CRM 'expected revenue' and subscription based services
Many CRM applications include sales pipeline tracking and sales workflow. Generally, when a new opportunity is created, one has to somehow enter the 'expected revenue' for the deal. This is easy for product and one-off service sales, it is simply the total of all products and services for the deal.
The question I have concerns subscription based services. When selling something that has a monthly recurring revenue, what value should be entered as the 'expected revenue' for the opportunity? Is it the revenue for one month, one year, or something else?
1 Answer
Many CRM applications don't address subscription / recurring revenue models. Cohort analysis is a good metric to view - but a bit more than a simple "field" value.
If you need a rollup value, See Estimating lifetime value of subscription models Also - there is an updated post on Estimating LV of an ecommerce company.
Do these work for you?
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Those are interesting articles, but are useful more for retrospective analysis than for estimating the value of a sale before it has happened. As you say, CRM applications don't adequately address this model. I think what I may do is just make an easy assumption that each customer will subscribe for a year, and take that as the value of the sale. After all, its only a metric for filtering and prioritsation. The actual sales figures will come from the accounting system. – Tim Long 12 years ago
