“Subscription metrics have always been a pain point. We are excited to see Zuora raise the bar by providing attractive and accessible metrics out-of-the-box with Zuora Analytics.” - Talbot McInnis, Engineering Lead at Control Play
ARR, MRR, NRR, Churn, & More
Recurring revenue comes with an entirely new set of metrics. Are you monitoring them all?
Check out this on-demand recording to learn how you can set up your dashboard in Zuora Analytics by using Subscribed Institute-verified subscription metrics to track the performance of your business.
In this recording, I am joined by Amy Konary, Global VP, Chair of the Subscribed Institute along with Zuora customer Shahin Kohan, President of AIMS360, to discuss the following topics.
The most important subscription metrics to include, such as recurring revenue, subscriber value, retention, receivable, and growth metrics
How to configure a dynamic KPI dashboard in Zuora Analytics
How a fellow Zuora customer is using Zuora Analytics to understand and trend these key business metrics
Check out the recording:
Here are the slides for the session:
How do you mitigate the impact on analytics when you have to restructure a customer? For example, when a customer decides not to do consolidated billing and wants to be billed separately will this look like churn or contraction and in turn also new business?
One recommendation here is to solve through process updates in conjunction with a detailed understanding of how Business Impact categories are computed in Zuora Analytics. To learn more about how the Business Impact attribute is computed, click here .
I understand new business/expenses/churn/contraction is a key indicator. Do you think subscription-based on physical products vs software would change this perception?
This what the Net Billings dataset is for. To learn more, click here .
What is the difference between older 'Insights' and new 'Analytics' and some tenants have both?
The original insights product was focused more on subscriber churn prediction. Zuora analytics is primarily used for understanding the order to revenue flow and the key metrics within that process.
How can you tell if your analytics is the updated version?
Analytics is always updated to the latest version. This week we are deploying the newest version, which includes multiple dashboards.
Can you create a dataset by connecting Zuora data to other external data, like CSVs or Salesforce, or NetSuite data?
This isn’t possible today. Right now, we are focused on surfacing insights and essential metrics based on the wealth of data that lives within Zuora Billing.
If we have a multi-entity tenant, will we have to update the data sets within each tenant or will they flow through to all of the entities?
At this time, each entity maintains its own datasets, cards, and dashboards. While the product does not currently offer the ability to roll-up data across entities in Analytics, consistent dataset definitions within each entity, along with currency conversion options, help streamline the cross-entity rollup process..
How can we get the Invoice Item field? I do not find the object.
Invoice Item records are available as a “Transaction Type” in the Analytics Transaction . object. Pending customer demand, we may expand the fields that we make available in dataset to include Invoice Item as a selectable object.
Is there a time frame for when you will be adding analytics based on the revenue recognition rules instead of at the billing level?
We are currently evaluating providing recognized revenue (based on revenue recognition rules) as a new metric in Analytics. We don’t have an exact timeframe for this.
Is this functionality dependent on the home currency settings from finance settings and can we still use this functionality if we currently do not have the home currency set?
Analytics currency conversion is not dependent on home currency. Yes, Analytics can be used without a home currency set up in your Zuora tenant.
Is data from custom objects accessible at this time?
The data from Custom Objects aren’t at this time.
What recommendations do you have for more accurately tracking, treating, and approaching seasonal or temporary revenue?
One of the values of staying focused on MRR is that it will not include revenue that can tend to be spikey -- things like one-time or usage charges. Zuora Analytics supports custom fields and one practice that many customers employ with success is leveraging custom fields in the product catalog for product or plans to exclude certain revenue from being displayed in Analytics. In addition to filtering, Analytics datasets offer a variety of aggregation periods for each metric (daily, weekly, monthly, quarterly, and annual). Using Analytics Time Series Cards in conjunction with those aggregation periods make it very easy to spot seasonal trends, which you can then explore further to get at underlying business drivers.
How does the Analytics engine differentiate between Churn and Contraction? I’ve come across many companies where this definition is fluid.
You can use Discover Analytics (available at the top of every dashboard and Explorer page) to access the Analytics metrics glossary , which contains a detailed explanation of how Analytics computes churn, contraction, expansion, and new business, along with every metric available in Analytics.
Are there examples of customers exporting this data into more accessible sources for broader/enterprise based reporting? How do you get to the root causes of churn? does the data tell you or do you conduct surveys? what is contraction versus churn?
Yes, all of the data in Cards and Datasets are exportable via CSV and we find a lot of customers are leveraging these exports as the basis for internal reporting.
Analytics helps you understand churn in a many useful ways. First, you can create a dataset to measure either subscriber churn, or MRR churn, so you can keep track of those trends. From there, Analytics will let you slice those metrics by key dimensions to understand what is happen in greater detail. Cut churn by individual accounts, or key account attributes you store in Account custom fields (like vertical, segment, CSM, and more) to understand which types of accounts are driving churn. Go further, by breaking churn down by product, by plan, and by other subscription and plan attributes (like term duration, billing period, term type) to see if there is a problem in your product catalog or pricing structure. Service and product delivery teams can also take the quantitative data from Zuora to inform their qualitative user research initiatives to make sure they are finding and talking to not only the customers who are churning, but also the ones who are expanding with you so that you can figure out what is driving success.
Regarding contraction versus churn: contraction is a subscriber who downgrades their subscription(s) with you to pay less, but does not completely cancel; churn is a subscriber who cancels all of their subscription(s) to completely stop paying for your service.
Can the system differentiate between different types of expansion, e.g. price increases, volume increases within an account, additional subscriptions within the same parent account?
No, as of now, Analytics does not offer sub-categories to the Business Impact field. This is something we are considering adding so that you can further subdivide your MRR Changes or ARR Changes into those categories. Thank you for the question to help validate the need.
In addition to our subscription business, we also have some “noisy” financial data that’s unrelated to key lines of business. What’s the best way to filter these out?
The answer, unfortunately, depends a little bit on how your Zuora setup has modeled these lines of business. If, for example, these lines of business are captured in your Product Catalog (which would be the ideal setup), then you can include the relevant product or rate plan metadata in your dataset configuration and you will be able to filter them out of either your datasets or your cards.
Subscription Metrics Guide
If you have any questions, post them below.
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Thank you for sharing this idea! I can imagine how value this could be and is something we will consider for Analytics.
If you have a chance to reply, I am curious to learn what particular uses you had in mind if we were to surface this data via API or in Workflow.
Kevin Suer | Zuora Product Management, Analytics
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Seeing something new in your left navigation bar? You now have access to Analytics! (Not seeing it yet? Learn more about Analytics permissions here .) We’re excited to bring you industry-leading subscription analytics, verified by the Subscribed Institute.
In a recent webcast for our customers, Kevin Suer, Senior Product Manager, walked through how to:
Access dozens of essential subscription metrics including Net MRR, Net Retention Rate, Subscriber Churn, and many more right out-of-the-box
Explore insights and trend analyses on a configurable, self-service dashboard
Easily build and customize datasets, slice and dice data, and convert it into a single currency view
Here is the recording from the session:
Here are the slides from the session:
Where can I find the Subscribed Institute guide to subscription metrics?
To get insight on all the essential recurring revenue metrics and when to use them, the Subscribed Institute has released the Definitive Guide to Subscription Metrics . View this guide to learn how you can leverage different metrics to uncover insights about your subscribers. And check out the helpful definitions along the way, making this guide your new go-to resource!
I am able to view the dashboard but I am not able to view the "3 dots" in the upper right-hand corner of each card and don't have the "ADD CARD" button, is this a permissions issue?
If you do not see the three dots (otherwise called the Card Action Menu) or the “Add Card” button when viewing the Dashboard, this indicates that you are an Analytics viewer, not an admin. Your Zuora platform administrator will need to update your Analytics permission to Analytics Admin in order for you to see these additional options.
If we have different “packages” that the client can subscribe to, can we track the MRR per subscription package?
Yes, Analytics was designed to help you get insights and understand MRR trends by “package”. Many customers will model a package in Zuora as a rate plan and Analytics provides the ability to analyze MRR or ARR by rate plan. Further, Analytics makes it easy to breakdown any metric by other essential fields on the rate plan charge, or product objects.
Is it possible to drill down to the detailed records behind any metric (for example, see a metric by individual customers)?
Yes, you can do this using datasets. While the default datasets provided by Zuora out of the box do not have the accounts built into them, you can create a new dataset individual account fields like Account ID, Account Number, and Account Name to see metrics by Account. Datasets allow you to view metrics at a very granular level and you can create datasets as large as 100M records.
Can you display multiple currencies?
Analytics does allow you to create Datasets and Cards in whatever arbitrary currency you are interested in. Simply select the currency of your choice (or leave metrics unconverted in the transaction currency) when configuring your metric configuration options in the Dataset Editor.
Can you have more than one dashboard?
Right now Analytics support one dashboard per tenant. Any edits that are made to the dashboard are visible to all users who have access to Analytics within your tenant.
What kind of tenant roles can edit the cards?
Click here to view all of the details on roles/permissions for Analytics.
Is there a limit to the datasets you can have?
Yes, there is a limit by edition. Growth edition customers are entitled to up to 10 datasets, Enterprise edition up to 50, and Nine edition up to 100. In the near future, Zuora will offer customers an option to purchase additional datasets for those tenants that run into their edition dataset limit.
Is there a limitation on the number of fields you can add for a single dataset?
You can have up to 40 fields and up to 60 metric columns.
What time each day does the dataset refresh?
On the card detailed page, you can view what time your data is set to reset. This is automatic and can not be adjusted.
Is it possible to somehow query the dataset contents to an external data warehouse?
Datasets can be exported as CSV via the export options located within the product. We hope to add in options for programmatically querying datasets via API so that they can be synchronized into customer data warehouses.
Are you able to schedule an export of the datasets?
Dataset exports cannot be scheduled at this time.
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This guide will help you understand what goes into a comprehensive and reliable LTV measure. Read our guide The Business Logic of LTV to understand why it’s so important to subscription companies.
LTV is a measure of how much profit you expect to make from any given customer in the future. It conceptually comprises of four key factors:
1: LIFE EXPECTANCY
The first element that goes into an LTV calculation is the life expectancy of your customer. Each of your customers will stay with your service a different amount of time. Some, who are dissatisfied and exhibit account health risk factors, may churn this renewal period; others, who are healthy and happy, will go on to renew for many renewal periods to come.
In order for customer lifetime value to have real meaning, Zuora recommends you estimate churn rate individually for each of your customers based on their unique behaviors, demographics, pricing, packaging, billing, and payment histories. At Zuora, some of our most sophisticated customers have moved beyond simple predictions based on a few intuitive factors to sophisticated statistical models that predict individual account churn rates by modeling the top factors responsible for past churns.
Once you have established a churn rate for your customers, then you can estimate life expectancy according to the following formula:
Life Expectancy = 1 / Churn Rate
For example, a customer whose renewal period is annual with an estimated churn rate of 32% will have a life expectancy of 1 / 0.32 or approximately 3.1years. As you estimate life expectancy, you will want to express your life expectancy using a consistent time period that corresponds to your subscription renewal cycles. For example, if your business has contracts that renew annually, then your LTV calculation will estimate how many years you expect to keep each customer.
2: REVENUE EXPECTANCY
It goes without saying that how much value you think you will earn from your customer in future periods is largely dependent on the revenue you expect from your customers. To estimate this, you not only need to look at current bookings (or revenue under contract), but you also need to estimate how the revenue you get from your customers is expected to change over time. Do you expect your customer to buy an upsell, continue to pay the same amount, or downsell?
A good way to estimate future changes in current subscription revenue is to use your Net MRR Retention rate. Net MRR Retention is defined as the dollar amount of your renewals divided by the dollar amount up for renewal. It gives you an aggregate measure of upsells relative to downsells and churns across your entire customer base.
In an attempt to find better alternatives to using Net MRR Retention in the revenue expectancy element of LTV, Zuora is currently experimenting with a few new methods aimed at improving the state-of-the-art by attempting to estimate revenue expectancy individually, by customer. These methods attempt to go beyond using just standard Net MRR Retention to a more personalized estimation. The idea holds promise. For example, Apple Music offers three plans:
Inherent in this packaging structure are two predictable upgrade paths (Student to Individual, and Individual to Family). Modeling those upgrade paths into individualized estimates of upgrade or downgrade likelihood could prove quite effective at improving LTV accuracy beyond a wholesale average net retention factor.
3: COST EXPECTANCY
The third element of lifetime value is estimating how much it costs you to deliver your product or service. Each of your subscription products has a particular contribution margin associated with it that needs to be estimated. Contribution margin represents the variable costs that go into providing your product and is a measure of the profitability of your subscription products. Some businesses leave out cost expectancy from LTV, but doing so leaves out an important element if you plan to make spending decisions based on LTV.
4: RISK EXPECTANCY
The final element of LTV is estimating how much risk your future revenue streams face. Risk expectancy is critically important because LTV is an estimate of what will happen in the future. Your estimates of the future can be conservative or aggressive. A common mistake that many make in calculating LTV is that they do not sufficiently account for future risks.
Zuora recommends you strive to underestimate LTV for customers — err toward a conservative LTV. Why? Let’s say you overestimate the average customer LTV at $2000 and it winds up being $1500. Let’s say based on the $2000 number, you decided to spend $1750 to acquire a customer. Your overestimate would have cost you $250 per customer instead of earning you $250. When working with LTV, you always want to estimate for the worst case.
How should you estimate for the worst case? First, you first want to discount LTV with prevailing interest rates since a dollar in today’s money will be less than a dollar in the future. Also, in addition to interest rate discounting, you need to factor in risk discounting. Wall Street investors offer a compelling model to follow when thinking about appropriate levels of risk discounting. On Wall Street, investments are always discounted by higher rates than just the interest rate. The additional percent discount is a risk adjustment commonly called the “spread”. The further out in the future cash is expected from a customer, the more that could go wrong. Additional risk could include changes in economic conditions, competitive landscape, and regulatory changes.
In essence, all reasons that future cash might not be paid by a customer gets rolled into the spread. Spread is roughly the percent change of catastrophic loss per payment period. For those with finance backgrounds, this is the very same concept as corporate bond spreads — high-grade corporate bonds have spreads of 1-5% and low-grade corporate bonds (junk status) have spreads between 5-25%. Factoring all these risks together, Zuora recommends you use a conservative discount rate and we often work with our customers to determine the right number for their business.
For more, check out our guide – The Best LTV Formula for Subscription Businesses
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Hi @peterwalsham, great question.
We will be including those updates and capabilities as part of your core subscription to Zuora Billing so if you are interested in testing it out and giving us feedback, there is no add-on to purchase. Let me know.
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Hi @MK_STP and all,
We do have a few exciting updates on the product front in this area.
We are actively developing a major new product capability that will make it significantly easier for you to report and analyze your Zuora MRR data net of discounts. The new functionality enhances the Discount Applied Metrics (https://knowledgecenter.zuora.com/Zuora_Central/Reporting_and_Analytics/D_Data_Sources_and_Exports/C_Data_Source_Reference/Discount_Applied_Metrics_Data_Source) and the Order MRR (https://knowledgecenter.zuora.com/Zuora_Central/Subscriptions/Orders/AA_Overview_of_Orders/Key_Metrics_for_Orders) data sources (which are two existing data sources that do provide data discount MRR data -- if you are curious about those, we have Zuora Subject Matter experts who can help answer questions about how they work and if they are suitable for your Zuora tenant configuration). A key benefit of our new capability, which we are going to call Zuora Analytics, is that it will provide the added benefit of MRR ease of use -- especially for business users (who may not want to learn about the details of how the Zuora object model works in the context of MRR reporting). Analytics will introduce enhanced ways to analyze your MRR trends based on what I've heard from conversations with our customers, such as using a visual dashboard to quickly see trends in the business with the ability to slice / dice MRR (gross or net of discounts) along a variety of key dimensions including business impact in a particular period (new, expansion, contraction, and churn MRR), product, region, and the numerous other dimensions of data we store in Zuora.
I am looking to recruit a handful of customers to get early access to test out this new functionality in your tenant. That testing would likely start in a few months from now. If you are interested in getting access, please let me know -- I'd love to meet you.
Product Management, Zuora Reporting & Analytics
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Hi @JulianHawes, thanks for this feedback! We do not have plans for this idea at this time, but we'll take under advisement. I'd would also encourage you to share the feedback on the Microsoft side too and vote up this idea in the Microsoft Power BI ideas forum below, which I can see is logged in their forum here:
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Thanks @DaveFrechette. Good to hear from you and appreciate you writing up this good feedback and sharing your perspective from both sides of Zuora. I hear you on this and look forward to getting you doing this in Reporting and obviating the need for those spreadsheets. Don't have roadmap timing on this, but I will share that with you (and everyone on this thread) as soon as we have an update.
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Hi @ls-zuora, thank you for following up on this idea and your feedback. I agree that it is still a good idea and improving how ZOQL allows you to work with ANDs and ORs is one way we are considering solving this problem. We do not have this scheduled on our roadmap at this time. I do want to mention that Export ZOQL does support combining ANDs and ORs together with parentheses, here's a little more information on this.
For those unfamiliar with Export ZOQL, here is a link to a Knowledge Center article that provides more information about it, including data sources and objects available, as well as limitations.
Analytics, Product Management
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Wanted to join this comment thread to say we hear you on this request and think it is really good feedback. I'm marking it as "Under Consideration". Best, Kevin Analytics, Product Management
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Thank you for logging this idea. To follow-up on this idea, do you know what is the use case where a user would the Excel locale and Zuora locale to be different? The locale feature in Zuora was designed so that these locales would be consistent with one another.
Zuora Product Management
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Hi @thomasklecan, Thank you for checking in on the status of this idea. The idea of adding cash forecasting into Reporting where you can include the kind of cash forecasting options like renewal assumptions offered in the BillingPreviewRun API or the CSV report you can download in Connect Developer Tools remains a compelling product enhancement candidate for the Reporting product. Best, Kevin Analytics, Product Management
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Insights lets you create new Segments based on any of the following types of criteria:
Account or User Attributes Values
Account or User Metrics Values
Whether a certain events occurred
Whether a certain number of session occurred.
There is currently not a way to create Segments based on Event Attributes. For example, image you have an Event Type for "Viewed Video" in Insights and with it, you feed the following Event Attributes into Insights:
Device or Browser Information
It would be nice to be able to create Segments using Event Attributes as criteria. For example, show me Accounts with at least one "Viewed Video" in last 7 days, where the video viewed has Video Name = "Amazing Cat Video".
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It was great meeting so many of you last week!
During the product roadmap session, you all had a few questions that I had to research with my fellow product managers. I have since connected with them and have some answers to share.
When it is released, will “orders” work with the Z-Suite Connector?
Unfortunately we do not currently have plans to integrate orders in Z-Suite when it is first released.
When it is released, will Z-Quote work with the “orders” feature?
Yes, we are currently planning this for the feature.
Will there be documentation on “orders” before the feature is released (say 2-3 months prior) so that Zuora customers can review the details and decide whether to put this into their IT/development roadmap before the feature is released?
There will be documentation for the feature available in the Zuora KnowledgeCenter. It will probably follow our normal cadence vs 2-3 months prior. Duly noted on the general request for more technical documentation in advance of releases to facilitate feature adoption planning.
When will Zuora have a self-service shopping cart feature?
We are currently researching solutions via our RBM Connect marketplace. Plans are early so cannot offer guidance on timing.
Thanks again and hope to see you all soon again!
Best, Kevin Suer
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For those interested in this idea, we are now targeting this for the R203.1 maintenance patch. That patch is slated for:
APISandbox release: 10 pm, 08/23 (Tuesday), PT
Production release: 10 pm, 08/24 (Wednesday), PT
If this Idea is delayed or not part of that patch, I will make sure to share an update here so you all have the latest information on it.
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Thanks for the great feedback! Right-clicking the navigation bar (to open in a new tab or window) is something that we're planning to release soon -- ideally in our September release. In the meantime, a work-around we're suggesting for folks is right-clicking the home breadcrumb link until we can get this improvement in.
Product Management, Zuora
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