Explain rebill ratios

I thought I understood it well. But I was trying to explain the concept to someone else and my explanation made NO sense. Lol.

Here's the example I used... A site gets 50 NEW members per month @ $20 each and has an amazing rebill ratio of 50%. This is the formula I came up with...

JANUARY.....................................50x $20 = $1000
FEBRUARY...............(rebills)25x$20 + 50x$20 = $1500
MARCH...................(rebills)37x$20 + 50x$20 = $1740
APRIL.....................(rebills)43x$20 + 50x$20 = $1860
MAY.......................(rebills)46x$20 + 50x$20 = $1920
Total members 401....................................$8020

Now I know there is something wrong with my formula because you can never get over 50 members rebilling per month. And the percentage increase just gets less and less each month.

Can someone explain this to me using my above example as a reference? I feel like a dumbass. :(

you can get over 50 rebilling members at once - many sites do. if yours doesn't, it usually means you don't have enough content, members don't like your content that much or you aren't making that many sales. there could be another issue so it's always a good idea to check the cancel reasons in your ccbill and epoch stats. to use this with epoch presently you will have to have your data dump enabled or will have to have a program collecting the stats from it for you.

the initial signup periond (whether 3 days or 10 days or a month) to the first recurring month is usually considered trial to monthly conversion. this is often lower than the site's month to month retention for a site that's doing well. it's often higher with a longer higher price and lower with a 2 - 5 day trial - bigger programs or programs with little content or content members don't like can convert as little as 10 or 15 percent.

if you have enough content (usually movies but a few sites rebill because of tons of pic sets), your month to month retention should be at least 50%). i've often seen 70% with sites with lots of good quality content and regular updates. reason it's better is that after initial cancels the first period, most members stayed because they not only like your content and found there was enough of it but also they are comfortable with your movie formats and the way pics are displayed.

Patti... you misunderstood me. The figures in the example are hypothetical. I have more than 50 rebilling members. ;)

I just need an example of the statistical formula for rebill ratios.

seems like you have it. if on average 50% of your month to month members quit each month and 50% stay on, you have 50% retention.

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Originally Posted by basschick

...your month to month retention should be at least 50%). i've often seen 70% with sites with lots of good quality content and regular updates...

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Ok, now you've lost me. What is the difference between retention percentage and rebill ratio?
If I understand what you are saying correctly, 50% retention (meaning a new join is 50% likely to stay around for more than one month) is normal? That doesn't sound right to me.

your formula looks good, but its a bit too simple. In your formula, you assume a flat rate of cancellation, ie, 50% of the previous months rebills cancel. The reality is its more of a curve, so I would say ~65% rebill once, then 35% rebill twice, then only 10% let it go for a 3rd rebill. After 3 rebills, you tend to either get 0% rebilling or you get the occasional "lifer" that will rebill for ages.

These aren't accurate rates, but its just to demonstrate what I am suggesting.

cheers,
Luke

Ah, ok.. but how do you calculate the rebill ratio and/or retention?

I have 'X' sales 2 months ago and 'Y' rebills, the next month I have 'Z' sales and 'AA' rebills, this month I have 'BB' sales and 'CC' rebills.

What is the formula? There has to be a simple calculation to put method to this madness. Where are the math majors when you need one? I'm not really concerned at the moment on how members rebill over the course of multiple months... just the basic trend.

I think you will need someone familiar with quantum mechanics much more than mathematics alone on this one man :p

I think a few guys tried to bring a more Copernican view to all this that would help you out man, but despite the greatest minds in history the numbers just do not add up. :specs:

Retention is how long a member remains a member in total, including the first month (or trial period).

Rebills are equal to the amount of times a member is charged for access to the site over a specific period of time.

For example, your member retained for 5 months, but was only rebilled 4 times.

Its totally plausible that you could have an average rebill percentage of 80% but an average retention of only 10% over any given period of time depending on your sales volume but if that was true, then you would have something seriously wrong with your site LOL

You also really do need to break down rebills by the period of rebill, for example...

Join date - Initial / Trial sale.
1st rebill - 30 days later
2nd rebill - 60 days later
3rd rebill - 90 days later

If a member 'rebilled' 3 times, you have a 4 month retention.

At least thats how i calculate my figures as the 1st sale really shouldnt count as a rebill as the member could cancel within a few seconds of joining.

From this point, you also need to work out what percentage of those customers that rebilled at the 1st rebill, subsequently made the 2nd billing cycle, then the 3rd, etc etc.

You could find that your 2nd to 3rd billing cycle has a 20% rebill rate but all of the members that rebilled from 1st to 2nd and cancelled, gave you an 80% rebill rate for that period.

Once you have these figures broken down, you can take a mean calculation across all the figures you have to work out your retention (and rebill) rates for any given period of time (usually 12 months).

This also becomes more convoluted once you start looking at multiple month access price points, for example, the member is charged $69.95 for a 3 month access before being rebilled, strictly speaking, you have only billed them for a trial but, if they rebill, you are going to have a 4 month retention figure. For this very reason i like to break down rebill/retention numbers based on the join option taken initially.

Regards,

Lee

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Originally Posted by Xstr8guy

Ah, ok.. but how do you calculate the rebill ratio and/or retention?
I have 'X' sales 2 months ago and 'Y' rebills, the next month I have 'Z' sales and 'AA' rebills, this month I have 'BB' sales and 'CC' rebills.
What is the formula?

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First, variables should not change.

Rebills should always be the same (variable). Say 'R'
Sales should always be the same.. Say 'S'
Dollar (amount) = 'D"
Total = 'T'
(I used the first letter to keep things simple)
* = times (x), or multiply (mutiplied by)

Using your example (of 50 sales and 50% retention all @ $20), here is what I get:

Now to clarify: S*.5 = R.
'R' was defined as being 1/2 of 'S', so it ('R') is not needed. Of course, once 'R' changes (no longer a constant 50%) the following formula will need to be modified (see last formula).

So, here is what I get:
(S*.5) + S * D = T

(50*.5) + 50 * 20 = 1500

With out the constant (50%, or R), it will be:
(S+R)*D=T
(sales + rebills) * dollar = total
(50 + 25) * 20 = 1500

Based on your idea of 50 new members each month and Chili's rebill scale...

http://www.happysucks.com/0/rebill.jpg

[edit]I just looked and the rebill key is 1 off - meaning... take the last column and shift it down one.[/edit]

Too much focus is applied to retention or rebill %. You should focus on average membership length instead.

Case in point... while 35% of total members may rebill, but of those 35% 90% rebill twice, 75% rebill 3 times, 60% rebill 4 times.... you'll make yourself crazy with all the formulas you can come up with. This is especially important if you offer multi-month options on the join pages

So, its better to just get the average membership length.
Total number of days active members are active / divided by total number of active members / divided by 30 = average number of months each member stays. This method is so much simpler and gives you an accurate accounting of member value (not counting any upsells or comeback offers etc). However you do need about 9 months of data to get an accurate number.

Oh wow! There is a lot to absorb here. I'll get my thinking cap on and study everything really hard. :teacher:

I had read your post before it had been even been responded to. I was gonna respond, but one thing led to another and I also feared being flamed.

It is impossible to create a formula, especially with UKnaked without a history of data. Each site is quite unique.

As many wrote above, the trial is "converted" in the first month. A pay site should have 50-70% converted from trial to full membership.

Now we are talking about the second month billing, the rebill. It seems that three months is an industry standard, and those that rebill for four plus months are the gold that is sought.

Do not fret trying to come up with a formula until your paysite has a longer history with numbers to crunch.

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Originally Posted by wnc

I had read your post before it had been even been responded to. I was gonna respond, but one thing led to another and I also feared being flamed.

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Flamed? By me?! I would never! Lol. I may be bitchy sometimes but I usually only get mean with people that know me well enough to not take it personally.

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Originally Posted by wnc

Do not fret trying to come up with a formula until your paysite has a longer history with numbers to crunch.

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Lol, that's good to know! Because these 'industry standard' figures posted in this thread have me really depressed. I have a long way to go to be standard. :(

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Originally Posted by wnc

As many wrote above, the trial is "converted" in the first month. A pay site should have 50-70% converted from trial to full membership.

Now we are talking about the second month billing, the rebill. It seems that three months is an industry standard, and those that rebill for four plus months are the gold that is sought.

Do not fret trying to come up with a formula until your paysite has a longer history with numbers to crunch.

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I have another question regarding the 'industry standard'. How is it possible to have such high retention and trial-to-conversion ratios in the scenario where short trials are not offered and 50% of new members are already choosing non-recurring options. That immediately skews my figures. :uhoh:

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Originally Posted by Xstr8guy

How is it possible to have such high retention and trial-to-conversion ratios in the scenario where short trials are not offered and 50% of new members are already choosing non-recurring options.

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Because the members joining on the recurring basis are already sold on the content to be found inside the site, if the members area delivers what is promised, you have a very good chance of keeping members rebilling for months.

Of course, the 'retention' figures being given in your scenario arent a true representation of the site since the accuracy of those figures is already cut in half. The figures are a crapshoot.

Again, from a programs perspective, another reason NOT to offer non-recurring memberships, your figures will automatically be scewed from the get go because you dont have a true representation of all the rebill data.

Regards,

Lee

I dont know if your just curious or want to get a formula for a reason, or just studying for a maths degree. If its just to see how well your site retains, i would be inclined just to look at the average number of months your members stay for. The work you do on the site will then see an increase or decrease in this, telling you everything.

If an affiliate asks about average retention, all they need to know is the average number of months members stay for.

Ive probably missed the point, this thread confuses me.. too many numbers lol

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Originally Posted by marcjacob

If an affiliate asks about average retention, all they need to know is the average number of months members stay for.

Ive probably missed the point, this thread confuses me.. too many numbers lol

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Good question... interesting question. I hope UKNAKED does not become bogged down in number crunching, when others just wish the site to create the next update.

I do see many sites via my affiliate income that recently the surfers select a SINGLE MONTH. The surfer feels more control? And of course, the affiliate doesn't get credit when the cookie expires and they become member again.

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Originally Posted by wnc

Good question... interesting question. I hope UKNAKED does not become bogged down in number crunching, when others just wish the site to create the next update.

I do see many sites via my affiliate income that recently the surfers select a SINGLE MONTH. The surfer feels more control? And of course, the affiliate doesn't get credit when the cookie expires and they become member again.

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Ah don't worry about us. :D We are updating 3 times per week.

We're still a young site but I've just been a little disappointed by rebills so far. I'm trying to increase retention and I needed some way to judge the results.

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Originally Posted by marcjacob

i would be inclined just to look at the average number of months your members stay for. The work you do on the site will then see an increase or decrease in this, telling you everything.

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In theory you are right however, we live in the real world. Program owners need a lot more information than just the 'average length of membership' when it comes to the running of the program in terms of profit/loss and revenue generation.

For example, lets say you are paying out $40 per join because your average retetion of a member is 4 months, fine, if those members joined using a single monthly rebilling cycle but, what if those members joined using a multi-month membership? $50 for the first 3 months and recurring monthly after that?

Its a 4 month retention but the amount of money being made is substantially different...

$29.95 x 4 = $119.80

As oppose to...

$49.95 x 1 + $29.95 = $79.90

On the PPS business model the program will lose $40 on each and every multi-month membership when compared to the single monthly recurring option, or to look at it another way, $80 ($40 lost revenue plus $40 affiliate payout) of each and every sale.... More than the value of the 4 month member to the program owner, throwing away another 100% of the sales value is bad business, no matter how it gets sugar coated.

In essence, without solid numbers, based on initial sales to full sales, full sales to rebills, how often certain types of join options rebill and what the sites retention is, overall and by join option, a program could become a loss to the owner in a relatively short space of time and id have to wonder how they were able to pay high referrals when all they were interested in is 'how long the member stays a member'.

Solid numbers also give you a much better judge at how well new updates, layout changes or upsells and / or feeds work in a members area, lets say you add a new feed one month, at the end of the month, you will be able to see how much longer (if at all) that feed made your members rebill and how much extra income the feed added to your bottom line profits.

If the feed cost you $200 a month but it added an additional $500 profit to your bottom line, you keep it. With 'average' membership lengths, this type of information isnt available to a program owner, which in turn means the program owner could be making lots and lots of bad decisions about his/her paysites.

Number crunching, may seem like a waste of time and effort to many but the bottom line is that the number crunching is what will ultimately make or break your business.

Knowledge really is power when it comes to running revenue reports on individual paysites and a program as a whole.

Regards,

Lee