The subscription model continues to experience major shifts in consumer behavior and expectations, where flexibility is not an option but a necessity–for both physical products and digital subscriptions. Additionally, as the global economy profoundly influences subscriber preferences, the key to sustainable growth lies in adapting to the latest trends in consumer behavior while maintaining proactive readiness.
To better understand what the future of subscription programs looks like, Recurly’s State of Subscriptions report draws data from over 2,200 subscription brands and more than 58 million subscribers to uncover the latest benchmarks and trends while delving into the shifts in customer experience, technology, and market dynamics that will shape the industry in 2024.
Let’s review some of the most outstanding stats included in our State of Subscriptions report.
The acquisition process begins before a customer signs up. Understanding the real value behind personalization options, such as free trials or add-ons, can help you make informed decisions that increase your customer base.
Free trials play an important role in that “first date” with customers, as they can test subscription products before buying. In fact, Recurly merchants acquired 50.0% of subscribers through trials–making it one of the most effective customer acquisition strategies.
Additionally, as customization becomes a necessity, add-ons become an essential part of personalized offers. 28.1% Recurly customers offered add-on options to let customers personalize their subscriptions, resulting in $2.2 billion in incremental revenue.
Acquisition has always been one of the main goals for subscription-based businesses. However, as subscriber bases grow, sustaining the same growth rate becomes difficult.
In response, subscription businesses are focusing more on retention by aligning their strategies with evolving consumer preferences. The right growth strategy will directly impact your customer acquisition costs, increase subscribers’ lifetime value, and open the door to a more scalable recurring revenue model.
The shift to prioritizing subscriber retention over acquisition is notorious. Last year, the average consumer churn rate was 4.1%, staying consistent year-over-year. As customers become more particular with spend, their purchases become more intentional, making them less likely to churn.
With a growing emphasis on retention, recovery events and effective dunning actively prevent involuntary churn. Last year, Recurly successfully saved 72.0% of at-risk subscribers using recovery events and $254 million from dunning management techniques.
Additionally, subscription pauses are a convenient alternative to outright cancellation when they need a break from monthly payments or product deliveries. 39.7% of merchant sites in Recurly enabled the pause functionality, preventing over 400,000 plan cancellations.
While churn management is not new, it is crucial to pinpoint and comprehend the factors impacting retention to adopt a more informed and effective strategy.
Payments are now an essential part of the customer experience. For businesses reliant on recurring revenue, the message is clear: offering multiple different payment options matters.
While debit cards (68.6%) remain the most popular payment method, the significance of alternative payment methods (APMs) is indisputable.
Including APMs in subscription offerings directly addresses the desire for a convenient, seamless payment experience–putting customer preferences at the core. Alternative payment methods have proven to drive more revenue (5.0% renewal invoice decline rate) and help prevent fraud (0.9% of failed fraud transactions).
The subscription industry will continue to redefine the modern consumer and evolve in response to subscriber preferences. Here’s what’s coming:
Today’s consumers seek personalized subscriptions encompassing their ever-evolving preferences. To successfully navigate these consumer expectations, businesses need a holistic understanding of subscriber demands and total flexibility in their technology to effortlessly and promptly meet them.
In the coming months, businesses will increasingly adopt retention-driven strategies to enhance the subscriber experience. Sophisticated toolkits will include loyalty rewards, competitive pricing, plan flexibility, pausing options, hybrid models, and streaming services bundling to foster loyalty.
Once-familiar concepts like pricing, payments, and personalization have gained newfound significance over the last year. Economic uncertainty has made consumers exceptionally price-sensitive, leaving the subscriber experience vulnerable to their critiques of payment options, customization features, and more.
In 2024, a stellar consumer experience–focused on personalization, payments, and AI-optimized churn management–is the competitive advantage all businesses should strive to have.
Lack of scalability inhibits revenue growth, making the right subscription technology stack indispensable. Without this holistic solution, valuable resources and headcount are diverted towards peripheral aspects of the business rather than the core product or service.
From onboarding to customized billing, payment processing, and plan management, the success of the subscriber lifecycle hinges on a flexible subscription management solution.
Subscription brands should not be intimidated by economic uncertainty but instead, seize the opportunity to deliver value in subscriptions.
Subscriber insights are key to understanding your business's health and growth trajectory–paving a clear view of your products or services, marketing campaigns, subscriber behavior, customer data, and more.
During 12 months, we analyzed the data of over 58 million unique active subscribers from 2,200 subscription companies in 2023 to identify the industry benchmarks, actionable data, subscriber trends, and predictions needed to define your growth strategy.
Such data, then, can be used to make strategic decisions for long-term success:
Identifying high-performing acquisition channels and subscribers
Delivering an enhanced subscriber experience that increases customer lifetime value
Understanding churn and finding better ways to reduce it
Customizing the checkout experience based on preferred payment methods
Even though the market changes rapidly, certain behaviors and preferences prevail among subscribers. Our 2024 State of Subscriptions report describes:
How acquisition, retention, and payment changes impact your business and how you can proactively respond to them
What influences changes in purchase decisions, and how you can stay competitive
Which subscription management and recurring billing capabilities do you need to set up yourself for success
The answers you want and need are just one download away.