The Top 7 Must-Track KPI Metrics for Pre-Made Meal Subscription Boxes

Welcome to our blog on pre-made meal subscription box KPI metrics. As a seasoned entrepreneur, I continue to see an upward trend in the popularity of meal subscription boxes. In fact, a recent report indicates there’s been over 27% growth in the industry in the past year. As such, it's important for businesses to understand KPIs to ensure they are meeting the mark. So, what are the top seven pre-made meal subscription box KPI metrics to track and calculate? Let's dive in!

• Customer retention rate
• Average order value

First, let's discuss customer retention rate. This is an important metric that measures the percentage of customers who decide to stay subscribed to your service. While there are a few ways to calculate retention rate, it's commonly done by dividing the number of subscribers at the end of a specific time period by the sum of subscribers at the beginning of that same period plus new subscribers gained during that period.

Another key KPI is the average order value. This metric measures the average amount of money customers spend per order. To get this value, simply divide total revenue by the number of orders. By analyzing this metric, you’ll be able to make changes to your pricing or marketing strategies to boost your average order value and increase revenue.

• Delivery success rate
• Customer satisfaction rate

The delivery success rate is another significant KPI to keep track of. This metric shows how many delivery attempts are successful out of the total number of times an order has been confirmed. It’s important to understand these numbers to ensure your customers are receiving what they paid for in a timely and proper manner. Ensuring customers consistently receive their orders can help improve satisfaction, which leads to better retention rates.

Lastly, the customer satisfaction rate is crucial for businesses to understand. Measured through surveys, it provides insight into the positive and negative experiences customers have had with your service. A high satisfaction rate will result in winning more subscribers through positive word of mouth and retention. Thus, tracking and analyzing this KPI is vital for the success of your pre-made meal subscription box service.

Customer retention rate

Definition: Customer retention rate is the percentage of customers who continue to purchase a product or service from a particular subscription box company within a given period.

Use Case: Customer retention rate is a critical KPI for subscription box companies since it indicates the number of customers who are loyal to their products and services. It is an essential metric for measuring customer satisfaction and loyalty, better understanding of customer behavior, and calculating customer lifetime value.

How To Calculate KPI:

Calculation Example:

KPI Advantages:

• Customer retention rate is an essential KPI for understanding customer behavior and loyalty, enabling companies to take the necessary steps to improve customer experience.
• It helps to reduce customer churn, which is crucial for subscription box companies since it involves recurring revenue.
• It provides more insights into trends and patterns of companies' overall performance, which can help to improve marketing strategies.

KPI Disadvantages:

• Customer retention rate does not indicate the profitability of customers.
• Companies may have different subscription periods, which can affect the overall customer retention rate.

KPI Industry Benchmarks for Customer Retention Rate:

• The customer retention rate for subscription boxes varies depending on the industry and customer behavior.
• On average, subscription box companies have a customer retention rate of between 60% and 70%. However, some companies can have retention rates as high as 80% or more.
• Companies can improve their customer retention rates by providing excellent customer service, offering special deals, or upgrading the quality of their products.

Average Order Value

As a pre-made meal subscription box business owner, tracking and calculating key performance indicators (KPIs) is essential to measure the success of your company and identify areas for improvement. One crucial KPI to monitor is the average order value.

Definition

Average order value (AOV) is the average dollar amount customers spend when placing an order on your website.

Use Case

By tracking AOV, you can analyze customers' buying behavior and determine the profitability of your business. This KPI also helps you to identify the popular meal plans or subscriptions and create sales tactics accordingly.

How To Calculate KPI

To calculate AOV, divide the total revenue generated by the total number of orders received within a specific time frame.

Calculation Example

If your pre-made meal subscription box business generated $10,000 in revenue from 100 orders, the AOV would be:

KPI Advantages

• Identifies popular products and services
• Helps in setting price points
• Assist in optimizing advertising spend

KPI Disadvantages

• Ignores other metrics, such as customer loyalty
• Can be skewed by outliers or promotions

KPI Industry Benchmarks

The AOV varies depending on the business model, industry, and time of the year. However, According to a recent study, the average AOV in the meal kit industry is around $60-$80.

Delivery success rate

Pre-made meal subscription box businesses are known for their convenience and variety. Customers demand reliable delivery services that provide meals on time and in optimal conditions. The delivery success rate KPI is a performance indicator used to measure the success of the delivery process.

Definition

Delivery success rate measures the percentage of successful deliveries compared to the total number of orders placed. The indicator monitors how efficiently a business is delivering their meal boxes to their customers.

Use Case

A high delivery success rate ensures customer satisfaction and retention. As a pre-made meal subscription box business owner, it is essential to track this KPI to spot potential issues in the delivery process and make improvements. Additionally, a high delivery success rate can be used as a competitive advantage to attract new customers.

How to Calculate KPI

The delivery success rate formula is:

For example, if a business delivered 1,000 orders and 950 of those were successful, the delivery success rate would be:

Calculation Example

A meal subscription box business had 2,500 orders in a month, out of which 2,350 deliveries were successful. The delivery success rate would be:

KPI Advantages

• Helps ensure customer satisfaction and retention
• Allows businesses to monitor and improve their delivery process
• Can be used as a competitive advantage to attract new customers

KPI Disadvantages

• Does not take into account reasons for failed deliveries
• Can be impacted by external factors such as weather, traffic, and logistics issues

KPI Industry Benchmarks

The industry benchmark for delivery success rate varies by the company's location and size. The recommended rate is around 95%, with more prominent companies aiming for a success rate of 97% or higher.

Customer satisfaction rate

As a pre-made meal subscription box, one of the most important KPIs to track is your customer satisfaction rate. This metric provides insight into how happy your customers are with your product and service, and it can help you identify areas for improvement.

Definition

The customer satisfaction rate is the percentage of customers who are satisfied with their experience with your subscription box. This metric can be measured using surveys or ratings provided by customers.

Use Case

A high customer satisfaction rate can indicate that your product and service are meeting the needs and expectations of your customers. It can also lead to customer loyalty, positive word-of-mouth, and ultimately, business growth.

How To Calculate KPI

Calculation Example

Let's say your pre-made meal subscription box has 500 customers, and you survey them to find out how satisfied they are with your product and service. Out of the 500 customers, 425 report being satisfied with their experience. To calculate your customer satisfaction rate:

KPI Advantages

• Provides insight into customer satisfaction and loyalty
• Can be used to identify areas for improvement
• Helps to prioritize customer support and service efforts

KPI Disadvantages

• May not capture the full spectrum of customer experience and satisfaction
• Can be influenced by response bias or survey methodology
• May not be applicable to all types of businesses or industries

KPI Industry Benchmarks

According to the American Customer Satisfaction Index, the average customer satisfaction for subscription meal kit services in 2021 is 77 out of 100.

Inventory turnover rate

One of the essential KPI metrics for pre-made meal subscription box businesses is the inventory turnover rate. It is the number of times that a company sells and replaces its inventory of goods in a specific period. It measures how efficiently a business is rotating its inventory and generating sales from it. In this chapter, we will discuss the following:

• Definition

• Use Case

• How To Calculate KPI

• Calculation Example

• KPI Advantages

• KPI Disadvantages

• KPI Industry Benchmarks

Definition

The inventory turnover rate is a KPI that measures the number of times a company sells and replaces its inventory within a specific period, usually a year. It measures how efficiently a business is rotating its inventory to generate sales. The formula for calculating the inventory turnover rate is:

Use Case

The inventory turnover rate is a crucial KPI for pre-made meal subscription box businesses. It helps the business monitor their inventory levels and determine whether they have too much or too little inventory. A high inventory turnover rate indicates a healthy business that is rotating its inventory efficiently, generating sales, and minimizing the risk of spoilage or waste. On the other hand, a low inventory turnover rate indicates that a business is struggling to sell its products, resulting in excess inventory that can lead to spoilage, waste, or increased carrying costs.

How To Calculate KPI

To calculate the inventory turnover rate, you need to determine the cost of goods sold (COGS) and the average inventory level during a specific period, usually a year. The steps involved in calculating the inventory turnover rate are:

• Determine the COGS for the period. The COGS is the total cost of the products that the business has sold during the period and includes the cost of raw materials, labor, and manufacturing overhead. The formula for calculating COGS is:
    COGS = Beginning Inventory + Purchases - Ending Inventory
• Determine the average inventory level during the period. The average inventory is the average of the beginning and ending inventory levels during the period. The formula for calculating the average inventory is:
    Average Inventory = (Beginning Inventory + Ending Inventory) / 2
• Finally, divide the COGS by the average inventory to get the inventory turnover rate:
    Inventory Turnover Rate = Cost of Goods Sold / Average Inventory

Calculation Example

Suppose that a pre-made meal subscription box business has a COGS of $500,000 and an average inventory level of $100,000 during the year. Using the formula mentioned above, the inventory turnover rate can be calculated as:

The inventory turnover rate for this business is 5, which means that the business is selling and replacing its inventory five times a year.

KPI Advantages

• Helps in monitoring inventory levels and preventing stockouts or excess inventory
• Provides insights into how efficiently a business is rotating its inventory to generate sales and minimize waste
• Helps businesses make informed decisions regarding pricing, purchasing, and production

KPI Disadvantages

• The inventory turnover rate does not take into account the lead time required to order and receive inventory
• It does not consider the impact of seasonality on inventory levels and sales
• It may not provide an accurate reflection of a business's profitability

KPI Industry Benchmarks

The inventory turnover rate benchmark varies across different industries. For instance, the fashion industry has a high inventory turnover rate of around 6 to 8, while the food industry has a relatively lower inventory turnover rate of around 3 to 4. It is important for businesses to compare their inventory turnover rate against industry benchmarks to gain insights into their operational efficiency.

Average Customer Lifetime Value

As a serial entrepreneur, I've come to understand the importance of tracking and analyzing your pre-made meal subscription box KPI metrics. One of the most crucial metrics that you should be monitoring is the average customer lifetime value (CLV). Let's dive deep into what this metric entails and how you can calculate it.

Definition

CLV refers to the average amount of money a customer will spend on your subscription service during their entire time as a subscriber. It's essential to know your CLV as it will help you determine how much money you should be investing in acquiring new customers and retaining your existing ones.

Use Case

CLV is a critical metric for pre-made meal subscription box businesses to track, as it can help you understand how much revenue you can expect to earn from each customer. This information is useful when it comes to setting your pricing strategy and developing your customer retention strategies.

How To Calculate KPI

To calculate the CLV, you'll need to use the following formula:

The average order value refers to the average amount that a customer spends per order. The purchase frequency rate is the average number of orders a customer makes per year, and the average customer lifespan is the average length of time a customer subscribes to your service.

Calculation Example

Let's say that the average order value for your pre-made meal subscription box is $50. The purchase frequency rate is two orders per month, and the average customer lifespan is 12 months. Using the formula, we can calculate the CLV:

In this example, the CLV for your pre-made meal subscription box is $1,200.

KPI Advantages

• Helps you determine the value of retaining your existing customers
• Provides insight into how much money you can expect to earn from each customer
• Helps you optimize your pricing strategy

KPI Disadvantages

• May not account for changes in your business model or industry trends
• Difficult to calculate accurately
• May not be an accurate representation of your customers' actual spending habits

KPI Industry Benchmarks

According to recent studies, the average CLV for pre-made meal subscription box businesses ranges from $500 to $1,500.

Subscriber Acquisition Cost

Definition: Subscriber acquisition cost (SAC) is the total cost that a pre-made meal subscription box company incurs to acquire one new subscriber. SAC includes various expenses such as marketing costs, sales commissions, and discounts offered to potential customers.

Use Case: SAC is a crucial metric for a pre-made meal subscription box company as it helps them determine how much they need to spend to acquire a new subscriber. By analyzing SAC, a company can monitor its marketing and acquisition costs and optimize its marketing campaigns for profitability.

How to Calculate KPI: To calculate SAC, a pre-made meal subscription box company needs to add up all the costs associated with acquiring a new subscriber and divide that total by the number of new subscribers gained during the same period.

Calculation Example: Let's say a pre-made meal subscription box company spent $10,000 on marketing and sales activities last month, which brought in 500 new subscribers. SAC for the company would be $20 per subscriber, as calculated below:

KPI Advantages:

• Helps pre-made meal subscription box companies determine the cost-effectiveness of their marketing and sales activities
• Allows companies to identify the most effective marketing channels to attract new subscribers
• Helps companies optimize their marketing campaigns and reduce customer acquisition costs over time

KPI Disadvantages:

• Does not account for the lifetime value of a subscriber, which could make the cost of acquiring a new subscriber seem higher than it is
• Does not consider the quality of subscribers acquired through marketing efforts i.e they could have a low retention rate, thus lowering their overall value
• Can make it difficult to differentiate between subscribers gained through organic vs. paid channels and get more insights into engagement and retention levels of each channel

KPI Industry Benchmarks: According to industry benchmarks, pre-made meal subscription box companies should aim to have an SAC between $50-$150 per new subscriber, depending on the cost of their subscription box.

As the pre-made meal subscription box industry continues to grow, it's crucial for businesses to track and understand their KPI metrics. By doing so, they can identify areas where they're excelling and areas that need improvement.

The customer retention rate and average order value are two critical metrics that help businesses ensure they're providing a service that's both valuable and affordable. These metrics also provide insights into customer behavior, which can inform marketing strategies and pricing decisions.

The delivery success rate and customer satisfaction rate are equally important. Ensuring reliable delivery and high satisfaction levels are key to retaining customers and attracting new ones. These metrics can also provide valuable feedback on areas that need improvement.

Overall, tracking these pre-made meal subscription box KPI metrics is essential for businesses looking to succeed in this competitive industry. By understanding and analyzing these metrics, businesses can make informed decisions that lead to growth and success.