Welcome to Inside Metrics!  In these Metric Guides I’ll show you the key performance indicators you need to track, but more importantly, I’ll show you how to use them to improve your business and make better decisions.  In this Inside Metrics Guide, the Subscription By Channel Report, we will talk about how to interpret any report in  3 minutes or less and sspecifically, the Subscription By Channel Report.

When working with metrics, always start with an objective, i.e. the question are you trying to answer.  This will determine how you build a report, as well as which data you’ll focus on so that you don’t have to waste time pore through the entire report if it’s really detailed and you don’t have time.

The Subscription By Channel report meets a high priority objective for your business:  to determine how the subscription business is performing overall, as well as how each channel is affecting that performance and why.  It provides the summary totals for your total subscription unit production by channel – but it also provides the drivers which explain the performance of those totals.  You’ve got everything you need to answer your objective (question) in one place.

This report requires more time and effort to prepare, but if yours is a mid- to large-sized business with significant revenue volume and accountability, this report is extremely useful because it has that all-in-one-place appeal.   Its only limitation is that there’s not enough room to provide revenue and expense data, but if you want to go wild you can add that into it. If you’re in a dashboard reporting environment then that’s a good item for a more complete drill-down picture.  It’s also especially important if you offer multiple billing terms where optimizing average revenue per order is a bigger leverage point than with a single-term offer (i.e. annual) businesses.  We’ll talk more about that in a future Guide.

The most effective way to think about organizing this report is to first identify your 3 or 4 biggest subscription sales channels.  Then plan to provide summary and driver information for these channels.  In this example I’ve simplified it to three channels, including Renewals.  All of the other channels are aggregated into a single row called “Miscellaneous” or “Default” or “Hugo” or whatever you like.  Basically, you’re skipping the drivers for those channels because they’re too small to bother with on a frequent basis.

So let’s take a look at one of these reports and talk about how you can use it to make your business more effective.  It’s a bit overwhelming, so let’s first review an easy process for interpreting any report in 3 minutes or less.

How to Interpret Any Report in 3 Minutes or Less

There are four basic steps to interpreting any report, provided that the report has been well-organized:

1. Visual Walk-Through.  Just scan across the column names at the top and row names on the left to get familiar with what’s where. For the rows, work your way UP from the totals upwards, because that’s the way you’re going to use the report.
2. Review Objectives.  These will tell you which numbers to look at first.
3. Review Summary Totals.  Based on your objectives, review the Grand Total row or column to determine the overall variance across the entire business.  Then work your way up to determine from the Subtotals which area(s) of the business are the source of the variance.
4.  Review Drivers.  Focus on the drivers for those Subtotals with the biggest variances.  These will explain the variances and anomalies in the totals you saw in Step 3 and lead you to the part of the business where changes are needed.

Interpreting a Subscription by Channel Report

Here is a sample Subscription By Channel Report:

Let’s apply our  “how to interpret any report in 3 minutes or less” lesson to this report:

1. Visual Walk-Through. Pretty Obvious. Quarters across the top, Total counts are summarized at bottom, each channel has its own section with its Subtotals in green rows, and then driver volumes and ratios are in light green.
2. Review Objectives.  These will tell you which numbers to look at first.  In this report, we said that our goal was to answer the question, “How is my subscription business performing overall, and how is each channel affecting that performance?” So we’ll be comparing the columns side-by-side.
3. Review Summary Totals.  We’ll start with the grand totals at the bottom.  Q2 is down from Q1 by about 33%.  Big variance.  Which channel subtotals are driving that drop?  Go up.  In this case there’s a big drop in volume for PPC and Media.  So those are the sections we want to examine.
4. Review Drivers.  In this case, those drops are most dramatic in Exposures for both Pay-Per-Click and Rich Media Ads, and in addition, there’s a big drop in Rich Media Ad Conversion Rate (i.e. conversion to orders from the Landing page).

So based on the reporting objective, logical next steps are to contact the agency to investigate both drivers.  In this case the agency had overspent in Q1 and cut back in Q2 to keep on budget, and conversion rate was down due to some excessive (and unfortunately unsuccessful) A/B split tests.  A new plan was laid to improve communication with the agency in order to manage decisions about spending, and to consider testing less in order to minimize the impact of failed tests.

Bill Baird, our INSIDER Guide to Inside Metrics, is a leading Internet subscription marketing advisor, specializing in insightful metrics and marketing practices to help subscription-driven online properties convert and retain more visitors and customers. His clients have included AmericanGreetings.com, Consumer Reports Online, Socrates.com, Edweek.org, Merriam-Webster.com, The Motley Fool and numerous others.  He is a contributor to numerous industry trade magazines and websites, as well as a popular speaker for a variety of web marketing trade organizations. (Read Bill’s full Bio)