What are the most effective lead qualification metrics for subscription-based businesses?

2 Lead velocity

Lead velocity is a metric that measures how fast your leads are moving through your sales funnel. Lead velocity helps you evaluate the efficiency and productivity of your sales prospecting process and the performance of your sales team. You can calculate your lead velocity by dividing the number of leads that moved from one stage to another by the time period. For example, if you had 100 leads in the awareness stage and 50 of them moved to the consideration stage in one month, your lead velocity from awareness to consideration is 50%. You can also calculate your lead velocity by revenue, by multiplying the number of leads by their average deal size.

3 Conversion rate

Conversion rate is a metric that measures the percentage of your leads that take a desired action, such as signing up for a free trial, requesting a demo, or becoming a paying customer. Conversion rate helps you assess the quality of your leads and the effectiveness of your sales prospecting strategies and tactics. You can calculate your conversion rate by dividing the number of leads that converted by the total number of leads. For example, if you had 100 leads and 10 of them became customers, your conversion rate is 10%. You can also calculate your conversion rate by stage, by dividing the number of leads that moved from one stage to another by the total number of leads in the previous stage.

4 Churn rate

Churn rate is a metric that measures the percentage of your customers that cancel or stop renewing their subscription within a given time period. Churn rate helps you understand the retention and loyalty of your customers and the impact of your sales prospecting and customer success efforts on your revenue. You can calculate your churn rate by dividing the number of customers that churned by the total number of customers at the beginning of the time period. For example, if you had 100 customers at the beginning of the month and 5 of them churned, your churn rate is 5%. You can also calculate your churn rate by revenue, by dividing the amount of revenue lost due to churn by the total revenue at the beginning of the time period.

5 Customer lifetime value

Customer lifetime value (CLV) is a metric that estimates the total revenue that a customer will generate for your subscription-based business over the course of their relationship with you. CLV helps you determine the profitability and value of your customers and the return on your sales prospecting and marketing investments. You can calculate your CLV by multiplying the average revenue per customer by the average retention rate by the average customer lifespan. For example, if your average revenue per customer is $100, your average retention rate is 90%, and your average customer lifespan is 12 months, your CLV is $100 x 0.9 x 12 = $1,080. You can also use more complex formulas that factor in the cost of acquiring and serving customers and the discount rate.

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?