Key Retention Metrics That Will Make or Break Your Subscription Business

Tracking retention is important. And most organizations track retention.??But you need more than that one metric to manage your business. By the time you lose a customer, it’s very hard to win them back.

So you want to measure other things-, leading indicators that can help you improve retention from the moment someone becomes a customer.

Below, I provide a pretty exhaustive list of metrics to help you understand what is driving churn in your organization and to identify ways to improve it.

I don’t expect every organization to use every one of these, especially if you’re just starting out.

A good place to start is by tracking churn, acquisition volume, cost of acquisition and lifetime customer value. With those metrics, you’ll understand how much you’re paying to acquire customers and which ones are actually valuable to you.?

But as you identify hypotheses about what’s driving churn, some of these other metrics can help.?

It might be that they don’t like the product (NPS) or that people who sign up in certain months are less likely to be good customers (cohort analysis) or that your customers never intended to pay after your free trial (free-to-paid conversion).

Pick and choose from these metrics to gain a deeper understanding of what’s behind your retention numbers:?

Lifetime Value (LTV)

Total revenue a customer is expected to generate over the lifetime of their subscription

Churn Rate

Rate at which customers cancel their subscriptions

Engagement

Level of engagement of your customers (how often they use your product, how long they spend on your site, and how many features they use, etc.)

Net Promoter Score (NPS)

Willingness of customers to recommend your product or service to others

Customer Retention Rates (CRR)

Percent of customers kept vs. lost

Failed Payments

Number of failed payments through hard or soft declines

Winback rate

How good you are at winning back (or keeping) customers who've canceled their subscription

Onboarding Success Rate

Percentage of customers you have activated in the first month

Gross Revenue Retention (GRR)

Annual revenue gained from a company's customer base

Additional Sales

How much more your subscribers buy from you on average

Payment Recovery Rates

Percent of customers, or revenue, recovered after experiencing a failed renewal payment

Customer ROI

Return on value of a customer. Calculated by LTV/CAC

Average Customer Lifespan (ACL)

Sum of all of your customer lifespans divided by the total number of customers

Existing Customer Growth Rate

Amount of revenue increase for existing customers?

Time Between Purchases

Period of time between customer purchases

“Loyal Customer” Rate

Number of customers who have purchased a desired time per year divided by total unique customers (Example: Perhaps you define loyal customers as those who purchase monthly, 12 would be your purchase number)

Customer Satisfaction Score (CSAT)

How satisfied a customer is with your product from 1-5

Feature Adoption Rates

Percentage of customers that use a feature

Repeat Purchase Ratio

The proportion of customers that make more than one purchase

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About Robbie Kellman Baxter

Robbie is the founder of Peninsula Strategies LLC, author of?The Membership Economy, and?The Forever Transaction, as well?the Instructor for 10 LinkedIn Learning courses including:?Create a Membership-Based Business?and?B ecome an Entrepreneur Inside the Company.?Her clients have included large organizations like?Netflix?,?SurveyMonkey, and the?National Restaurant Association, as well as smaller venture-backed start-ups. Over the course of her career, Robbie has worked in or consulted with subscription-oriented clients in more than 20 industries.

As a public speaker, Robbie has presented to thousands of people in corporations, associations, and universities. She has an AB from Harvard College and an MBA from the Stanford Graduate School of Business. Find Robbie on Twitter?@robbiebax,?on Instagram @robbiekellmanbaxter, and on?Facebook?@robbiekellmanbaxter.

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