To run the most effective operations in your business you need ensure you are monitoring your business’ metrics very carefully. Metrics are the indicators which demonstrate not only if there is a problem within your business, but where it is and how you might be able to solve it.
Here are some of the key metrics, what they mean and how you can improve the results:
1. Net Subscriber Change
This is where you are comparing the number of subscribers from the beginning of the month to the end. This metric is displayed as a percentage and can be positive or negative. It is worked out by dividing the number of subscribers at the end of month by the number at the start of the month and multiplying by 100.
You’ll always want this figure to be positive. A negative figure will state that your subscriber numbers are shrinking. If your figure is negative you have to look at several aspects of your business. Firstly is your promise before the customer’s signup matching the service you are offering? Not matching your promise can result in customers leaving quickly.
2. Customer Lifetime Value
One of the most important aspects of having a subscription business is to ensure your customer’s lifetime value is high. This allows you to offset the costs to bring in the customers and supply them with your product over a longer period, increasing the profit you make per month. To calculate this metric you need to take the average amount earned from the customers who have left during the month.
A low value can be a sign of a number of different problems including poor customer service, a mismatch of promise and delivery and your customers’ poor valuation of your product. Therefore addressing these issues is an essential task.
3. Customer Acquisition Cost
The main issue with a subscription business is that one month’s subscription does not usual cover what it costs to gain new customers. Knowing how much it costs to acquire the customer and their lifetime value, can help you determine if you are running an effective business.
A high customer acquisition cost specifically refers to your marketing tactics. Therefore you need to consider whether you are utilising the best avenues for your market. PPC and display advertisements cost a significant amount. You may not need to remove them from your marketing mix, but you should adjust them so that your audience is more targeted or the copy is more persuasive.
You should also consider your checkout process ensuring there are as few barriers to buying as possible and your landing pages are optimised. Consider running split testing to test different landing page designs and how effective they are at securing new customers and leads.
As another option you could consider increasing your marketing on other avenues such as blogging and social media, both of which help increase your search engine page rank and are inexpensive. Search engines can contribute up to 70% of your web traffic.
Having a good marketing mix which encourages good page rank can lower your customer acquisition cost.
4. Customer Conversion Time
Not all customers convert instantly upon learning about your brand. Sometimes it takes time for them to do further research or to look around the market for other options. They may subscribe to your mailing list which further down the line will support their conversion. The length of your conversion time is indicates how persuasive your marketing content is.
A long time from the first interaction to converting into a customer means you need to look at your brands’ messaging. Are you being persuasive enough, are you selling features rather than the benefits? These can make a significant difference and lower the time it takes for your audience to covert, the acquisition cost and increase lifetime value.
Getting the most from your marketing is all about understanding the statistics of your business. The above four are highly important if you want to maximise your customer acquisitions and their value. From there you can make adjustments to create a successful, high earning business.