Measuring the Subscription Economy

April 10-12 | Chicago, IL

Measuring the Subscription EconomyDimensional Modeling/Analytics

Angel Abundez, Lead BI Consultant, DesignMind

April 10-12 | Chicago, IL

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Familiar Subscription modelsContent Subscriptions

3

Familiar Subscription modelsService and Product Subscriptions

4

Yesterday’s Subscription Economy

Linear Transaction

5

Business models have changed

6

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

New Content Subscriptions

7

Software as a Service (Saas)Infrastructure/Platform Productivity Software

8

Today’s Subscription Economy

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The Key Metrics

Recurring Revenue• Annual Recurring Revenue (ARR)

Churn• Percentage of members lost

New Business• Annual Contract Value (ACV)

10

The Key Metrics

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ARRn

Churn

ACV

ARRn

+1What Recurring Revenue can we anticipate for the

year?

What percentage of

customers are leaving you?

How many new customers do

we need to sign up?

How many new customers do

we need to sign up?

12

Subscription Economy DifficultiesInsufficient Funds

System loop-holes

Rapidly ChangingMarketing Campaigns

Freemium

Invalid Credit Card numberOr Expired Card

Refunds

Credits

Charges

13

Assemble the Team

Operations

Sales and Marketing

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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

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Data Profile Subscriptions, Products1. Subscriptions2. Products3. Customers

APIs Available at:

April 10-12 | Chicago, IL

DemoSubscription Data Profile

The Key Metrics

17

ARRnChur

n ACV ARRn

+1

What percentage of customers

are leaving you?

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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. Additive2. Semi-additive3. Factless4. Text

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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. Transactional2. Periodic Snapshot3. Accumulating Snapshot

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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?

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Timeline Scenarios

April 10-12 | Chicago, IL

DemoMembership Facts for calculating Churn

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The Key Metrics

ARRnChur

n ACV ARRn

+1

What Recurring Revenue can we

anticipate for the year ?

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Key Metrics – Recurring Revenue

Goal: Spread out a payment transactions into equal interval units

What T-SQL function can do this the best?1. CROSS JOIN2. UNPIVOT3. OUTER APPLY4. CROSS APPLY

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Key Metrics – Recurring Revenue

Ask the right questionsWhat 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.

April 10-12 | Chicago, IL

DemoRecurring Revenue Facts

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Strategies using Subscription Data

Reduce Attrition and ChurnIncrease CashThe Freemium ModelLong Term Agreements

Let’s Visualize our data to answer these needs

April 10-12 | Chicago, IL

DemoVisualizations

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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: angel@designmind.com; @angelstreamline or at

www.angelstreamline.com• Mark Ginnebaugh: mark@designmind.com; @markginnebaugh or

at designmind.com/blog

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April 10-12, Chicago, IL

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