Tracking Recurring Revenue

Recently, I had the pleasure of meeting a web analyst whose business relied on a subscription model. In a subscription model, you often sell a product initially and then there is a subsequent Recurring Revenue stream (normally monthly). During the conversation, I explained how I would address this in SiteCatalyst and since it is a somewhat advanced concept, thought I would share the same info here in case there are blog readers out there who also have Recurring Revenue models.

Why Is Recurring Revenue A Challenge?
So why is tracking Recurring Revenue in SiteCatalyst difficult? As always, I like to explain through an example. Let’s imagine that you sell a popular CRM product that has an initial sale price and then a monthly subscription. A visitor comes to your website from a Bing keyword of “CRM” and they end up purchasing your product for $10,000. You can track this $10,000 sale online and attribute it to the Bing keyword. However, what do you do after one month? Let’s say the customer pays $1,000 each month after the initial $10,000. How do you attribute the recurring monthly $1,000 to the Bing keyword that originally brought the customer? Many clients I have seen stop at the initial sale, but this is problematic. What if there are some marketing campaigns that bring in a lot of initial sales, but those campaigns produce customers who quit the subscription after two months? Perhaps there are other marketing campaigns that generate lower initial sale amounts, but result in customers who are retained for several years. How do you compare “apples to apples” in this case if you cannot tie both initial and subscription revenue to the original marketing campaign?

The answer for most clients is to simply pass the original marketing campaign to their back-end system and do all of the reporting outside of a tool like SiteCatalyst. However, this has the following negative consequences:

1. As a web analyst, you are now out of the loop which is not good for your program (or your career!)
2. There are hundreds of online web-only data points that you know about the original sale (i.e. visit number, internal search terms used, internal promos used, etc…). Are you going to pass all of these data points to your company’s data warehouse and do analysis there? If you are a big company that may be possible, but what if you are a small or mid-sized business?

If you are like me, at a minimum, I like to have all important data in SiteCatalyst so I can have a seat at the table. With this in mind, the following section will describe what you need to do if you want to get Recurring Revenue into your SiteCatalyst implementation so it can be tied to the same data points as the initial sale.

Recurring Revenue in SiteCatalyst Reports
If you have read my past blog posts or even just my last post on Product Returns, you may know that one of my favorite SiteCatalyst features is Transaction ID (I suggest re-reading this post!). At a high level, Transaction ID allows you to set an ID associated with a transaction and later upload offline metrics that are dynamically associated with any Conversion Variable (eVar) values which were active at the time the Transaction ID was set. Just as Transaction ID was important to solving our Product Returns issue, it can be used similarly to solve the aforementioned Recurring Revenue challenge.

When visitors make their initial subscription purchase, you can set a Transaction ID value on the confirmation page. Doing this allows you to establish “key” that can be used later to upload Recurring Revenue and tie it to all of the eVar values associated with the original sale. Keep in mind that you will have to work with your Adobe account manager to get Transaction ID set-up. Additionally, Transaction ID is normally only used for 90 days, but in this case you will need to work with your account manager to get it extended perpetually (or for as long as you want to include Recurring Revenue). For example, if you want to associate two years of revenue with the eVar values that contributed to the original sale, then your Transaction ID data must persist for two years.

Once you have Transaction ID enabled and have started passing Transaction ID’s for online purchases, the next step is to create a new “Recurring Revenue” [Currency] Incrementor Event. Transaction ID uploads are similar to Data Sources and, as such, can only import data as Incrementor Success Event. Setting up a new Incrementor Event is easily done through the Admin Console.

Once you have Transaction ID set-up and your new Recurring Revenue currency Success Event, you need to generate a Data Sources template file that you can upload on a monthly/weekly/daily basis. This file will consist of each subscription account that is still active and the amount of [monthly] Recurring Revenue that should be recorded for each date. Normally, you will have subscriptions that expire at varying dates so you may decide to upload a file on a daily basis which represents all those who are starting a new subscription cycle on that date. The Data Sources template that you will create should have the following columns:

1. Date – Use the date that the new subscription cycle starts, not the date of the original sale. This date will determine which month the Recurring Revenue will appear in when using SiteCatalyst. NOTE: Please keep in mind that there is currently a SiteCatalyst restriction that you cannot upload a Transaction ID file that has dates spanning more than 90 days. You can upload dates that are more than 90 days old, but the date ranges for the entire file upload cannot be more than 90 days (kind of lame in my opinion!).
2. Transaction ID – The ID set when the initial subscription sale took place
3. Product Name/ID – Same value that was passed to the Products Variable during the original online subscription purchase
4. Recurring Revenue – Amount that the client will be charged for the next subscription cycle

When you are done, your Data Sources upload file might look something like this:

Seeing Recurring Revenue in SiteCatalyst Reports
Once you have successfully uploaded some Recurring Revenue data, it is time to see how all of this looks in SiteCatalyst. To do this, open the Products report and add Revenue and our new Recurring Revenue metrics. The report should look like this:

Next, you can create a Calculated Metric which combines the two metrics to create a “Total Revenue” metric as shown here:

Finally, since Transaction ID allows you to apply the eVar values that were associated with the original transaction to the new Recurring Revenue data, you can use Subrelation break downs for the Products report by Campaign and see both Revenue and Recurring Revenue (and the Total Revenue Calculated Metric)!

In the above report, we can see an example of the quandary I described in the beginning of this post. When we break down our first product (Sales Cloud) by marketing campaign, if we look at the Revenue column, it looks like we should be focusing our marketing spend on Bing Branded Keywords. However, when we add our Recurring Revenue, we can see that the majority of our Recurring Revenue and the most of our Total Revenue is coming from E-mail. Perhaps that is the best place to concentrate our marketing budget…

Final Thoughts
So there you have it. A simple, yet [hopefully] effective approach for making sure that you show all Revenue you are helping generate whether it takes place during the initial sale or subsequently… If you have comments/questions, please leave a comment here…