Podcast Summary

Episode Overview

Podcast: Sub Club by RevenueCat
Episode: Using Subscription App Benchmarks to Make Better Growth Decisions — Phil Carter, Elemental Growth
Hosts: David Barnard, Jacob Eiting
Guest: Phil Carter, Independent Growth Advisor
Date: December 23, 2024

In this episode, the hosts sit down with Phil Carter—an experienced growth advisor and former VC/product leader at companies including Quizlet and iBotta—to discuss practical strategies for using benchmarks in consumer subscription apps. The conversation centers on Phil’s Subscription Value Loop Calculator, how the best companies leverage benchmarks for growth decisions, the limitations and nuances of benchmarks, and actionable examples from Phil's consulting work.

Key Discussion Points & Insights

1. Introduction to Subscription Benchmarks and Their Challenges

• Benchmarks are controversial: Not all data is accurate; sources matter.
  • "Benchmarks, very polarizing topic, super controversial." (Phil, 02:18)
• Many widely available benchmarks are too generic or unreliable, making custom, context-specific benchmarks crucial.
  • "Some of the largest and more reliable data sets out there... are providing them globally, not for a specific country. Or they're providing them across all app categories..." (Phil, 08:33)

2. The Subscription Value Loop Framework and Calculator

• Concept: Framework divides growth into three phases—value creation, delivery, and capture.
  • "The best consumer subscription businesses are able to generate sustainable compounding long term growth through three steps: value creation, value delivery, and value capture." (Phil, 02:25)
• Calculator Purpose: Lets leaders compare their metrics to relevant, filtered benchmarks and quickly identify biggest growth opportunities via a heat map.
  • "Ideally, let's enable leaders to filter it by important variables like category and performance tier... then let's use that info to help those growth leaders more efficiently allocate resources against the growth opportunities where they have the most upside." (Phil, 02:56)

3. Data Sources and Construction of the Calculator

• Core data comes from RevenueCat: Over 30,000 apps, 290 million subscribers, ~$7B revenue.
• Supplemented survey: Fills gaps in value delivery metrics with 600+ responses; Phil plans to strengthen this with MMP partnership in future versions.
  • "For value delivery metrics... we ran a one time survey where we ended up getting almost 600 responses..." (Phil, 05:16)

4. The Role and Limits of Benchmarks

• Benchmarks as directional tools: Not the endpoint of decision-making.
  • "The way I think of benchmarks is they're one tool in a very big toolkit... to get a directional, high level view of where they're performing better or worse than other peers..." (Phil, 06:33)
• Key Limitations:
  • Inaccuracy/unreliability;
  • Overly generic/non-actionable;
  • Can point you to what areas are weak, not how to fix them.
  • "They're only a jumping off point..." (Phil, 08:33)
• Judgment is critical: Great execution means filtering and acting on the right ideas informed by data — not blindly following it.
  • "What we hand wavingly call execution is really judgment. ...Benchmarks can be a good input into those judgment decisions..." (David, 17:25)

Notable Quote:

"There's almost the midwit meme here of on the one end of the spectrum it's like, just build a good product... and then in the middle it's like, I'm going to look at 100 different metrics and I'm going to optimize every last thing..."
— Phil Carter (11:28)

5. Applying Benchmarks and the Calculator in Practice

• First step with new clients: Phil uses the calculator to quickly diagnose growth bottlenecks and create a roadmap to improvement.
  • "It's almost like X-ray vision into where is the biggest problem in the loop..." (Phil, 20:32)
• Real examples:
  • EdTech client: High retention, but low conversion/pricing issue — led to focus on onboarding, paywall, and pricing optimizations.
    • "Subscriber retention was really strong... their subscriber conversion rates were quite low, and their pricing was higher than the typical edtech app..." (Phil, 22:22)
  • Fitness app: Too much value given away for free, showing in low conversion and low price — led to reviewing the freemium/premium balance.
    • "The free product is so good. Do I actually need to pay for the premium product?" (Phil, 24:33)

6. Deep Dive: Calculator Inputs and Sections

A) Tool Overview

• User inputs: 12-month average data, app category, performance tier (P25, P50, P75, P95).
• Heat map output: Shows metric deltas vs. peer set.
  • "Once you put in your app category, your performance tier and your business metrics, the tool immediately outputs your performance delta relative to your peer set." (Phil, 25:28)

B) Value Creation

• Key metrics: Signup/registration rate, retention rates (monthly & annual), average lifetime.
  • "Activation rate would be a great metric... but it's really hard to compare apples to apples." (Phil, 31:31)

C) Value Delivery

• Key metrics: Blended and paid cost per install/trial/subscriber (CPI, CPT, CPS), payback period, LTV/CAC.
  • Blended metrics more meaningful for business health; paid metrics for marketing efficiency.
  • "As you get larger and larger, what really matters is your marketing budget, more and more so versus the cost of your marketing team..." (Phil, 43:06)
• Stage matters: Early on, organic dominates; as you scale, paid acquisition becomes crucial and economics shift.
  • "Every consumer subscription business at some point is going to hit a point where they have to spend more and more dollars on performance marketing in order to sustain growth." (Phil, 45:56)

D) Value Capture

• Key metrics: Trial start rate, trial conversion rate, install-to-paid conversion, subscription prices, plan mix (monthly vs annual), gross margin.
  • Need to balance high conversion and retention; being best-in-class in every metric is rare.
    • "It's not like they're P95 across every single metric... there are natural checks and balances..." (Phil, 49:22)
  • Companies may excel at one phase (e.g. converting users quickly) but lag slightly in others — that’s often a valid, sustainable strategy.

Notable Quotes & Memorable Moments

• On benchmarks as input, not gospel:
  "Benchmarks can be a good input into those judgment decisions, those millions of small decisions you make along a product journey."
  — David Barnard (17:25)

• On pitfalls of fixation:
  "People lose the forest through the trees... they see one thing and they over-obsess about it and then get frustrated."
  — Jacob Eiting (10:15)

• On why best-in-class in every metric is nearly impossible:
  "By definition, if you're really, really efficient at converting free users and subscribers, you're probably going to have a harder time retaining them because you're getting some lower intent users into your subscription funnel."
  — Phil Carter (49:22)

• On early stage vs. later stage growth priorities:
  "If you're a seed stage or series A startup... focus on just being really efficient at acquiring users early on. But if you're a series C... you have to look at the metrics in totally different ways."
  — Phil Carter (36:01)

Timestamps for Important Segments

• [02:18] — Introduction to the Value Loop Calculator and benchmarks’ limitations.
• [05:16] — Data sources for the calculator.
• [06:33] — Proper role and misuse of benchmarks.
• [10:15] — Common pitfalls: over-obsession with singular metrics.
• [17:25] — Benchmarks as input to product judgment and decision-making.
• [20:32] — How Phil uses the calculator with consulting clients.
• [22:22] — Real EdTech client example.
• [24:33] — Real fitness app example.
• [25:28] — Tool interface and filtering.
• [31:31] — Limitations of activation as a benchmark metric.
• [36:01] — Early vs. late-stage companies' use of paid acquisition.
• [43:06] — Blended vs. paid CAC and the economics of scale.
• [49:22] — Inteplay/imbalances between different funnel metrics.
• [52:05] — Duolingo case study: evolution of value capture.
• [53:40] — Future plans for the calculator: better data, more filters.

The Future of the Value Loop Calculator

• Expanding the dataset with annual updates and more apps.
• Adding more filters: Geography, platform (iOS vs. Android vs. web), company stage.
• Improving value delivery metrics: Seeking deeper integration with MMPs for more accurate data.
• Desire for full-funnel benchmarks — future versions may enable this.

"Ideally, eventually... we can filter by iOS vs. Android or even vs. Web would be another filter I'm really excited to add."
— Phil Carter (53:40)

Final Resources and Invitations

• Phil’s Substack: philgcarter.substack.com
• His consumer subscription growth course (promo code: Sub Club at Maven).
• Interested listeners can find Phil on all platforms as "philgcarter."

Summary Takeaways

• Context is everything: Don't take benchmarks at face value; always interpret through the lens of your app’s stage, category, and strategy.
• Benchmarks are a starting point: They highlight potential bottlenecks but only combined with your judgment and intuition do they yield actionable, high-leverage decisions.
• Best-in-class ≠ perfect in all metrics: Most successful companies are outliers in only some areas and "good enough" in the rest.
• As you scale: The importance of value capture and nuanced monetization grows, and operational focus naturally shifts.
• Continuous process: As your business evolves, so do the most useful benchmarks.

This episode is a must-listen for subscription app founders and growth teams seeking to use benchmarks to inform—not dictate—product, marketing, and revenue strategy.