3 Lifetime Value Metrics you should consider Posted on 2014-06-27 16:11:00 by House of Kaizen

The best indicator of success for a subscription service is the lifetime value of your customers. Not all customers are the same and there are three specific factors important to look at while determining LTV.

1. Cost of Acquisition

It is paramount to understand the costs of acquiring a member or subscriber, including research, marketing, copy writing, advertising, free trials. Once the cost to calculated, deduct that amount from the amount the customer has spent on your service in order to determine their lifetime value.

2. Customer Renewal Rate/Attrition

Keeping customers satisfied makes them happy, repeat subscribers. The higher the renewal rate, the better for your business. Calculating the number of renewals gives you an idea of whether or not people are satisfied can help you determine areas of needed improvement as well as areas of growth. Attrition is the percentage of people that did not renew or left your service. You want this number to be as low as possible.

3. Trial or Freemium Conversions

It’s imperative to have a handle on how many people your business is able to take from a free or trial period to a paying subscriber. A high conversion percentage is indicative that people are pleased with your service. The figure can also help you understand how to keep customers.