KPI’s Every Membership Site Owner Should Be Measuring
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 indeed whether your membership site is doing well or if it’s in trouble.
This needs to change.
Here are the key performance indicators that you should be monitoring and measuring in order to ensure you have the finger on the pulse of your membership business:
Turnover & Profit
Key to any business, and the most obvious KPI’s that you should be aware of.
How much money is your membership business making, and 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, what really matters 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 an Analytics service in place, which measures and monitors traffic and visitor behaviour.
Google Analytics is the most widely used platform for measuring this data, and it also enables you to do goal tracking, split-testing and a lot more.
Measuring traffic, identifying patterns and being able to drill-down not only into key information about your visitors, but also see what your most popular content is provides you with crucial data for refining your marketing strategy.
Of course you want the people visiting your website to become leads and – ultimately – members; so you need to know how effective your lead generation and sales assets 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.
If you’re offering a trial for your membership site, then it is 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.
As with many of the membership site-specific stats you’ll need to monitor, there’s no real easy way of keeping on top of this aside from manually crunching your numbers and comparing the amount of trial signups to the amount of members remaining after that initial term.
Retention is as important – if not moreso – than acquiring new members.
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 money you make from them.
“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 churn, you simply work out how many members who were here on day one of the month are still here on the last day of the month.
So if you have 100 members on January 1st, and 98 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 for no more than 5% churn; 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 the 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 fixed point at which someone will no longer need it, then naturally your churn will be much higher.
Customer Lifetime Value
As we’ve established, member retention is vital for a successful membership site, and it’s all because of this wonderful little metric.
Your Customer 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.
Your Customer Lifetime Value may also incorporate upsells or addon 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.
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.
Tools such as Intercom can keep on top of some of these areas – identifying 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.
So, do you know your numbers?
Is there a metric or a KPI that we’ve missed?
What systems or tools do you use to keep track of everything?
Let us know in the comments section below…