Churn rate is the rate at which customers do not renew their membership.
This piece talks about four metrics that subscription-based ecommerce companies should consider to grow their businesses. Subscription-based business models require constant monitoring and work best when the product is something that customers need on a regular basis, like meal delivery services.
Businesses should consider metrics like monthly recurring revenue, customer acquisition costs, churn rate and customer lifetime value. Multiplying the average revenue per account (ARPA) with total number of customer will provide the monthly recurring revenue.
ARPA is particularly useful while creating subscription tiers. Calculating customer lifetime value can help project a business’s lifetime and its profitability, while finding out churn rates can help improve customer retention. Along with retaining customers, reducing churn rate can also aid in lowering customer acquisition costs and increasing profits.
[4 minute read]