Demand Rating™ in the Real World—Churn

Posted by: Matt Shanahan

Another critical use of Demand Rating™ is to better understand and reduce churn—a threat to any subscription business model. A no-churn mentality drives profits and creates a platform for growth. Unfortunately, most organizations don’t have the necessary optics to determine which subscribers have waning loyalty and are at risk of defection. While web analytics tools might deliver standard low usage reports, they can be misleading. Demand Rating enriches web analytics with contract and firmographic data—supplying a normalized metric for comparison—and giving new insight into preventing churn before it happens. Here’s how Demand Rating helps:

Which subscribers are at risk? While low usage is never good, often it’s difficult to know what’s low. Take a global financial information services company. Usage by their venture capital subscribers is radically different from their corporate subscribers, and is like night-and-day from the traders they have in their subscriber base. The definition of low is different in each usage scenario, so a metric that allows an apples-to-apples comparison is essential. Demand Rating is a normalized metric that is relevant and comparable as the market is sliced, diced and segmented. Suddenly, what is normal is for a segment or even a particular subscriber become obvious and addressable.

When is a subscriber at risk? Too often, organizations don’t have the ability to recognize a subcriber issue until a license is not renewed. Because Demand Rating enables comparisons over time, it can identify subscriber issues when they occur. A sudden drop in the Demand Rating could be because of a reduction in force or the entrance of a competitor. Identifying this issue when it occurs allows a sales team to refine the license mix and boost the Demand Rating.

Why is a subscriber at risk? While some subscriber issues are outside the control of a service provider, many are not. Demand Rating helps compare subscribers to each other and identify the difference between low demand subscribers and their high demand peers using the same content. It helps identify characteristics of high risk subscribers. Knowing these differences enables the organization to target specific retention programs toward them so that they might gain more value from the service.

By constantly measuring the dynamics of subscriber loyalty, Demand Rating is an important new element for identifying at-risk subscribers early, intervening through effective retention programs and holding on to subscribers. After all, it’s all about maximizing the lifetime value of the subscriber.