Running a subscription-based business with a recurring revenue model is the way to go these days if you ask me. But if you are going to do it, you have to keep a close look at some key metrics to make sure the health of your company is strong. In Episode 60, I covered what I consider to be the most important things to monitor from a business operations perspective, the leading indicators.
In this episode, I’m going to cover a set of metrics that apply to more established businesses, with enough customers and data to make them make sense, but even if you are not there yet, you should know about them and establish a process and way to start calculating them (get in the habit).
They are Monthly Recurring Revenue (MRR), Churn, Lifetime Value (LTV), Customer Acquisition Cost (CAC), Average Revenue per Account (ARPA), and Quick Ratio. In this episode, I explain what they are and how you should use them.
00:56 Six metrics you should know if you are in a subscription-based business
04:15 Lagging indicators
11:29 Churn rate
14:25 Value of metrics when segmented
15:08 Revenue churn rate
22:50 Average Revenue Per Account (ARPA)
30:49 The importance of the amount of money you need to spend to acquire new customers
38:31 Research on monthly recurring revenue, lifetime value, churn rate, ARPA, quick ratio, and customer acquisition cost.
Thanks for listening and checking out the show notes, any feedback, comments, or questions, send me an email at david@techsmartboss.com
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