A look into The State of Subscriptions: The evolving economy
The subscription industry has changed, and it will continue to evolve in response to the changing climate of the economy and subscriber preferences:
Complexity in maturity: As the industry matures, competition, commoditization, and more factors arise that complicate the existing subscription infrastructure. Simple subscription plans have transformed into variable plans that require more technical integrations on both the front and back-end systems, as well as a subscription management and recurring billing platform that supports every adjustment.
Single to omnichannel engagement: Subscription management itself has been redefined–what was once hosted in a single location has progressed to an omnichannel subscription experience that forces businesses to expand their attention. Today, an omnichannel strategy not only includes channel management but global expansion as well, expanding subscription business footprints to new channels and new geographies.
Scale through automation: Automations are at the epicenter of a successful, scalable subscription business. Maximizing operational efficiencies through the automation of time-consuming but important processes like revenue recognition and more allows businesses to be proactive and focus on optimizing their products or services.
Additionally, economic pressures such as the recession and inflation eat away at consumer confidence–especially their spending habits. More intentional decision-making impacts personal budgets, which leads to high acquisition costs and lower retention rates for businesses. Consumers are forced to reconsider the number of subscriptions they have, while also demanding ever-increasing value from the subscriptions they hold.
In fact, Recurly discovered that acquisition rates have dropped year over year while churn rates have remained steady, indicating that while consumers are still interested in subscriptions, they’re putting more weight on decisions to subscribe to new products and services. As acquisition rates slow, it’s more important than ever for businesses to prioritize long-term relationships with their subscribers.
Subscriber expectations, as a result, continue to set the stage for strategic decision-making–but some businesses are struggling to keep up. While personalization, value, and convenience are in high demand, subscription companies lack insights due to disconnected systems and the limited flexibility of manual processes and operational bloat. Companies are slow to test products and services and find it difficult to correct this due to limited resources and expertise.
While there is not one solution to these overarching problems, there is increasingly substantial value in partnering with a subscription management and recurring billing expert that guides you through the highs and lows of building a successful subscription business.
With a year’s worth of fresh data and more than a decade of partnerships with global subscription brands, download our State of Subscriptions report to reveal what your business should focus on this year.