Master the Game with these Powerful HR Software Subscription KPI Metrics

Welcome to my latest blog post on human resource software subscription KPI metrics. As a seasoned serial entrepreneur with over a decade of experience, you can trust me when I say that tracking KPIs is critical to the success of any modern enterprise.

Today, I'm going to share with you the top seven human resource software on subscription KPI metrics that you need to track to stay ahead of the competition. These metrics have become an indispensable part of the modern workplace, and businesses that ignore them do so at their own peril.

• Customer retention rate: This KPI measures the percentage of customers that continue to do business with you over a period of time. A high retention rate is a sign of customer satisfaction and loyalty.
• Average revenue per user: This KPI measures the average amount of revenue generated per individual customer. This KPI is important for businesses that rely on recurring revenue streams to sustain operations.
• Churn rate: This KPI measures the number of customers that leave your business over a period of time. A high churn rate can be an indication of problems with your products or services.

In addition to these KPIs, we'll also be exploring customer satisfaction score, monthly recurring revenue, cost per acquisition, and time to value. So, sit back, relax, and get ready to learn about the KPI metrics that will take your business to the next level.

Customer Retention Rate

Definition: The customer retention rate (CRR) is a metric that demonstrates the percentage of customers purchasing or renewing products or services from a company in a specific period.

Use Case: CRR is essential for human resource teams to calculate the loyalty of their customer base. A higher CRR indicates higher loyalty and satisfaction among the customers, whereas a lower CRR points towards opportunities to improve customer service, product quality, or communication with customers.

How To Calculate KPI: CRR KPI formula can be calculated by dividing the number of customers a company holds at the end of a certain period (E) by the total number of customers present at the start of the period (S). CRR = (E/S) * 100

Calculation Example: Suppose a company has 1000 customers at the start of the year (S) and 950 at the end of the year (E). The customer retention rate would be calculated as follows:

KPI Advantages:

• The CRR metric helps HR teams to have a clear understanding of customer satisfaction levels and customer loyalty towards a company’s products and services.
• A higher CRR means a steady customer base and improved revenue streams.
• It helps to identify gaps in customer service and communication, which, if improved, can result in a higher retention rate.

KPI Disadvantages:

• The CRR does not provide insight into what customers are thinking. Higher retention rates might also mean that the company is unable to attract new customers, losing out on growth opportunities.
• Depending on the industry, CRR benchmarks can vary significantly, leading to difficulty in comparing CRR scores with others in the industry.

KPI Industry Benchmarks for Customer Retention Rate: According to a survey, the CRR for the software industry falls between 81%-90%. Other industries might have different benchmarks based on the target market and the type of product/service offered.

Average revenue per user

Definition

Average revenue per user (ARPU) is a KPI metric that measures the amount of revenue generated by a company for each user or customer on average. ARPU provides an insight into a company's revenue-generating potential per user, which is a crucial factor in understanding a company's financial performance.

Use Case

ARPU is a vital KPI for companies that offer subscription-based services such as software as a service (SaaS). It helps to track revenue generation, predict future growth and forecast marketing budgets. Understanding ARPU also helps companies to optimize their pricing strategy, improve customer acquisition and retention, and increase customer lifetime value (CLV).

How To Calculate KPI

To calculate ARPU, divide the total revenue generated by the number of users or customers.

Calculation Example

Suppose a SaaS company has 1000 users, and it generates a total revenue of $100,000 in a month. The ARPU for the given month would be:

KPI Advantages

• ARPU provides valuable insights into a company's revenue generation potential per user.
• It helps to monitor and forecast revenue growth and predict future cash flow.
• Understanding ARPU enables companies to optimize their pricing strategy, improve customer acquisition and retention, and increase customer lifetime value.

KPI Disadvantages

• ARPU does not provide insights into the profitability of each user.
• It does not account for the differences in customers' purchasing patterns, geographical regions, or user segments.

KPI Industry Benchmarks

The ARPU benchmarks vary significantly based on the industry, company size, and business model. For example, the ARPU for a SaaS company can be higher than a retail business. According to the SaaS benchmark report by Compass, the median ARPU for B2B SaaS companies is $3,671 annually, while for B2C SaaS companies, it is $960 annually.

Customer satisfaction score

Customer satisfaction is one of the most important metrics for any business. Measuring customer satisfaction score (CSAT) can help you understand how well your products/services are meeting customer needs and expectations, and how satisfied your customers are with your overall brand. Here's a breakdown of how to calculate, track and use customer satisfaction score as a key performance indicator (KPI) for your human resource software subscription.

Definition

CSAT is a system used to gauge how satisfied customers are with a product, service, or the overall brand. The metric is typically measured using a survey with a scale asking customers to rate their satisfaction with a specific product or service. CSAT scores are calculated based on the percentage of customers who indicate they are satisfied with a product or service.

Use Case

CSAT can be used to measure satisfaction at various touchpoints along the customer journey, including product/service usage, customer service interactions, and overall brand experience.

How to Calculate KPI

To calculate CSAT, you need to conduct a survey. The survey should ask customers to rate their satisfaction with a product or service on a scale, typically a 1-5 point or 1-10 point scale. The CSAT KPI is then calculated as the percentage of respondents that answered with a 4 or 5 (or 8, 9, or 10). The formula can be represented as:

Calculation Example

Let's say that you send out a survey to 100 customers, and 80 of them respond. Of those 80 respondents, 60 answered with a 4 or 5 on the satisfaction scale. The calculation would be:

Therefore, your CSAT score for that survey would be 75%.

KPI Advantages

• Provides a simple, clear way to gauge customer satisfaction
• Allows you to quickly identify areas for improvement and measure the success of changes you make
• Can help to increase customer loyalty and retention by addressing areas of dissatisfaction

KPI Disadvantages

• May not provide a complete picture of customer satisfaction or a comprehensive understanding of why customers are satisfied or dissatisfied
• Results can be impacted by survey design, sample size, and timing of surveys
• Can be difficult to benchmark against industry standards given variation in survey methodologies

KPI Industry Benchmarks for the KPI: 'Customer satisfaction score'

The average CSAT score varies by industry. According to research conducted by the American Customer Satisfaction Index (ACSI), the average CSAT score across industries in the United States is around 76 out of 100. The financial services and healthcare industries tend to have the highest CSAT scores, while the internet and subscription TV industries tend to have the lowest.

Monthly Recurring Revenue

Definition

Monthly Recurring Revenue (MRR) is the amount of revenue a company expects to recur every month from its customers’ subscriptions or monthly payments. It is an essential metric for companies providing subscription services. MRR helps to monitor the growth rate and overall health of the business.

Use Case

MRR is a vital KPI for companies with subscription-based business models, including SaaS and e-commerce businesses. It helps these businesses monitor their growth rate and overall performance. By tracking MRR, companies can identify trends and behaviors among their customers and make informed decisions to improve their services.

How To Calculate KPI

To calculate MRR, you need to add up the total recurring revenue from all your customers. The formula for MRR calculation is:

Calculation Example

Let's say you have 50 customers, and each customer pays a monthly subscription fee of $100. Your monthly recurring revenue would be:

KPI Advantages

• Helps to monitor the growth rate and overall health of the business
• Provides insights into the customer behavior and trends
• Helps to identify the performance of marketing campaigns
• Facilitates accurate revenue forecasting and cash flow management

KPI Disadvantages

• Less effective for businesses with one-time purchase models
• Does not consider customers that cancel or pause subscriptions
• High MRR can mask other performance issues and customer churn rates
• Not a sufficient measure of profitability

KPI Industry Benchmarks

Industry benchmarks for MRR can vary widely based on the company's size, products, and target audience. Generally, software-as-a-service (SaaS) companies aim for an MRR growth rate between 7% and 10% monthly. However, it's essential to analyze your business's specific industry, market, and competitors to determine appropriate benchmarks.

Churn Rate

Definition

Churn rate is a metric that measures the rate at which customers stop doing business with a company during a given period of time. It is commonly used by businesses with subscription models, including Human Resource software on Subscription, to calculate the number of customers lost or the percentage of customers who stopped using their software.

Use Case

Churn rate is an important metric for businesses because it can help identify which products or services are not meeting customer needs. By measuring churn rate, businesses can pinpoint areas of improvement and address customer concerns to reduce customer turnover and retain customers.

How to Calculate KPI

To calculate churn rate, take the number of customers who stopped doing business with the company during the specified period and divide it by the total number of customers at the beginning of the period. The resulting percentage is the churn rate.

Calculation Example

Let's say a Human Resource software on Subscription had 1000 customers at the beginning of the year. During the year, 100 customers stopped using the software.

KPI Advantages

• Helps businesses identify areas of improvement for products or services
• Assists businesses with customer retention strategies
• Improves overall customer satisfaction by addressing customer concerns

KPI Disadvantages

• Does not take into account new customers (only measures customer loss)
• May not accurately reflect overall customer satisfaction
• Churn rate can be influenced by external factors such as economic conditions or market competition

KPI Industry Benchmarks

The industry benchmark for churn rate in the Human Resource software on Subscription field can vary depending on the target market or industry. However, averages range from 5% to 15%.

Cost per Acquisition

Definition

Cost per acquisition (CPA) is a financial metric that measures the cost of acquiring a new customer or user for a product or service. It is calculated by dividing the total cost of the marketing campaign by the number of new customers acquired during the campaign.

Use Case

CPA is commonly used by businesses to measure the effectiveness of their marketing campaigns and to determine the return on investment (ROI) of their marketing spend. It is a useful metric in determining which marketing channels and campaigns are most effective in acquiring new customers and which are not.

How To Calculate KPI

Calculation Example

Let's say a company spends $1000 on a marketing campaign and acquires 50 new customers as a result. The CPA for this campaign would be:

KPI Advantages

• Helps companies measure the effectiveness of their marketing campaigns
• Enables companies to optimize their marketing spend by identifying the most effective channels and campaigns
• Provides a way to track ROI for marketing campaigns

KPI Disadvantages

• Does not take into account the lifetime value of a customer
• Can be affected by outliers or abnormal fluctuations in customer acquisition
• May not be the most appropriate metric for all businesses or industries

KPI Industry Benchmarks

Industry benchmarks for CPA can vary depending on the industry and the target audience. Generally, a lower CPA is considered better, but this can also depend on the lifetime value of a customer. For example:

• E-commerce industry: Average CPA is around $20-30 for a sale worth around $100-200
• SaaS industry: Average CPA is around $100-200 for a monthly subscription worth around $50-100
• Financial services industry: Average CPA is around $500-1000 for a new account worth around $5000-10000

Top Seven Human Resource Software on Subscription KPI Metrics. How to Track and Calculate.

As a seasoned serial entrepreneur, I have learned that one of the most crucial aspects of running a successful business is keeping track of its performance. The human resource department is no exception - keeping an eye on its KPIs is integral to making informed decisions that affect the organization's strategy and growth. In this chapter, we will delve into one such KPI, 'Time to Value,' exploring its definition, use cases, how to calculate, calculation examples, advantages, disadvantages, and industry benchmarks.

Time to Value

Time to Value is an HR metric used to measure how long it takes for a new hire to become productive and deliver value to the organization. A typical Time to Value KPI measures the time between a new employee's start date and the date when they become fully integrated into the company's operations.

Definition

The Time to Value KPI measures the time from when a new employee commences work to when they add value as a productive member of the organization.

Use Case

Time to Value can help human resource departments track employee performance, the effectiveness of training, and the hiring process's efficiency. In addition, it helps identify issues within a company's onboarding process, such as lack of training or insufficient resources.

How To Calculate KPI

Calculation Example

KPI Advantages

• Helps track employee performance and the effectiveness of the training program.
• Facilitates better onboarding of new hires and reduces overall training time, which saves cost.
• Quantifiable metric that enables tracking and reporting on employee performance trends.

KPI Disadvantages

• Time to Value may not be entirely accurate, as it does not account for external factors that affect performance, such as the economy.
• It may lead to a narrow focus on short-term results over long-term development.
• It might overemphasize the role of the individual employee rather than the collective effort or team dynamics.

KPI Industry Benchmarks

The Time to Value KPI varies depending on the company's industry, business model, size, and culture. The benchmark ranges between three to twelve months for most organizations.