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Freemium 301 - Understanding the Data to Drive Growth

Business News & Politics

Freemium 301
How I learned to love freemium
@ranjithkumaran

Lifetime subscription revenue per
registered user
Registered User Cohort (month registered)

Total subscription revenue by month
Month (in business)

Lifetime value of registered user
by month
Source: Adams Street Partners (analysis of YouSendIt’s subscription business)

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• 3. We’ll cover...1 The metrics we like to track...2 The metrics we NEED to track3 Q&A • 4. WHY DO METRICSMatter? • 5. They tell us if we’re succeeding • 6. Great metrics help us work on the right projects • 7. THE METRICS WE LIKEToo Much • 8. Total users • 9. Pageviews and visitors • 10. Vanity metrics are a distraction • 11. We need metrics that track our business • 12. Metric #1 MONTHLY RECURRING Revenue • 13. What is monthly recurring revenue (MRR)? • 14. SaaS depends heavily on recurring revenue All your costs are up front. And it takes a long time to turn a profit on a customer. • 15. MRR best practices • 16. Metric #2 USER AND REVENUE Churn • 17. Churn is the percentage of people that bail • 18. High churn = pain, low churn = win • 19. Churn starts low but grows quickly If customer growth is constant, churn will eventually match it. You’ll stop growing. • 20. 100 new customers per month at 10% churn 800 600 Customers 400 200 0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar • 21. High churn = improve your product • 22. Once you have control of churn... To keep growing, you’ll need to acquire customers faster every month. • 23. Churn best practices • 24. Metric #3 AVERAGE REVENUE PER Customer • 25. Average revenue per customer • 26. Up-sells and cross-sells are the key • 27. Up-selling = get them on a higher plan • 28. Cross-selling = sell more stuff • 29. Average revenue best practices • 30. Metric #4 LIFETIME Value • 31. There are many different ways to calculate LTV LTV combines current revenue with churn to predict how much you’ll earn in the future. • 32. Different from average revenue per customer? • 33. LTV best practices • 34. Metric #5 COST PER Acquisition • 35. What’s the cost to acquire a new customer? • 36. The importance of CPA • 37. Get CPA for each marketing campaign • 38. CPA best practices • 39. Metric #6 THE SIGNUP Funnel • 40. Track each step to becoming a customer • 41. Don’t forget to track activation Activation = Someone uses a core part of your product for the first time • 42. Funnel best practices • 43. CAN WE TRACK THESE IN Analytics? • 44. Google Analytics can’t track any of this. • 45. You need to connect revenue to customers. • 46. A customer analytics revenue report • 47. We can also segment by traffic source • 48. Where do we get customer analytics? • 49. Two metrics you’ll need to pull by hand (for now) • 50. KISSmetrics will track these metrics for you

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