Product Data: ERPI As An Input (PART 1)

In my recent articles, we’ve examined how to measure the overall performance of your mobile subscription app. Specifically, I look at with expected revenue per install (ERPI) – reviewing how to pull necessary product data to calculate the metric.

However, ERPI can also be used as an input methodology. We can use ERPI to help us make strategic decisions about our product roadmap. The goal is to tell better, more accurate stories about our data. How do we react to the right metrics in the right way? ERPI can help.

Let’s take an example funnel for SuperNews, a mobile subscription app that curates news content for you. In this example, SuperNews gets 50,000 installs a month, with a 15 percent trial start rate and a 60% trial to pay rate, resulting in 4,500 new subscribers for the period. These subscribers pay $9.99 a month, and our projections show they have an average lifetime of 7 months, resulting in an average lifetime value of $69.93. This results in a $6.29 ERPI.  Pretty decent.

Baseline Example

InstallsInstall > TrialTrial > PayNew SubsLifetimeLTVERPI
50,00015%60%4,5007 mo$69.93$6.29

At a weekly reporting meeting, the SuperNews team is trying to explain a sudden drop of two absolute points in the trial start rate that week. Obviously, this could have a huge impact on the business if all other metrics stayed constant. From an ERPI standpoint, it would look something like this:

InstallsInstall > TrialTrial > PayNew SubsLifetimeLTVERPI
50,00013%60%3,9007 mo$69.93$5.45

ERPI Delta: -$0.84

Net Gain/Loss per Month: -$41,958

We can see from the cohorts of new installs, over the time those users are in the product, SuperNews is losing an expected $41,958. So, there is some cause for concern.

Some discussion ensues about potential reasons for this change. A bug in a new update? Any changes to the funnel? Has the nature of the traffic changed? Does this look different if we break it down by country? Platform? Devices?

What would it take for this to not be a problem at all?  If the nature of the traffic has changed, what signals can we look for in early engagement data to have confidence this audience is going to have better performance in the rest of the funnel?  Let’s look at the ERPI calculation:

InstallsInstall > TrialTrial > PayNew SubsLifetimeLTVERPI
50,00013%65%4,2257.5 mo$74.93$6.33

ERPI Delta: +$0.04

Net Gain/Loss per Month: +$1,873.12

We can run the projections a couple of different ways.

Specifically, we can start to understand what kind of conversion we would need in the rest of the funnel to see ERPI creep back up to acceptable levels. In this example, a high trial to pay rate and higher lifetime would counter the impact of the trial start rate drop.

Your team can examine leading indicators of trial-to-pay rate, for example, to make projections around this performance. From there, your team can make a more informed decision about actions to take (or not take) to correct the issue.

Trial start rate can have an outsized effect on the performance of the funnel. However. it’s not the only product data metric to look at or get excited about. Let’s say the growth team has been making meaningful investments in the sign-up page. As a result, SuperNews is seeing a trial start rate of 17 percent.

InstallsInstall > TrialTrial > PayNew SubsLifetimeLTVERPI
50,00017%60%5,1007 mo$69.93$7.13

ERPI Delta: +$0.84

Net Gain/Loss per Month: +$41,958

Naturally, this has a huge positive swing on ERPI if the rest of the funnel holds. However, what happens when parts of your value proposition are a little bold and your conversion rate suffers? In my next article, we’ll take a closer look at the potential for a lower ERPI even with a rising trial start rate.

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About the Speaker
Britt Myers
GameClub COO
An experienced and creative entrepreneur and product leader, Britt Myers has developed an impressive resume of business successes in media and technology production. Currently, Britt is the COO & Head of Product at GameClub - a premium platform for mobile gaming. In 2014, Myers partnered with Stephanie Dua as co-founder and Chief Product Officer of ed-tech startup Homer. Homer is the #1 Learn-To-Read program powered by your child’s interests; an educational app for iOS and web that teaches a child to read and develops crucial early childhood cognitive skills.

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