Investors want them can predict the future and reduce uncertainty about how a business will grow. Subscriber retention on the annual plan is directly related to product value. However, it comes with a significant delay, for example an annual plan is only observable one year after the customer has signed up.
So the best predictors of re-enrolment are the current engagement rates of your existing subscribers. Let’s see which engagement metrics spark the most interest from investors.
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Engagement over long periods at the end of a subscription
There are a lot of engagement metrics to look at. What matters most is how your subscribers interact with the core functionality of the app over extended periods of time, especially closer to the end of their subscription. If they use the asset, it indicates they are getting the expected (or hopefully even more than expected) value from the product, increasing the likelihood of them renewing for another year. The obvious metric to judge is how often your user opens the app by the end of that period.
Start by studying these engagement metrics from your existing users to find customer retention data points that have strong investor appeal.
For a more in-depth analysis, look at the use of the app’s core functionality during these periods. Cohort engagement analysis comes in handy here; you can see what proportion of users who started using your application 12 months ago are still accessing it and using core functionality three, six, nine, and 12 months after first use. For example, if you see a churn rate of 60% in the third month after installation, the cohort obviously doesn’t have a great chance of getting more than 40% of its customers to resubscribe within nine months, because they’re very likely to lose their annual subscription. canceled in these first three months. In this situation, the direct relationship between engagement and retention comes into play.
Frequency of interactions with core features of the app
To make a solid case regarding the value customers get from the product, investors want to see how many interactions with core app functionality occur on average over the lifetime of the respective cohort of subscribers. For example, interactions beyond just opening your app mean that subscribers are consciously looking for value. Each startup should define its “key commands” and help users by directing them to this core activity within the product.
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