Unlocking growth: The power of customer retention in subscriptions
Consumer purchasing power is directly affected by economic conditions, and this, in turn, influences how subscription services are perceived and valued. Grappling with the challenges of acquiring new subscribers and changing consumer preferences, businesses are reconsidering the long-term benefits of customer retention tactics.
The era of personalization
Today’s consumers are more sophisticated than ever, seeking personalized subscriptions encompassing their preferences for price, payment types, plan terms, and more.
74% of subscribers surveyed in our What consumers want study rank the ability to personalize–free trial, pause, cancel, payment choices, etc.–as the top reasons to subscribe. Another 65% would reconsider canceling a subscription if they can customize their plan to their needs.
The freedom to create a personalized subscription experience is and will continue to be one of the biggest catalysts for retention and growth in years to come.
Measurement of success: Customer lifetime value
Customer retention can be quantified in various ways, but one of the most effective indicators of successful retention is customer lifetime value (LTV), the estimated profit you can expect to receive from your customers over the subscription period–starting when they sign up and ending when they cancel.
It’s imperative to note that you can’t expect all customers to have the same LTV. With successful cohort analyses–a key retention tactic–you can identify subscriber preferences across a spectrum of customers to shape experiences that maximize LTV and improve retention rates.
The value of customer retention in 2024
In the coming months of 2024, businesses will increasingly adopt retention-driven strategies to enhance the subscriber experience. This includes various aspects of a subscriber's lifetime, such as checkout events, renewal journeys, gifting opportunities, and even the lulls of pause or cancellation.
The primary objective will revolve around crafting a business model that amplifies the perceived value of subscription products or services, minimizing any uncertainty among consumers about their loyalty. To successfully navigate these evolving consumer expectations, businesses need a holistic understanding of subscriber preferences and total flexibility in their subscription technology to effortlessly and promptly meet these demands.
Learn more about the importance of proven subscriber retention strategies and key churn benchmarks you should measure your business against in Recurly’s 2024 State of Subscriptions report.