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Measuring the Subscription Economy


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Presented at the PASS Business Analytics Conference 2013 in Chicago.

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Measuring the Subscription Economy

  1. 1. Measuring the Subscription Economy Dimensional Modeling/Analytics Angel Abundez, Lead BI Consultant, DesignMind April 10-12 | Chicago, IL
  2. 2. Please silence cell phones April 10-12 | Chicago, IL
  3. 3. Familiar Subscription models Content Subscriptions 3
  4. 4. Familiar Subscription models Service and Product Subscriptions 4
  5. 5. Yesterday’s Subscription Economy Linear Transaction 5
  6. 6. Business models have changed Technology and Innovation • • • • • • • Cloud Computing Digital Media Mobile Devices Social Media Software as a Service (SaaS) Internet Access and Broadband speeds Startups, Apps, Innovative Entreprenuers 6
  7. 7. New Content Subscriptions 7
  8. 8. Software as a Service (Saas) Infrastructure/Platform Productivity Software 8
  9. 9. Today’s Subscription Economy 9
  10. 10. The Key Metrics Recurring Revenue • Annual Recurring Revenue (ARR) Churn • Percentage of members lost New Business • Annual Contract Value (ACV) 10
  11. 11. The Key Metrics ARRn What Recurring Revenue can we anticipate for the year? Churn What percentage of customers are leaving you? ACV How many new customers do we need to sign up? ARRn+1 How many new customers do we need to sign up? 11
  12. 12. Subscription Economy Difficulties Insufficient Funds Invalid Credit Card number Or Expired Card Rapidly Changing Marketing Campaigns System loop-holes Refunds Freemium Credits Charges 12
  13. 13. Assemble the Team Operations Sales and Marketing Business Analysts * Finance IT 13
  14. 14. Define your Data Customers • New, Renewed, Cancelled, Expired Subscription Terms • Free Trial, Paid, Overdue, In-Grace, Cancelled,Expired, Silver, Gold Payment Transactions • Recurring, Credit Card, Free Trial, Coupons, Credits Service or Product Usage • Minutes, Hours, Visits, Downloads, etc 14
  15. 15. Data Profile Subscriptions, Products 1. 2. 3. Subscriptions Products Customers APIs Available at: 15
  16. 16. Demo Subscription Data Profile April 10-12 | Chicago, IL
  17. 17. The Key Metrics ARRn Churn What percentage of customers are leaving you? ACV ARRn+ 1 17
  18. 18. Key Metrics - Churn From your data definition meetings, you have the following customers: • • • • Active Customers Overdue Customers Cancelled Customers Expired Customers • What type of Facts are these? 1. Additive 2. Semi-additive 3. Factless 4. Text 18
  19. 19. Key Metrics - Churn For Churn percentage, you need total Active Membership. This requires moment-in-time views of how many members were active on a given date. • What type of Fact table is needed? 1. Transactional 2. Periodic Snapshot 3. Accumulating Snapshot 19
  20. 20. Key Metrics - Churn Ask the right questions: What events lead up to an active customer? What events lead up to a cancelled customer? Do we want to trend active membership over time? Dimensional Modeling lessons learned: Don’t even think about aggregating Slowly Changing Dimensions. Subscriptions could be modeled as a Slowly Changing Dimension, but will people use it in the data model? 20
  21. 21. Timeline Scenarios 21
  22. 22. Demo Membership Facts for calculating Churn April 10-12 | Chicago, IL
  23. 23. The Key Metrics ARRn Churn ACV ARRn+ 1 What Recurring Revenue can we anticipate for the year ? 23
  24. 24. Key Metrics – Recurring Revenue Goal: Spread out a payment transactions into equal interval units What T-SQL function can do this the best? 1. 2. 3. 4. CROSS JOIN UNPIVOT OUTER APPLY CROSS APPLY 24
  25. 25. Key Metrics – Recurring Revenue Ask the right questions What if payment transactions occur before, during, or after the subscription period? Do we want to add discount amounts? How should refunds be treated? Dimensional Modeling lessons learned: Use transaction date, not effective date. Draw up scenarios for how to handle +/- transactions, when they could occur, and handle the grain carefully. Use the CROSS APPLY function as it scales for variable-length subscriptions. 25
  26. 26. Demo Recurring Revenue Facts April 10-12 | Chicago, IL
  27. 27. Strategies using Subscription Data Reduce Attrition and Churn Increase Cash The Freemium Model Long Term Agreements Let’s Visualize our data to answer these needs 27
  28. 28. Demo Visualizations April 10-12 | Chicago, IL
  29. 29. Summing it all Up – Subscription Economy is vital in todays economy. There are no publications out there that tell you how to dimensionally model this lucrative business model, so we thought we’d show you how we were to successfully implement this for our clients. For further questions, feel free to contact us: • • Angel Abundez:; @angelstreamline or at Mark Ginnebaugh:; @markginnebaugh or at 29
  30. 30. Win a Microsoft Surface Pro! Complete an online SESSION EVALUATION to be entered into the draw. Draw closes April 12, 11:59pm CT Winners will be announced on the PASS BA Conference website and on Twitter. Go to or follow the QR code link displayed on session signage throughout the conference venue. Your feedback is important and valuable. All feedback will be used to improve and select sessions for future events.
  31. 31. Thank you! Diamond Sponsor Platinum Sponsor April 10-12, Chicago, IL