# 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

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:

CRR = (950/1000) * 100 = 95%

• 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.

• 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.

#### Top 3 Tips to Improve Customer Retention Rate:

• Develop customer service policies and guidelines that align with customer expectations and needs. Train the support staff to handle customer inquiries and complaints efficiently.
• Encourage customer feedback and suggestions on the product or service offered. Consider implementing suggestions if they align with the company's values and goals.
• Offer personalized experiences to each customer to make them feel valued. Use data analytics to gain insights into customer preferences and cater to them.

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## 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.

ARPU = Total revenue / 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:

ARPU = \$100,000 / 1000 = \$100

• 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.

• 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.

#### Tips & Tricks

• Track and monitor the ARPU monthly, quarterly, and yearly to identify trends and changes.
• Compare the ARPU of different user segments to analyze the revenue contribution of each group.
• Analyze the ARPU data in combination with other KPI metrics such as customer acquisition cost (CAC), churn rate, and CLV to gain a complete understanding of the company's financial performance.

## 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:

`(Number of satisfied respondents / Number of total respondents) x 100 = CSAT score`

### 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:

`(60/80) x 100 = 75%`

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

• 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

• 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.

#### Tips & Tricks

• Use various feedback channels (e.g. in-app messages, email surveys, chatbots) to capture customer sentiment at different touchpoints, not just when something goes wrong.
• Segment your feedback results (e.g. by customer demographics, frequency of use) to identify nuances in satisfaction.
• Share your CSAT results and learnings with your team and customers, to show them you are listening and committed to improving the customer experience.

## 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:

MRR = ∑ Revenue from all customers in a month

### 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:

MRR = 50 customers x \$100 = \$5,000

• 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

• 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.

#### Tips & Tricks

• Use MRR in combination with other KPIs, such as Customer Lifetime Value (CLV), to get a holistic view of the business's health
• Track MRR churn rate to determine customer dissatisfaction and improve customer retention efforts
• Consider upselling or cross-selling customers to increase MRR and overall revenue

## 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.

Churn rate formula:

Number of customers lost during specified period / Total number of customers at the beginning of the period

### 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.

Churn rate = 100 / 1000 = 0.1 or 10%

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

• 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%.

#### Tips and Tricks

• Identify the reasons why customers have left the business to address underlying issues
• Offer loyal customers incentives for continued use of the company's products or services
• Stay ahead of the competition by regularly reviewing and improving company products or services

## 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

CPA = Total Cost of Campaign / Number of New Customers Acquired

### 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:

CPA = \$1000 / 50 = \$20

• 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

• 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

#### Tips & Tricks

• Track CPA over time to identify trends and changes in marketing effectiveness
• Test different marketing channels and campaigns to find the most effective ones for your business

## 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

KPI = (Total revenue generated by an employee - employee's salary, benefits, and overhead costs) / Time taken to generate the revenue.

#### Calculation Example

Suppose an employee contributes \$100,000 in revenue annually and incurs \$50,000 in salary, benefits, and overhead costs. Hence, their net contribution is \$50,000. Suppose the time taken for the employee to generate the revenue is one year. Then, the Time to Value KPI would be:
KPI = (\$100,000 - \$50,000) / 1 year = \$50,000.

• 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.

• 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.

#### Tips & Tricks

• Creating a well-structured onboarding program can significantly improve the Time to Value KPI.
• Provide continuous training and feedback to enable employees to perform better, leading to faster Time to Value.
• Regularly evaluate KPIs to help identify issues and make informed decisions.

In today's fast-paced business world, tracking Key Performance Indicators (KPIs) is more critical than ever before. As discussed in this article, human resource software subscription KPI metrics play a crucial role in business success and can help organizations stay ahead of the competition. By monitoring KPIs such as Customer retention rate, Average revenue per user, and Churn rate, businesses can gain valuable insight into customer satisfaction and identify areas for improvement. Further key metrics such as Customer satisfaction score, Monthly recurring revenue, Cost per acquisition, and Time to value can provide critical information to guide strategic decision-making. Overall, tracking and analyzing KPIs is essential to ensuring a successful and profitable business.

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