The Spotify marketing team is experiencing considerable drop-off in their sales funnel for Spotify Premium. What are the key metrics you’d track to identify issues in the funnel?

Assumptions

Because Spotify premium operates on a subscription model, I will assume that people can only purchase premium subscriptions via the Spotify website. Additionally, I will assume that the drop-off in the sales funnel is not due to a seasonal or a temporary trend but rather an ongoing issue.

Goal

With these assumptions, my first step in this process would be to set goals for the outcome of my efforts. My goal would be to increase the number of individual premium subscriptions by 5% per month.

Funnel Mapping

The next step in identifying the source of the drop-offs in the sales funnel would be to map out the sales funnel stages. As we know, the sales funnel consists of Awareness, Interest, Conversion, Retention, and Referral. Each of these steps has numerous metrics associated with measuring them. In the case of Spotify, we need to map out the customer journey into the steps below:

• Visits spotify.com
• Click on the “Start a free trial” button
• Completed the trial form
• Used the product on various platforms (web, desktop, mobile)
• Clicked on the “Upgrade” button
• Completed the upgrade form
• Click on the “Cancel subscription” button
• Canceled subscription
• Clicked on the “Refer Friends” button

Metrics Analysis

Once the customer journey is mapped out, I’d extract and map all of the metrics above to the associated step in the sales funnel as a guide. Additionally, I would research to understand the industry-standard benchmark metrics for a subscription-based consumer product like Spotify.

One key metric that applies throughout the funnel is the conversion rate from one step to the next. I would focus on the metrics below:

Percent of the website visitors who started a free trial****bold text - I would associate this with the INTEREST step of the funnel. This metrics outlines the number of people who began a Spotify trial after visiting the Spotify website. Generally, landing pages convert about 3-10% of visitors. If Spotify’s website conversion rate is below 3%, I would research the items below:

• Audience - How’s our target audience? Are we targeting the correct audience for our ads, social media, SEO, and other marketing efforts?
• Messaging & Value proposition - Does the Spotify.com page clearly articulate our key differentiation and value proposition? Does the messaging resonate with our target audience?
• Website UX - Is the Spotify.com page easy to navigate? Is there a clear call to action?
• Social Proof - Does the landing-page highlight customer testimonials and reviews to build social proof for Spotify Premium?
• Complexity - Are there steps that could be reduced or eliminate in the Trial signup process? Are all of the required fields for trial signup important?

Percent of trial customers that started a premium subscription - I would associate this with the CONVERSION step of the sales funnel. Generally, trial to premium conversion rate is around 15-20%. If Spotify’s trial conversion rate is below this range, I would research the areas below to improve this metric. This research would involve surveys, customer interviews, competitive analysis, benchmark analysis, and market analysis.

• Pricing - Do we need to adjust pricing to meet customer expectations? Is the current $9.99/month pricing for individual subscribers not meeting customer expectations?
• Usage - What percent of the trial users are using the product? I would work with a product manager to improve product onboarding and usage.
• Customer Support Issues - Are there any trends in the types of issues that customers are reaching out about that could be preventing them from converting to Spotify Premium subscription?
• UX for upgrading - What type of improvements could we make to the UX for the Spotify Premium upgrade process?

Percent of customers that renewed their subscription - I would associate this with the RETENTION step of the sales funnel. Based on industry averages, about 90-95% of our subscribers should be renewing their subscription. If Spotify Premium’s renewal rate is below this amount, it would be essential to review product usage metrics as well as customer support tickets to understand the critical drivers of cancellations. I would also launch a new campaign to add a new step into the cancelation process that offers users a limited discount on their next three months of subscription if they do not cancel.

Percent of customers that sent a referral code - I would associate this with the REFERRAL step of the sales funnel. If the current Spotify Premium referral rate is below the industry benchmarks, it might be a good idea to launch a referral campaign that provides subscription discounts for current and prospective customers.