New Subscriber Churn Benchmarks and Why Managing Churn Is Critical
In the last few weeks, the headlines around subscription commerce have centered on two main players: Moviepass and The New York Times.
Moviepass, the trendy disruptor to the movie theater business model, continues to grab attention for its questionable pricing and product changes following an initial spike in new sign ups. Alternatively, The New York Times has recently been lauded for its significant subscriber growth numbers in the last quarter.
Analysts and media outlets have focused heavily on lessons to be learned from the very divergent trajectories of these two subscription businesses. Most of the attention has been around their ability to sustain high levels of new subscriber growth. But, what should also grab our attention is what each story can tell us about the importance of managing subscriber churn.
While the new New York Times impressively added 109,000 digital-only subscribers in Q2 2018, this increase only equates to lasting subscription revenue if they can be successful at retaining these subscribers. The more-than-century-old publisher is doubling down on retention efforts by focusing on curating subscription-only content and encouraging new channels for consumption.
When Moviepass decreased prices from $49.95 a month to $9.95 a month, they grew from 20,000 to 3 million subscribers in a matter of months. Since then, they’ve been changing plans and pricing structures practically every month in order to balance willingness to pay with sustainable margins. This has introduced significant friction in their subscriber relationships, causing a huge numbers of subscribers to flee the service.
Even if Moviepass manages to find the right pricing and packaging fit to acquire new subscribers, they won’t sustain profitable subscription growth if they can’t find a way to rein in churn.
So, what is the lesson learned here? Churn can make or break a subscription offering. Subscription businesses must not only have intentional retention strategies, but also must closely monitor their churn rates, both for voluntary and involuntary churn.
One valuable resource for knowing whether your churn rates are in-check is by comparing yourself to industry benchmarks. Recurly Research has recently published an update to our Churn Analysis study. The study now reports on data from the calendar year 2017.
While conducting this research, we saw a general trends towards decreases in overall churn rates from 2016 to 2017. As subscription commerce matures and more subscription businesses find their stride, managing churn continues to be an important focus. There are many strategies for managing churn. Companies can’t afford to double down on new subscriber acquisition without investing equally in managing churn if they wish to grow a profitable, sustainable subscription business.
Check out how your churn rate compares in the UPDATED Recurly Research Churn Analysis report.