a reliable revenue stream this means you’ve found yourself with good retention rates.
If you have a steady stream of readers visiting your website
Get a lot of engagement from your followers
Have a niche that will help you generate content
Once you have a ad/alternative revenue stream in place to support your efforts
Have time/resources to put more effort into your platform as payback
These are key performance metrics that help you narrow down your attention on some performance factors that you can keep track of to understand progress made in your business. These differ from business to business and are based on business strategies adapted.
Metrics such as - customer acquisition costs, customer lifetime value, pricing strategy help measure subscription rates, retention rates and revenue earned.
Monthly and annual recurring revenue
This refers to the revenue that is generated every month for a subscription. This is because most subscriptions can be repeated every month. If your brand has annual plans or quarterly plans, you can divide this to know how much you make from your subscriptions on a monthly basis. You add up all the active subscriptions. What’s important to remember is that only recurring bills are calculated and nothing else.
Churn rate
This refers to the subscribers that will or have terminated their subscriptions. This has to be expected. One can hope for a low churn rate however this number is ever changing. If you’re seeing low churn rates you’re doing this right, if however, it increases, you need to switch things up. You can calculate churn rate monthly, half yearly or annually. The best way to balance this is to increase the amount of new subscribers onto your website. It is important for businesses that have a high initial user acquisition cost.
Average revenue per account
This gives you how much your company’s revenue per customer account is. This is important because each subscriber could be on a different subscription plan. Like a premium account and a student account would be bringing you very different revenue. Counting the average monthly will help you understand how much steady flow of revenue you’re making. It also helps understand if you should focus on a particular set of subscribers.
Renewal rate
This is determined by the total number of subscriptions that get renewed. This is a very telling metric of the success of your subscription plans. In a healthy subscription model, your renewal rate should be high and it should help support your growth. This can be calculated annually or biannually. This is indicative of future growth.
Customer lifetime value
It is one of the most important metrics out there as it indicates the total revenue potential of a customer i.e, how much money can you profit by having a particular customer. If they’re more regular, if they’re on a bigger subscription plan then the value increases. The value one puts in retaining a customer for longer must supersede anything else. The way to calculate this is by taking the average monthly recurring bills per customer by churn rate.
You can have the best tool in place and the most vibrant audience but it will all fall short if you’re not pioiritizing the right things. These were some of the metrics that you should look into but there are many others that are subjective to your industry or company that you musn’t overlook. Success in subscription is when you’re making steady revenue throughout a long period of time and you’re able to carry your subscribers from one year onto the next. Loyal subscribers are more important than premium subscribers. They will carry the company ahead.
At Quintype, we have a subscription management tool that will help you analyze these metrics with ease. Get on Accesstype now and make bills and subscriptions easy. Schedule a free demo today!