What are the key metrics and KPIs to measure subscription growth and performance?

1 MRR and ARR

Monthly recurring revenue (MRR) and annual recurring revenue (ARR) are the most basic and essential metrics for subscription sales. They measure the amount of revenue you generate from your active subscribers in a given period. MRR and ARR help you evaluate your overall subscription performance, forecast your future revenue, and compare your results with your competitors and industry benchmarks.

2 Churn rate and retention rate

Churn rate and retention rate are the flip sides of the same coin. Churn rate measures the percentage of subscribers who cancel or do not renew their subscriptions in a given period. Retention rate measures the percentage of subscribers who stay with you and renew their subscriptions in a given period. Both metrics are crucial for understanding your customer loyalty, satisfaction, and lifetime value. You want to minimize your churn rate and maximize your retention rate by providing value, service, and support to your subscribers.

3 Customer acquisition cost and customer lifetime value

Customer acquisition cost (CAC) and customer lifetime value (CLV) are two metrics that help you assess the profitability and efficiency of your subscription sales. CAC measures the average amount of money you spend to acquire a new subscriber, including marketing, sales, and other expenses. CLV measures the average amount of revenue you generate from a subscriber over their entire relationship with you, minus the costs of servicing them. You want to optimize your CAC and CLV ratio by reducing your acquisition costs and increasing your subscription revenue and retention.

4 Expansion revenue and contraction revenue

Expansion revenue and contraction revenue are two metrics that measure the changes in your subscription revenue from existing subscribers. Expansion revenue is the additional revenue you generate from upselling, cross-selling, or increasing the price or quantity of your subscriptions. Contraction revenue is the lost revenue you incur from downselling, discounting, or decreasing the price or quantity of your subscriptions. You want to grow your expansion revenue and shrink your contraction revenue by offering value-added features, services, or bundles to your subscribers.

5 Net promoter score and customer satisfaction score

Net promoter score (NPS) and customer satisfaction score (CSAT) are two metrics that measure the quality and perception of your subscription service. NPS measures the likelihood of your subscribers to recommend your service to others, based on a scale from -100 to 100. CSAT measures the satisfaction of your subscribers with your service, based on a scale from 1 to 5. Both metrics are useful for gauging your customer loyalty, advocacy, and feedback. You want to improve your NPS and CSAT by delivering consistent, reliable, and exceptional service to your subscribers.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?