Explain rebill ratios

[Xstr8guy]

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.

[basschick]

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.

[Xstr8guy]

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.

[basschick]

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.

[Xstr8guy]

...your month to month retention should be at least 50&#37. i've often seen 70% with sites with lots of good quality content and regular updates...

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.

[Chilihost]

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

[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? 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.

[maxpower]

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

[maxpower]

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:

[Lee]

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

[Paco]

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?

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

[IdolKnights]

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



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

[djdez]

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.

[Xstr8guy]

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

[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.

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.