There is a significant lag between when a customer signs up for an annual plan and when the value of that plan can be observed. This lag creates uncertainty for investors, who wish they could forecast the future and decrease the uncertainty regarding how a business will grow. Subscribers’ retention on the annual plan is directly related to the product value. However, it comes with a significant lag, e.g., an annual plan is only observable a year after the customer signed up. There are several ways to combat this lag issue: by creating customized plans that match customers’ individual needs more closely; by using predictive analytics techniques to better understand customer behavior; or by increasing transparency so that customers can see how their subscription contribution is being used (for example, providing weekly/monthly reports on active subscribers and usage data).
Engagement metrics that are most important to investors when it comes to subscription services include:
-Engagement rates -This metric measures how engaged your subscribers are with your content. Impactful engagement can result in higher repeat subscription rates and can spike as a result of viral marketing efforts.
-Abandonment rates -If a majority of your subscribers abandon your content, this could mean that they no longer find value in it or are even angry with it. This could lead to a sharp decrease in engagement and potentially lead to an exodus of customers from your subscriber base.
-Retention rate -The retention rate is the number of subscribers who have been
Engagement over long periods at the end of a subscription
When reviewing engagement metrics, it is important to consider what matters most to your users: how actively they are using the core app functionality over a longer period of time. If they are opening the app more often near the end of their subscription period, this signals that they are getting the expected (or hopefully even beyond expected) value from the product, increasing the probability of their renewing for another year.
User engagement metrics often show that retaining customers is an important part of a company’s success. By studying user engagement data, investors can better understand how well a company is serving its customers and whether it has strategies in place to keep them loyal. Retention data points that are particularly valuable to investors may include the percentage of users who continue using a product or service after initial adoption, how long it takes for users to churn, and how frequently customers communicate with a company.
When reviewing the Cohort Engagement Analysis for your application, it is important to pay attention to how engaged users are with the core functionality of the app. If a high churn rate is observed in the third month after installation, it suggests that this cohort will have a low chance of retaining more than 40% of its customers. In order to increase retention rates, developing innovative features or improving upon the core functionality of the app may be necessary. After all, if users are not satisfied with using your app’s core features, they are unlikely to return.
Frequency of interactions with core app features
By definition, key engagements are the specific actions that customers take with the product on a daily basis. When investors assess how much value they believe customers derive from a product, they want to see how frequently those key engagements happen. Investors also want to be sure that each startup is providing clear and helpful guides to help users achieve as many of these key interactions as possible.