Rethinking metrics, measuring the right things.
Growth gets harder as the market evolves and as products mature, which means that the measurement of growth needs to be more precisely focused on the metrics that truly drive value.
We’re seeing a significant shift away from metrics that measure counts-of (users, activities, etc) and more towards metrics that can represent monetary value — this is a very good way to rethink the implications of metrics to focus on sustainable growth.
Dan Rayburn recently wrote about this movement in Streaming OTT and how the recent price increases are indicative of the focus on revenue metrics, primarily ARPU:
The number of net new subscribers added each quarter is still an important metric, but OTT services can have fewer subs and more revenue as long as they increase how much money they are getting from subscribers each month.
Likewise Brian Morrissey wrote about the shift to ARPU in publishing as a necessary step towards finding the right fit between product and paying customers (audiences and advertisers) for sustainability:
One publisher with a high-priced subscription offering lamented teaching the market their premium brand was valued at $1.99 a month. Most ended up churning anyway. The name of the game now is a back-to-basics focus on ARPU (average revenue per user) instead of the sugar high of growth hacks.
Our experience has shown that a focus on monetary metrics is critical to the long-term growth of any recurring revenue product.
Even when the strategy isn’t focused on monetization in the early stages of the journey, measurement of value-oriented metrics point teams and their efforts towards creating more value for the business and customers — that is, after all, what keeps a business going… and growing.
And that’s when another opportunity for customer centricity is often overlooked. It’s relatively easy to develop value-based metrics defined by the things the business, or the Street, values. More and more companies are prioritizing this effort and moving away from the “vanity metrics” of recent times. Yet more sustainable outcomes are the result of metrics that merge business goals with customer goals.
A marriage of customer and business goals through the metrics is what’s necessary to orient and optimize efforts towards sustainable success.
Low retention (high churn) is the result of achieving only business goals
Low margin is the result of achieving only customer goals
This approach helps organizations prioritize the customer goals and ensure that value-based metrics are in alignment between the customer and the business. It provides a repeat-customer-centric perspective to transition from organization-centric silos to valuable customer-centric outcomes.
Get our complete list of repeat customer metrics
We’ve compiled the most comprehensive guide to growth metrics for repeat customer products, aligned with HoK’s Growth Framework, organized by customer journey stage and count or value type.
Our Growth Framework is a great tool to set up a full stack and full journey perspective on getting to the right metrics, you can download it here. We go through all of this in detail during our workshops, use it in our diagnostics and our ongoing collaborations. This worksheet literally puts everyone on the same page with the repeat-customer/subscriber at the center of focus. The result is more sustainable growth through changing or challenging markets.
