Truth be told; subscription businesses are a hot trend worldwide. And this is easy to see since the subscription business model seems to work for almost any industry. But running such a venture is not a piece of cake as it sounds. No wonder most entrepreneurs make the mistake of measuring subscription business metrics similar to businesses that rely on one-time sales.
While they might not see flaws with this decision, it could cost them in the long run. After all, this doesn’t give them the entire story they desire. Keep in mind subscription businesses leverage recurring revenue to maintain strong profit margins. That means you should do all it takes to keep your customers happy and track key business metrics.
Skimp on this, and your subscription business may fall down the pecking order sooner or later. Rather than turning a blind eye as this happens, it pays off to know the key metrics you should track. Below are three subscription metrics to track and drive business growth hassle-free.
Monthly Recurring Revenue (MRR)
Monthly Recurring Revenue (MRR) is about the total amount of predictable revenue you expect to receive in a month. Keeping tracking of this metric helps subscription business owners understand the existing month-to-month differences in their venture. You can view it as the average of different billing periods and pricing plans.
Even though you might not deem this metric vital, it is the lifeblood of your subscription business. You want to keep a close eye on your subscription growth, and it is possible when you evaluate your MRR. In short, you should use this metric to determine what is derailing your subscription business from realizing the set goals.
Retention Rate
The retention rate metric looks into the percentage of customers a subscription business retains in a specified period. sThere is no way your business will remain afloat if it fails to achieve customer satisfaction.
And since you want to give your competitors a run for their money, you need to know how many customers stay with you. By leveraging the retention rate business metric, rest assured you will keep your customers happy over their lifetime.