If you’re running a subscription-based business, it’s not enough to have the right product and subscription and billing software. You also need to know about using the right metrics to measure the success of your business. For investors, revenue is often the key metric they focus on when evaluating a company’s performance. But what revenue metrics are the most important for investors, and how can businesses use subscription and billing software to track them?
One important revenue metric that investors look at is monthly recurring revenue (MRR). MRR is the amount of revenue a business generates from its subscription-based services on a monthly basis. It is an important metric because it provides insight into the predictability of a company’s revenue stream. Investors want to see consistent growth in MRR over time, as it is an indicator of the health and stability of the business.
Another important metric is customer lifetime value (CLTV). CLTV is the amount of revenue a business can expect to generate from a single customer over the course of their relationship. This metric is important because it helps investors evaluate the long-term potential of a business. Businesses that have a high CLTV are more likely to be successful in the long run, as they have a loyal customer base that generates consistent revenue.
There are many examples of successful businesses that have used subscription and billing software to track and improve these revenue metrics. For example, SaaS company HubSpot has consistently grown its MRR by over 50% year-over-year, thanks in part to its effective use of subscription and billing software to manage its customer relationships. Meanwhile, streaming service Netflix has a CLTV that is three times higher than its customer acquisition cost, showing that it has been successful in retaining customers and generating long-term revenue.
