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10 tips for running a profitable subscription-based business

Jennifer Lonoff Schiff | Oct. 13, 2015
Experts in customer acquisition and retention and ecommerce share advice on how to create and sustain a successful recurring-revenue business.

10. Use analytics to spot problems and decrease churn. “Track everything with analytics, especially your conversion funnel and attribution for digital spend,” says Bumgardner. “Define your key performance indicators and make sure your team sees these dashboards on a regular basis (e.g., acquisition cost and lifetime value).”

“Average revenue per user (ARPU), average revenue per paying user (ARPPU), average customer lifetime value (ACLV) and monthly recurring revenue (MRR) are just a few of the metrics that you'll want to keep an eye on, depending on which model you pursue,” adds Bryta Schulz, senior vice president Marketing at Vindicia, a provider of enterprise-class subscription billing. “Track these against customer acquisition costs, and make sure you're achieving return on investment.”

Also consider creating “cancellation surveys to understand why customers are churning, and use the findings to alter your product and customer communications to combat churn,” says Bumbardner. Similarly, “consider sending net promoter score (NPS) surveys to proactively gain insight into opportunities for improving your product and pricing.”

 

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