TRENDS TIPS SUCCESS
Follow subscription news and get tips from the ZIQY community to maximise your growth.
Le 23 Nov 2016
The ZIQY subscription expert today invites you to look into your key performance indicators. They allow you to determine the quality and success of your subscription offer. There are many KPI. Their accurate and regular analysis makes it possible for you to put in place a process of continuous improvement and to maximize your business performance. Remind yourself of this quote from Harvard Business School: “You are what you measure”.
KPI no. 1: The CHURN or ATTRITION RATE
The churn is the rate at which you lose your customers each month. This may vary and depend on several factors. However, it is one of the best performance indicators of your subscription offer. Note that your churn rate must be less than your customer acquisition rate so that your business can develop.
How can you control your churn rate?
To best control your churn rate and try to keep it to a minimum, you need to be aware of what affects the growth of your subscriptions.
Customer knowledge is thus your best ally. Below are a few questions that you might ask yourself:
- Have you gained a large number of new subscribers recently
- Where are these new subscribers from?
- Did they use a discount?
- What is the feeling of your purchasing department about the box?
- What is the feeling of your subscribers when they receive their product or service?
- Does the service quality meet the required standards?
KPI no. 2: the cost of customer acquisition or COCA
The cost of customer acquisition is the amount that you spend per new customer. The best way of determining the entirety of your COCA is by determining your overall budget allocated to marketing and communication expenditure (AdWords campaigns, display, media relations and influencers). Divide this by the number of new customers acquired over a given period. It is normal when you start your activity for your COCA to be more than your customer revenue.
It is here that the CLTV comes into play: you need to actually see the revenue that a customer will bring you over the period. Not for one payment.
KPI no. 3: Average revenue per user (ARPU) and recurring monthly revenue
The average revenue per user is equal to the average amount that each customer brings you. To calculate it, just divide the total revenue of all customers by the number of customers.
For example, if you have revenue of €5,000 (for all customers) and 200 customers, the average revenue per customer will be €25.
This allows you to anticipate the total amount of revenue that you will have each month. A useful function for planning cash flow and forecasting your future investments.
KPI no. 4: the Customer Lifetime Value (CLTV)
The customer lifetime value is the amount of expected generated profit on average over the lifetime of a typical customer.
It may be difficult to determine for new businesses. Complicated by knowing how long on average your customer will stay subscribed.
Once you start to analyse your monthly performance, you will be able to make reliable assumptions on the average lifetime of your subscribers.
The lifetime value is particularly important. It can help you to determine a sustainable COCA. The higher your CLTV, the more you can justify higher expenditure on customer acquisition.
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