Powerful & Profitable Series: The Most Important Metrics
Dive into why calculating and tracking LTV, CAC, AOV, and churn for your brand will set you on the right path.
To assess the health of your subscription business, it’s important to pay particularly close attention to a few key metrics. By setting a baseline for your customer lifetime value, customer acquisition cost, average order value, and churn rate, you can measure their changes over time and pivot your strategy when needed.
In The Most Important Metrics, 12 of our ecommerce agency partners share their expert insights for increasing your LTV and AOV while reducing your CAC and churn rate. Pulling from their years of experience with top-performing direct-to-consumer merchants, they also advise how these metrics can change for your business over time.
Ready to learn more about the metrics your brand should keep top of mind?
With this playbook, hone your business strategy by answering questions for your brand like:
How can offering your subscribers exclusive “perks” help increase your LTV?
How are customer acquisition costs expected to change in the near future?
What are the most effective strategies to increase AOV for subscription businesses?
How can analyzing your customers’ cancellation reasons help reduce your churn?
Frequently asked questions
What is lifetime value (LTV)?
Lifetime value measures the average amount of money an individual spends with your brand over their entire customer lifespan. It is sometimes referred to as customer lifetime value (CLV). Recharge calculates LTV by dividing a merchant’s annual revenue per user by their churn.
What is cost of acquisition (CAC)?
Cost of acquisition, also referred to as customer acquisition cost, measures the average amount your company spends to acquire a new customer, including marketing and advertising costs. Within your business, CAC can vary across different customer segments.
What is average order value (AOV)?
Average order value is a key metric that signals the average amount of money a customer spends per order. To calculate AOV, divide your company’s revenue by your total number of orders.
What is churn?
Churn rate, also referred to as the rate of attrition, is the percentage of your customers who “churn out” (meaning they cancel their business with you) over a set period of time. For example, annual churn measures the percentage of your customers who churn out of your business over a year-long period, while monthly churn calculates the percentage of your customers who churn over a month-long period.