Tuesday, August 08, 2006

A Closer Look at the XM Quarterly Subscription Numbers

This time around, XM gave a weath of information about their sub numbers. The following is an attempt to break down the churn numbers. It's a work in progress.

CHr = Rqg - Rqn = 408,695 - 168,487 = 240,208
RTn = Rn + Dn = 4,045,986 + 27,091 = 4,073,077
RTavg = RTn - 1/2 * Rqn = 4,073,077 - 1/2 * 168,487 = 3,988,833.5
%CHr = CHr/(RTavg*3) = 240,208/(3,988,833.5 * 3) = 2.01%

The retail churn should be a fairly exact number.

There doesn't appear to be a way to calculate the self-paying OEM churn. However, XM does gave a self-paying churn rate of 1.83%. Within the precision of that number, the OEM self-paying churn can be calculated.

CHsp = SPavg * 1.83% * 3 = (6,284,886 + 5,894,374)/2 * 0.0183 * 3 = 6,089,630 * 0.0183 * 3 = 334,321

CHo = CHsp - CHr = 334,321 - 240,208 = 94,113

OTavg = OTn - 1/2 Oqn = 2,211,809 - 1/2 * 224,868 = 2,099,375

%CHo = CH0/(OTavg*3) = 94,113/(2,099,375 * 3) = 1.49%

deltaSelf-Paying = Ocv + Rqn + Dqn - CHo

Ocv = deltaSelf-Paying - Rqn - Dqn + CHo = (6,284,886 - 5,916,648) - 168,487 + 94,113 = 293,864

deltaInPromo = Oqg - Oqd - Ocv - RNTqg

Oqd = Oqg - deltaInPromo - Ocv - RNTqg

Assuming RNTqg is equal to the Rental car net, which should be close:

Oqd = 517,586 - (573,144 - 548,027) - 293,864 - 4,817 = 193,788

ConvRate = Ocv/(Ocv+Oqd) = 293,864/(293,864 + 193,788) = 60.3%

Note: XM measures the conversion 3 months after the trial period end, which means more dropouts are likely to occur during that period, thus lowering the conversion rate.

CHr => Retail churn
Rqg => Quarterly gross retail including data services
Rqn => Quarterly net retail including daat services
RTn => Total net retail
RTavg => Average total retail
%CHr => Percent retail churn
CHsp => Self-paying churn
CHo => OEM churn
Oqg => Gross quarterly OEM subs including rentals
Oqn => Net quarterly OEM subs including rentals
Oqd => Quartly OEM drops
CHrent => Rental churn
OTn => Total self-paying OEMs
OTavg => Average total self-paying OEMs
RNTqg => Rental quarterly gross.

Summary
=======
Retail Churn : 240,208
Retail %Churn : 2.01%
OEM Churn : 94,113
OEM %Churn : 1.49%
OEM Conversions: 293,864
OEM Dropouts : 193,788 (Initial dropouts)
Conversion rate: 60.3% (Initial conversion rate)

The 2.01% retail churn rate is atrocious. The 1.49% self-paying OEM churn rate is about what one would expect. XM blew off somewhere in the order of 60,000 subscriptions with their customer service fiasco.

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