3 ways to accelerate subscriber growth & revenue in 2023
General Manager of EMEA at Recurly Oscar Wall and Recuro Founder and CEO Jonas Åström sat down to share the latest in subscriber growth and revenue trends in 2023. Based in Stockholm, Recuro is a strategy consulting and growth marketing firm, focused exclusively on subscription-based companies.
In the webinar, Wall and Åström highlighted Recurly’s newest State of Subscriptions report, which reveals strategies and trends for subscription growth using data analysis of over 2,200 global Recurly merchants and more than 65 million active subscribers over a 12-month period.
Here are some of the key takeaways from the report:
Macroeconomic pressures such as the looming recession, inflation, and consumer confidence create an environment where consumers make more intentional decisions about their spending.
The subscription industry is maturing. Competition, commoditization, and other factors make subscriptions increasingly complex to manage.
Subscriber expectations are evolving to the point where personalization, value, and convenience continue to set the pace for consumer expectations to rise, and some businesses are struggling to keep up.
Keep reading to learn more about the expert insights and how subscription businesses can drive faster growth based on these learnings.
The last several years have been turbulent economically from inflation and increased interest rates to supply chain issues and general uncertainty in the market. In these times, subscriber retention is critical. Subscription businesses must adjust, realign, protect, and retain the business, so they have a solid foundation to stand on in the years to come.
Moreover, Åström believes subscription businesses have an advantage compared to businesses that operate on one-time transactions. Even in an economic downturn, loyal subscribers continue to be a reliable source of recurring revenue for subscription businesses.
While different industries experience the effects differently, the most heavily impacted industries will be those in the business-to-consumer (B2C) space such as streaming media and consumer apps. Consumers are responding to challenging financial conditions by cutting back on the number of subscriptions they have, which will likely result in a decrease in acquisition rates and an increase in churn rates. On the business-to-business (B2B) front, the impact will be less severe. As these subscription services are necessary to run their businesses, B2B businesses are less likely to churn.
Additionally, Åström believes that new subscription businesses have an opportunity to grow despite macroeconomic pressures. For example, Parently, a more sustainable subscription service for baby products based in Sweden, has growth potential at a time when consumers may find it harder to invest in strollers, car seats, and the like.
Maturing digital subscription industry
While the subscription business model has been around for decades, the digital subscription industry has seen the most progression in the past few years. Especially as a result of the pandemic, competition in the B2C digital space has increased steadily and consumers are more selective with their subscription choices as a result. For B2B businesses, the question becomes, “Is there an opportunity to consolidate my tech stack?”
For example, in the digital publishing industry, there is an “all-you-can-eat approach” with subscriptions that allow individuals to consume as much content as they’d like. With more and more saturation in the industry, however, consumers can’t “eat” everything that is presented to them. This leads subscribers to question the value of their subscriptions–“I’m paying for all of these subscriptions, but I’m not using them as much as I want to or could.”
As a result, there is a demand for niche or targeted subscription offers that tailor specifically to consumer needs and desires. As industries mature and market share is being occupied at an increasingly faster rate, the omnichannel experience can revive dormant subscriptions for B2C sectors. On the B2B side, businesses should explore additional sales channels, such as partnership marketing, to create more monetization opportunities.
How to drive subscription growth
Pricing differentiation: Innovate around your existing pricing and packaging strategies. While the all-you-can-eat subscription business model has been especially successful for B2C companies and most B2B companies, we anticipate more usage-based pricing and more differentiated packaging options including ad-based tiers or discounted and ramp pricing packages for price-conscious consumers.
“Organic” acquisition: More and more, subscription companies are noticing that consumers need to be slowly eased into conversions. To address this issue, it's crucial not only to provide a solution or service that truly solves the customer's problem and builds a trustworthy brand that they can rely on, but also to offer additional value through coupons, promotions, exclusive content, and other similar means. This is the beginning of a subscriber-business relationship–the period during which the consumer gets to know your brand and is more convinced to convert.
The year of retention: In a time of financial difficulty, many subscription companies are focusing on retaining subscribers, from optimizing the customer journey to increasing the value of a subscription. Moreover, a simple but impactful way to manage churn rates is by diversifying and adding more payment methods. In our State of Subscriptions report, we found that credit cards have a 5.9% overall churn rate, while debit cards sit a 9.7% and alternative payment methods sit at 7.7%.
Recurly & Recuro: A strategic advice and technology combo
To be able to bring subscription innovation to market rapidly, businesses need expert support. Together, Recurly offers the most advanced subscription management and recurring technology with the knowledge of Recuro’s subscription experts to create the most progressive strategies to drive growth.
In the years to come, subscription businesses need the right technology to analyze the effectiveness of different propositions and identify risk groups and cohorts to put the right offers in front of them. Never again should a subscription business lose a customer to involuntary churn–a preventable occurrence that leaves a significant impact. With the right partners like Recurly and Recuro, subscription businesses offer consumers more and better choices to acquire, retain, and grow limitlessly.