Limitations. Subscriptions isn’t for everyone.
You’ll need to adapt as you implement the subscription revenue model. Subscribers give you time, attention and money. Hence, all your decisions need to answer what’s best for your subscribers!
It is always advisable to have one major source of revenue and then diversify by having multiple minor streams of revenue that de-risk you from that major source of revenue. For example, YouTube’s revenue split is 1:3 between subscriptions and advertisements.
Why it matters:
There are different forms of revenue models:
Some of these revenue models can be in opposition to each other and make commoditized businesses complicated. This in turn mandates the need for propensity models.
When retention fails, you churn, i.e., lose customers.
Why it matters: In any business you want to make sure that you are adding customers faster than you are losing them and at the right Customer Acquisition Cost.
Challenges: Churn is a delayed backward looking and you cannot get a live number.
Examples. Everyone has faced challenges with churn:
Establishing exact causality is very hard. For example, unknown to us, a conversion event might have occurred after the lead read one of our Candid Communication blog posts, seen a Digital Advertisements, received our Newsletters as a forward, or saw a post in their Social media feeds.
So, who gets the credit? There are few models that can help estimate attribution:
Retention rate is the inverse of Churn rate.
Here’s the rationale behind the statements: