7 Key Metrics of Membership Businesses

We get it. Tracking the metrics of your membership business is hard work.

But knowing which metrics to track in the first place? That can be just as confusing and difficult.

There are dozens of metrics to pay attention to. How do you know which ones are vital in determining the health of your membership site?

To help you get your bearings, we put together a list of 7 Key Metrics of Membership Businesses. Recording, monitoring, and measuring these metrics will certainly help steer you towards success.

Let’s get started!

1. Lifetime Customer Value

When it comes to membership site marketing there is no metric of greater importance to your business than average Lifetime Customer Value (LCV).

Defined as the projected net profit of your entire relationship with a customer, this is the average amount a customer spends with you. Your LCV will inform how much money you can spend to profitably acquire customers and is the key to making intelligent decisions about your marketing budget.

You should always be thinking of ways to increase this number. The higher this number is, the more you can spend on the front-end to acquire a new customer. In terms of strategy, we’ve found the implementation of 1-click upsells to be an effective way to increase your LCV (we’ll circle back to this later in the post).

2. Retention Rate

This metric tells you the percentage of members who remain customers compared to those who don’t.

Have you heard the saying: “Big doors swing on small hinges?” Well, your retention rate is the small hinge that swings the big door of profitability. If you’ve built a spreadsheet and crunched some numbers for your membership, you’ll quickly see how improving your retention rate by just a few percentage points can really improve your customer value.

As a rule of thumb, if you are losing more than 15% of your customers each month, you should spend a significant amount of time implementing stick strategies to keep customers happy and engaged with your membership site. Bumping up retention just a little bit has a huge impact on your customer value and thus the profitability of your business.

3. Website Traffic

The traffic to your page is the lifeblood of an online business. If no one is visiting your site, how can they become members?

At its core, web traffic boils down to the number of people who visit your page within a given timeframe (day, week, month, etc.). This is a vital metric to consistently track and monitor.

Web traffic metrics are a subject in their own right, and include total number of users, sessions, and pageviews. It’s also key to understand the different traffic sources: organic, direct, referral, and social. By understanding where your best members are coming from, you can focus your efforts on the most cost-effective traffic sources.

Google Analytics is a fantastic free tool and provides an exhaustive analysis of your web traffic. It should be a mainstay in the toolkit of all membership site owners.

4. Conversion Rate

Strictly speaking, this is the percentage of visitors who take a desired action. That could mean opting in for a lead-generator, signing up for your newsletter, or becoming a paying member.

In terms of customer acquisition, this is typically defined as sales over visitors. Even with a conversion rate as low as 0.3% (three tenths of one percent) you can still make money if your traffic and customer value is high enough. But typical conversion rates for successful direct response campaigns range from 0.5 to 1.5% across a broad range of traffic.

Remember, the higher your customer value, the lower your conversion rate can be while still maintaining a profit.

Similar to the flight instruments a pilot relies on to provide vital information like altitude, airspeed, and direction, tracking these 7 metrics will give you greater visibility into the direction your business is heading.

5. Upsell Rate

An often-overlooked metric, your upsell rate is defined as the total number of customers who take you up on an upsell offer.

One of the easiest ways to increase your customer value is to make a one-time offer after the initial sale. Immediately after someone joins your membership site for the first-time, offer them a related product at a steep discount (50% works well). You will not get a better opportunity to sell them something else and you should be able to get roughly 15% of visitors to take the upsell.

If you ignore this technique, you probably won’t be able to spend enough to acquire a customer and may even jeopardize your ability to grow a successful membership site.

Pro Tip: Optimize your upsells by offering your members multiple items in sequence. If you’ve ever purchased anything from Amazon or GoDaddy, you’ve witnessed masterful upsell chains in action. They’re experts at taking a small order and transforming it to a large dollar purchase. It’s worth going through them simply for the learning experience. By utilizing 1-click upsells, you remove friction in the upsell process and increase your chances of success.

6. Refund Rate

This metric is defined as the number of customers who request and receive a refund.

You should aim to keep this number as low as possible, with one exception. If your refund rate is exceptionally low (say under 2% — then perhaps you are not marketing as boldly as you could be). You always want customers to be happy, but if you’re not making any exciting claims whatsoever, your marketing is probably putting people to sleep.

7. Chargebacks

A chargeback occurs when a customer calls their bank or credit card provider and disputes a charge on their card. They may not recognize the charge, it may be actual fraud (if their credit card number was stolen) or they may be dishonest and simply want their money back. It’s extremely important to keep chargebacks at a minimum or you could potentially lose your merchant account. Fortunately, this is easy to prevent, if you provide good customer service.

One of the easiest ways to lose your membership business is to have chargebacks creep up. If this happens, your merchant account provider will terminate your account. If you’ve never heard of this issue, you might think it’s an esoteric problem that could never happen to you. But it couldn’t be further from the truth.

Final Thoughts

And there you have it! 7 Key Metrics of Membership Businesses.

Keep in mind, these are simply 7 guiding metrics we’ve found to be instrumental in membership site growth – not an exhaustive list.

Similar to the flight instruments a pilot relies on to provide vital information like altitude, airspeed, and direction, tracking these 7 metrics will give you greater visibility into the direction your business is heading.

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About Matt Brown

Matt is an enthusiastic Marketing Associate at MemberMouse. Originally from Chicago, Matt now resides in the Pacific Northwest with his wife and cat. He loves reading, writing and getting outdoors.