Why Analytics Matter
In subscription businesses, data-driven decisions are crucial for success. The right metrics help you understand user behavior, optimize conversion funnels, and maximize revenue. This guide covers the essential metrics every subscription app should track.
Essential Subscription Metrics
These metrics provide a comprehensive view of your subscription business health and help identify opportunities for growth and optimization.
Monthly Recurring Revenue (MRR)
Total predictable revenue generated each month
Calculation:
Sum of all active subscriptions × average price
Benchmark:
Growing 10-20% month-over-month
Customer Acquisition Cost (CAC)
Total cost to acquire a new customer
Calculation:
Total marketing spend / New customers acquired
Benchmark:
3-5x lower than LTV
Customer Lifetime Value (LTV)
Total revenue expected from a customer over their lifetime
Calculation:
Average Revenue Per User / Monthly Churn Rate
Benchmark:
3-5x higher than CAC
Monthly Churn Rate
Percentage of customers who cancel each month
Calculation:
(Cancellations / Total customers) × 100
Benchmark:
Less than 5%
Average Revenue Per User (ARPU)
Average revenue generated per user per month
Calculation:
Total revenue / Number of active users
Benchmark:
Growing over time
Conversion Rate
Percentage of users who convert from free to paid
Calculation:
(Paid conversions / Total users) × 100
Benchmark:
2-5% for most apps
Analytics Frameworks
These frameworks help organize your analytics approach and ensure you're tracking the right metrics for your business goals.
North Star Metric
The single metric that best captures the core value your product delivers
Example:
Daily active users, Time to first value, Feature adoption rate
Benefits:
- Focuses team efforts
- Aligns stakeholders
- Measures true value
Implementation:
Choose one metric that represents user success
Pirate Metrics (AARRR)
Acquisition, Activation, Retention, Referral, Revenue
Example:
Track each stage of the user journey
Benefits:
- Complete funnel view
- Identifies bottlenecks
- Guides optimization
Implementation:
Set up tracking for each stage
Cohort Analysis
Analyze user behavior over time by grouping users by signup date
Example:
Monthly cohorts, Feature usage by cohort, Revenue by cohort
Benefits:
- Identifies trends
- Measures retention
- Shows long-term value
Implementation:
Group users by signup period and track behavior
Dashboard Structure
Organize your analytics into focused dashboards that serve different stakeholders and use cases.
Revenue Overview
Key Metrics:
- MRR
- ARR
- Revenue Growth
- ARPU
Stakeholders:
CEO, CFO, Revenue Team
User Acquisition
Key Metrics:
- CAC
- Conversion Rate
- Traffic Sources
- Signup Rate
Stakeholders:
Marketing, Growth Team, Product
User Engagement
Key Metrics:
- DAU/MAU
- Session Duration
- Feature Usage
- Retention
Stakeholders:
Product, Engineering, Customer Success
Churn Analysis
Key Metrics:
- Churn Rate
- Churn Reasons
- Win-back Rate
- LTV
Stakeholders:
Customer Success, Product, CEO
Common Analytics Mistakes
Avoid these common pitfalls that can lead to poor decision-making and missed opportunities.
Tracking too many metrics
High ImpactFocus on 5-10 key metrics that drive business decisions
Why this matters:
Too many metrics can lead to analysis paralysis and unclear priorities
Ignoring leading indicators
High ImpactTrack both leading and lagging indicators
Why this matters:
Leading indicators help predict future performance and enable proactive optimization
Not segmenting data
Medium ImpactAnalyze metrics by user segments, cohorts, and channels
Why this matters:
Aggregate data can hide important insights about different user groups
Focusing only on vanity metrics
High ImpactPrioritize actionable metrics that drive business outcomes
Why this matters:
Vanity metrics like total downloads don't necessarily correlate with business success
Implementation Best Practices
Analytics Setup Checklist
Data Collection
- • Set up event tracking
- • Implement user identification
- • Configure conversion tracking
- • Set up cohort analysis
- • Implement revenue tracking
Analysis & Reporting
- • Create key metric dashboards
- • Set up automated reports
- • Implement alerting systems
- • Schedule regular reviews
- • Document metric definitions
Conclusion
Effective analytics for subscription apps requires a strategic approach that balances comprehensive tracking with actionable insights. Focus on the metrics that directly impact your business goals and use frameworks to organize your analytics approach.
Remember, analytics are only valuable if they lead to action. Regularly review your metrics, identify trends and patterns, and use data to inform product and marketing decisions. The goal is not just to collect data, but to use it to drive growth and improve user experience.
Ready to optimize your analytics?
SplitWall provides comprehensive analytics and reporting tools to help you track the metrics that matter most for your subscription business.