Every successful membership site owner knows their numbers…
If you don’t know how your business is performing in key areas, then you have no basis for growth and making improvements…
Or any idea of whether or not your membership site is doing well or if it’s in trouble.
Worryingly, our Online Membership Industry Report revealed that 14% of membership site owners aren’t tracking their KPIs (Key Performance Indicators) at all…
And an even greater number only track a few key metrics!
This needs to change…
And we want to help make that happen…
So if you’re currently not tracking metrics on your site…
Or are measuring some, but are not sure if they’re the ones you should be focusing on…
Here are the KPIs that you should be monitoring and measuring to ensure you have the finger on the pulse of your membership business:
Turnover & Profit
This of course is key to any business, and the most obvious KPI that you should be aware of.
How much money is your membership business making?
What is your profit margin?
Knowing the financials is essential for every business owner, not just those running membership websites…
And remember, while many people will be quick to brag about their turnover, particularly in they’re in the online business space…
What really matters in business is the overall profit you’re making…
As the old saying goes – turnover is vanity, profit is sanity.
Having a great accounting system in place to monitor these figures makes it easy to stay on top of things.
For those of you in the UK, we highly recommend FreeAgent (we use it for our business, and have done for years).
Website traffic & site activity
You need to know how many people are coming to your site and what they’re doing when they get there.
Every website, not just membership sites, should have and some sort Analytics service in place, which measures and monitors traffic and visitor behaviour.
Google Analytics is the most widely used platform for measuring this data, it enables you to do things like goal tracking, split-testing and a lot more.
You measuring your website traffic…
Measuring traffic, identifying patterns and being able to drill-down into key information about your visitors…
Where they come from, the content they like to consume within your site and what days of the week sees the highest level of visitors…
Provides you with crucial data for refining your marketing strategy, which in turn will help you attract new members.
Conversion Rates
Of course you want the people visiting your website to become leads by signing up to your email list and ultimately become paying members…
So you need to know how effective your lead generation and sales strategies are.
To that end you need to know your conversion rates…
What percentage of traffic to one of your key pages takes the action you want them to take…
This would typically be signing up for your mailing list, or joining your membership site.
The goal tracking features of Google Analytics can help you to measure and monitor this.
Conversion rates are such a key piece of information because they will help you to identify what’s working and what isn’t…
And they’re a key piece of the puzzle if you want to look at the bigger picture i.e. how much traffic comes in, how much of that traffic converts to leads, how much of those leads convert to sales and so on.
Knowing that bigger picture is so important for everything from budgeting and ad spend to deciding what areas of your business to focus on for growth.
Trial Retention
If you’re offering a trial for your membership site, then it’s crucial that you have a way of measuring what percentage of those trial participants go on to become full-paid members.
You may have a trial that is attracting staggering numbers of new signups…
But if none of them stick around beyond that initial free period, then it’s all for nothing.
Depending on what system or platform you’re using, this information may not be readily available so you may need to do a bit of manual work to get this data…
Whatever you’ve got to do, make sure you know those figures!
Churn Rate
Retention is just as as important – if not more so – than acquiring new members…
After all memberships are a retention business.
It costs far less to keep an existing member than it does to bring in a new one…
And with membership sites the longer someone stays a member, the more revenue you generate…
That’s the membership model.
So “Churn” is the rate at which you lose members…
And for obvious reasons is a crucial statistic that every membership site owner should stay on top of.
To calculate your churn, you simply work out how many members are with you on day one of the month… And still there on the last day of the month.
So if you have 100 members on January 1st, and 98 are still there on January 31st, then your churn for that month was 2%..
For the purposes of calculating churn, we ignore any new members who join during the month.
We have a tool inside the Membership Academy specifically for tracking and measuring your churn rate too if you need a hand.
Opinions vary on what an acceptable churn rate is…
Accepted wisdom from the SAAS market is that you should be aiming to keep your churn below 5%, however with membership sites centred around e-learning and community (where the “pain of disconnect” is less than with SAAS), then 5-10% is more realistic.
According to our Online Membership Industry Report, around 44% of online memberships have a churn rate of 5% or less, with a further 22% achieving churn between 5% to 10%.
If your subject matter or your training material is finite – i.e. it has a natural end date, then naturally your churn will be much higher, so you need to take things like this into account…
The main thing that you need to know is your churn rate – what you’re aiming for and the appropriate action you need to take to reach that target.
Customer Lifetime Value
As we’ve established, member retention is vital for a successful membership site, and it’s all because of lifetime value..
This wonderful little metric.
Your Member Lifetime Value is the average financial value of each member on your membership site.
If your membership costs $50 and your members stay for 6 months, then your average customer lifetime value is $300.
It’s that simple.
Your Customer Lifetime Value may also incorporate upsells or add-on products that your members purchase too.
This means that when planning advertising campaigns or other marketing spend, you can more accurately assess your return on investment.
Some membership plugins, such as MemberPress, calculate this value for you.
Customer Acquisition Cost
Every penny counts when it comes to business, so you need to be aware of how much it’s costing you to get new members.
These costs can mount up, so it’s important to understand whether you’re getting a good return on investment when it comes to your marketing spend.
If you’re running Facebook ads, for example, it can be easier to get a grasp on this…
You’ll be able to see precisely how much you’ve spent on advertising, and how many sales have come directly from that channel and then work out how much the cost per sale is.
However not all marketing can be so clearly measured, so it’s important not to forget about indirect costs too.
Any tool, resource or indeed person you pay that plays a part in acquiring members needs to be accounted for.
Once you know your customer acquisition cost you can make better, more informed decisions on where to invest as well as be better able to predict the return you’ll get.
Member Engagement
Keeping your members engaged with your content and your community is key to prolonging the member lifecycle, increasing retention and raising your customer lifetime value.
As such, you should be monitoring and measuring how engaged your members are.
There isn’t a single, straightforward value or equation that will tell you how engaged people are…
But things like the number of times people log in, the completion rate of courses (if you’re using an LMS), the frequency with which people post on your forum etc all paint a picture of how engaging your site is and how engaged your members are.
There are some tools such as Intercom, for example, that can keep on top of some of these areas…
They identify any members that are “slipping away” (where they haven’t logged in for 30 days or more) as well as allowing you to send automated messages to people based on when they were last seen, how many times they’ve logged in and more.
When your engagement stats are good…
You can also use tools like User Insights to get more data on member engagement…
If you’re using an LMS plugin, they’ll quite often come with reporting features that enables you to see course consumption and completion…
Or if you’re using our Memberoni theme, we have a simple report plugin with the core data you need.
So, do you know your numbers?
If not then now you know the key areas to focus on moving forward.
Of course these are by no means all of the KPIs a membership owner needs to track…
There are others…
But, on a basic level they are the ones that you need to know so you can grow your membership.
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