Part 1 - Subscription Metrics (July)

July 2023

Dear Growth Designers,I'm Jen Byyny, and I lead growth-focused product design teams for data and wellness companies such as Looker Data Sciences, Teladoc Health, and Strava. There are a few must-know metrics about subscription businesses that I'll share with you just like I would any new designer joining my team. I'll then give you a B2B and B2C example from my career about which metric each business emphasized and why.Today is Part One, where we'll level set with basic concepts for subscription metrics, and tomorrow we'll send Part Two to dive into how growth designers can impact these metrics. We'll look at the fundamental dynamics between annual vs. monthly plans. Subscribing to your growth, Jen Byyny, Growth Design Leader

Know Your Subscription MetricsNo matter where I'm working, I strongly encourage each member of my team to know the company's core four subscription metrics and how to access them:1️⃣ Monthly Recurring Revenue (MRR)Measures the total revenue generated by monthly subscriptions within a given month. It provides insights into the revenue stream and helps track changes in subscription growth over time.2️⃣ Annual Recurring Revenue (ARR)Represents the total revenue generated by yearly subscriptions within a year. It indicates the long-term revenue potential and stability of the business.3️⃣ Churn RateMeasures the percentage of customers who cancel or do not renew their subscriptions within a specific period. Tracking churn rate helps identify customer retention issues and assess the overall health of the subscription base.4️⃣ Customer Lifetime Value (CLTV)Estimates the total revenue a business can expect from a single customer throughout their lifetime as a subscriber. It considers factors such as subscription duration, monthly or yearly payment amount, and the likelihood of churn.Companies use different tools to track these metrics, but designers on my team do not just proactively monitor them; they also draw a line back to their design solutions.So, how are these subscription metrics used in practice by B2B and B2C companies?

Example subscription metrics dashboard

B2B ExampleThe transparency was exceptional at Looker, a beloved product among data analysts and a broad business audience. Our internal home page as employees was a Looker dashboard that allowed us to see how the company was performing. We knew the MRR or ARR at any given time and when there was a newly acquired business (referred to as new "logos"). The tool and transparency fostered a culture of strategy and innovation, which helped drive growth and engaged us in attracting new business.

B2C ExampleStrava, a fast-growing product highly endorsed by cyclists and runners, has expanded to over 100 million users and caters to active individuals participating in now over 50 different types of activities. MAU is the most talked-about metric. MAU serves as a signal for business health, revenue prediction, and overall growth. With subscriptions, a steady win for the business lies in acquiring monthly or annual paid subscribers, benefitting both the company and users. 

In ConclusionIf they're not readily available, you must request access to metrics like MRR, ARR, Churn Rate, and CLTV. It's necessary and expected that designers accountable for growth understand the current metrics, goals, and changes in numbers over time. By understanding and monitoring these metrics, growth designers can explain the ROI of our work in the language of the business.Tomorrow, we'll send part two in this newsletter doubleheader on the theme of subscriptions about the trade-offs between monthly and annual pricing. Plan duration is a fundamental growth lever for subscription businesses that designers can use to drive revenue impact. 

About the Author

Jen Byyny is an experienced product design leader focused on driving innovation for business success. She has over twenty years of experience leading high-performing teams in designing and building exceptional product experiences. She's based in Denver, CO, and moonlights in the mountains as a ski instructor. 

Bonus: Jen @ Growth Design School

Jen will add her voice to the Monetization and Expansion learning module at Growth Design School. 

Growth Design School pricing is live. $950 includes an all-access seat to the five-week learning experience combining on-demand video modules and live talks with a cohort of fellow designers. Plus, ongoing course content, event recordings, and discussions. Enrollment includes:

• Cohort live events and event recordings

• Access to premium async learning content

• Private discussions around topics

• Networking with industry practitioners

• Mentorship from growth design experts

• Certificate of completion

More Learning Resources

This month's resources are research-themed. Growth designers harness experimentation to drive subscription metrics. We suggest these resources to upgrade your work on the core four metrics.

Live Workshop

The GrowthDesigners.co Community is hosting a workshop about mixed methods for experimentation. Learn how to marry insights from qualitative and quantitative data, formulate hypotheses and measure impact with design leaders Ran Liu and Amplitude's Jenny Chang.

Free On-Demand Class

We recommend Maze University's continuous product discovery course if you cannot join a live workshop with GrowthDesigners.co. User research tool Maze launched this free class with practical examples of improving your research cycle efficiency and quality. Enroll for free in Maze University

  Easier Design References

Rethinking your user journeys? Save hours of UI & UX auditing research with Mobbin's library of 100,000+ fully searchable mobile & web screenshots. Search apps, screens, and UI elements. (Affiliate Link.)