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Keeping track of your subscription business is not merely an afterthought: it’s essential to its success. Without tracking, it’s nearly impossible to manage a subscription model, much less monitor its success or failure at any given point in time. 

The trick, however, is figuring out which metrics you need to track and how often you need to track them, in order to know where to concentrate your efforts — are there areas where your subscription business is coming unstuck? Are there measures you can take to improve your subscription model? Without tracking your key metrics, your subscription business is unlikely to grow any time soon. 

In this post, we’ll look at the key subscription metrics you need to be tracking, and recommend some useful tools that can help you stay on top of them. 

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What are the must-have metrics for tracking your subscriptions?

There are a few metrics you can’t afford to lose sight of if you want to run a successful subscription business. They include:

  Revenue

   First and foremost, you need to track revenue: this is the metric that will ultimately tell you how successful your subscription business is. It will allow you to track the lifetime value of your customers, average revenue per customer, and how much revenue your subscription business is generating on a monthly, quarterly, and annual basis. 

  Acquisition 

   You also need to track your acquisition metrics. This includes the number of leads you’re generating from all sources, conversion rates for your different lead sources, customer acquisition cost (CAC), and customer lifetime value (CLTV). The CLTV metric is essential to keep track of because it will give you insight into how much each customer is actually worth to you. This is helpful when you’re considering different marketing campaigns.

  Retention 

    One of the most important metrics for a subscription-based business is customer retention: this simply refers to the number of customers who have remained loyal to your brand over a given period. By measuring retention rates, you can determine how many of your customers you’ve been able to retain, and (if necessary) identify ways to drive retention by keeping them engaged for longer. You can measure retention using this simple formula:

Total customers at the end of the period – new customers gained during the period/customers at the start of the period = Customer Retention Rate

  Churn

   On the other hand, it’s important to measure your customer churn rates: this is the percentage of your customers who cancel (or decide not to renew) their subscriptions over a given time period. It’s closely linked to retention, of course (since reducing churn and increasing retention typically go hand-in-hand), but measuring your churn rate — and taking preventative measures to reduce churn where necessary — will ultimately help to drive more customer loyalty. 

How often should you track these metrics?

All of these metrics are essential to track on a regular basis. You need to know how much revenue your subscription business is generating, and where it’s coming from. You should also track your acquisition metrics on a regular basis so that you can determine whether your marketing efforts are bringing in the right leads. The CLTV metric will help you determine how long customers are sticking around, which is essential to help you plan for the future while keeping a regular watch over your churn rates will help you identify when, why and how you’re losing customers.

By tracking all of these important metrics at least on a weekly basis, you’ll have a better chance of identifying any issues within your sales funnel: maybe you’ve seen a drop-off in acquisitions, which might suggest that you should review your lead generation strategy, or your churn rate has suddenly increased, which would indicate that your attempts at keeping your customers engaged are not working. In any case, you can take the necessary steps to try to remedy the situation. 

Which tools can you use to track and manage subscriptions?

Fortunately, there are a number of tools out there that make subscription management and tracking easier than ever before. They can automate key parts of the subscription management process, and uncover key metrics that can help you optimize your subscription business model. For example: 

- Subscription management software is often the best way to manage and keep track of your key subscriber metrics: subscription management by Chargebee, for instance, will give you visibility of every customer’s lifecycle, providing a unified view of all your subscriber data in one central location. Subscription management software also enables you to roll out a number of flexible pricing plans, simplify the billing process for your customers, and recover failed payments more often. 

- Web analytics tools such as Google Analytics are also effective when it comes to providing insight into your subscription business: you can measure the traffic your website is generating, how long customers are spending on your site, the rate at which they “bounce” (leave after viewing a single page), and so on. These metrics will help you understand how your users are interacting with your business, and identify areas to improve acquisition, conversion and engagement. 

- Customer communication platforms are a great way of getting to the heart of your customers’ needs and pain points: Intercom’s Engagement OS helps you open up a direct line of communication with your customers across sales, marketing, and support. That’s essential, because as useful as quantitative (numbers-based) data is, qualitative data (which is based on your customers’ real-life experiences) is just as valuable when it comes to truly understanding your subscribers. 

Which product metrics should you track?

You need to track each and every metric that relates to your product, or the core service or product that your subscription business is providing. This includes:

- The number of subscribers paying for your service

- The retention rate of those subscribers

- Average revenue per user (ARPU)

- Average customer lifetime value (ACLTV)

You also need to track the number of cancellations and the reasons why customers are canceling their subscriptions. These metrics will help you keep track of how your product is doing, including how many customers you’re acquiring and what they’re paying for your service. These metrics will also help you determine how long customers are sticking around, and how much revenue you’re generating from each of these customers.

Which customer behavior metrics should you track?

You also need to track customer behavior metrics for your subscription business. This includes the number of active users, customer engagement, customer retention, and customer referral rates. You also need to track the number of new sign-ups, cancellations, and net new customers. These metrics will help you determine how your customer base is interacting with your subscription business. This will also help you determine how many new customers you’re acquiring and how many cancellations you’re experiencing.

Which marketing and advertising metrics should you track?

You also need to track marketing and advertising metrics for your subscription business. This includes the number of leads you’re generating from your different marketing efforts, conversion rates for these marketing channels, and the cost per lead (CPL) of your lead sources. 

Of course, you also need to track the number of sales you’re generating through marketing, conversion rates for your sales sources, revenue per sale (RPS), and cost per sale (CPS). These metrics will help you determine which marketing channels are bringing in the most leads for your subscription business, and also how much revenue you’re generating from each lead source. Not only that, but they’ll help you determine how much it’s costing you to generate each lead and convert each lead into a sale.

Summary

There’s no such thing as too much data when it comes to running a successful subscription business. The more data you have about your subscription business, the better you’ll be able to manage your subscription business and stay on top of its progress. That said, you need to make sure you’re tracking the right metrics. This includes tracking revenue, acquisition, retention, and customer behavior. You also need to track product metrics, marketing, and advertising metrics, and customer sentiment metrics, in order to ensure your subscription business, can continue to grow at scale. 

Feel free to contact us to see the unprecedented growth of your business.

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