Alright. Hi, everyone. We're gonna go ahead and get started. Welcome to the future of subscriptions session. Some quick introductions.
My name is Dylan Heffler. I'm the vice president of product marketing here at Recurly. Introduce you to my cohost today, Niraj.
Niraj Naik, VP of product here at Recurly. Super excited to be here.
Oh, Niraj, I'm excited to be here. You feeling good?
Feeling good.
Alright. Alright. Before we get started, just a little bit about Recurly, if if you're not familiar with us. So a little more than fourteen years now, we've been helping brands like Twitch, Paramount Plus, FabFitFun grow their subscription businesses globally. In that time, we've we had the benefit of observing a lot of different trends and consumer behaviors and tactics that different merchants are taking to to grow and retain customers.
And in the last few years, actually, brands that are partnered with Recurly have seen about a hundred and five percent increase in in active subscribers. So So so naturally, we we spend a lot of time with merchants talking about subscribers, our consumer expectations are shifting, how this is going to impact the future of subscription businesses. And we we take a lot of this experience and perspective, and we we provide it back to the merchants we work with through different reports and benchmarks. Maybe we build some of those important benchmarks into the platform as well. So we're excited today to share some of these insights and learnings here with you, and you can get a sense of what we're seeing when we're working with some of the largest brands in the world.
So, really, a lot of our conversations with merchants end up focusing on, like, what what do subscribers want? And so we're seeing recently is a few different trends.
We're gonna focus on the shift toward retention, how subscribers and consumers are thinking about personalization, what their expectations are around flexibility, and then how those expectations also change depending on, you know, the channel that they're interacting with the brand in. Before we get started, though, a lot of the data that we're gonna be talking about today is in our state of subscriptions report. We're releasing our twenty twenty five version in the first part of January. If if you're not familiar with the report, the twenty twenty four one is is still available. So I I'd encourage you to go to Rick Crowley dot com and check that out. But this is includes data across more than two thousand merchants diving into subscriber trends, benchmarks, different benchmarks cut across industries.
If you'd like to join the wait list for this, we encourage you to to go check out. There should be a link here on the chat, but go to Recurly dot com and you can sign up. And and that reminds me, if you have questions throughout the presentation today, please put those questions in the chat. We'll be sure to to answer them for you.
Alright. So there's been a big shift, not surprising one, towards retention and loyalty for merchants. So the days of rapid acquisition at all costs are are gone. This is this is common during COVID twenty twenty, twenty twenty one.
It was all about acquisition and merchants and brands saw huge growth in subscribers during that time. But there has been a big shift away from this model, especially in in brands that sell directly to consumer. And it it's really across across all industries. So we've seen a decline in acquisition rates from three point one six percent in twenty twenty three to two point eight five percent in twenty twenty four, so just over a year.
And that that decline is even more pronounced that the farther back you go. So if you go back to, like, the middle of COVID to twenty twenty one, the average acquisition rate, again, across all industries was sitting at about four point zero four percent. So those those beginning years of COVID, we just saw the acceleration of adoption and different services as consumers started adding different subscriptions to their own personal tech stack as as different brands and merchants started offering subscription services for for their for their products.
And so we think that that growth that we saw at the beginning of the twenty twenties, we start to see, like like flattening out now, will really change as we get into the last half of the decade. So the last half of the twenty twenties, we feel like it's really gonna be defined by those brands that can master customer value, personalization of their services, and really capitalize on innovating with, like, their own technology and services, but also the technology they use to help provide subscriptions and payments and also just really good consumer and brand experiences to their subscribers.
A lot of that shift you see in, like, flexibility is around, how do we offer different types of different types of packages, different types of payment plans. We move maybe from an annual to to monthly plans and all these investments that brands are making and how do personalizing the experience and making it flexible.
You know, it's it's consumers are catching on. They say, great. I I have more choice. I have more flexibility now. So that that begins to feed a loop for consumers as they search for brands that resonate with them where they wanna spend their money.
This personalization really matters because it makes people feel like the service or the brand or the product is is truly made for them. So when when subscribers see content or products that match their interests, their personality, the lifestyle they're building for themselves, then they it makes them feel understood. It makes them feel valued.
And that builds a stronger relationship and a stronger bond with the brand. And this this bond and the the value loop that that keeps them that keeps them engaged, and it keeps them stick around. Right? And for for businesses, it's it's a win win.
It's personalized experiences. It keeps the subscribers happy. They're more likely to tell their friends and their family, people in our community. It reduces cancellations, and it provides insights really into what these customers want.
Are you you're getting a more of a sense of what they're coming to the brand looking for? And when you're in a crowded market, which a lot of especially direct to consumer brands are, personalizing those touches for the consumer, for the subscriber, that that can be the the special touch that really begins to set your brand apart and keep subscribers coming back. Right? And you you foster that that long term loyalty and allowing them to customize your their experience with you and how you fit in again through their personal tech stack.
Like, really, again, begins to foster that loyalty and, you know, we we know this. We're when we talk about subscribers, consumers, like, it's somebody else. Like, we're we're all subscribers too. Right?
Everyone here listening subscribes to something. And then you know that when you have an experience with a brand that feels more personal and feels like it could be more customized, that that creates a stronger bond with the brand.
And meeting subscribers where they are becomes even more important. And so we a lot of the way we experience subscriptions now is is, of course, digital, but the brands are taking that extra step to create all of those offline experiences, those different omnichannel experiences for consumers. Those become even more important and more rich. So how do you begin to blend the online and offline?
How do you offer physical and digital experiences for consumers? These are the things that consumers are gonna be looking for, or maybe they're not even looking for it, but it begins to add, like, to the the rich tapestry of their their experience with you and how they they think of the brand and how you're showing up. Right? Like, maybe they mostly think of you as digital, and then one day they get some physical manifestation of the brand that they get to interact with.
That that creates, like, you know, like, more of a feeling of loyalty for them.
And, of course, there's been a lot of changes recently around this. We've all seen the new guidance from the FTC on different regulations around click to cancel. Look like, ultimately, though, this this this is a good thing. Right?
It's important for merchants to be able to offer the informations to consumers that is truthful and clear and easy to find. And this is what consumers expect, and, you know, their subscribers are smart. Right? They they know they know when they're not getting the full story.
So being able to show people exactly what they've agreed to before they sign up as they're signing up, making it easy for them to make changes to the plan.
Could be canceled, could be paused, could be alterations to payment methods. Is it monthly? Is it annual? It's it's all about flexibility and choice for the consumer.
So, like, like, not only is this good for business, but, again, it creates, like, a really good and positive feedback loop with the subscriber because they trust the brand more. They they look to the brand and they understand, like, okay. This is someone that's actually here. Like, let me customize how I'm going to interact with them, and I'm more likely to come back to them or stay with them even longer.
So, really, subscribers expect this seamless and hassle free experience really from from start to finish. And that convenience, the value, and personalized experience, it creates the full picture for how the subscribers can interact with the brand. Right? So convenience means it's easy to sign up.
It's intuitive. The billing process is smooth and predictable and easy. Is there anything that can reduce friction and save time? Like, they they want access to content and products and service all to be be effortless across different devices, and they wanna be able to pick what options is it auto renew.
And, like, they they expect it to be easy. Right? And the value and the key to maintaining that loyalty is is the value. And subscribers need to feel like they're getting more than what they're paying for.
And then this can mean maybe it's exclusive content or products or services, premium features, discounts, or added benefits that they can only get once they're once they're a member. Subscribers are they're quick to assess if a service really justifies the price and consistent value. It keeps them engaged and prevents them from turning out. And that that personalization, it's last year, but it's increasingly a core expectation of consumers.
Subscribers want experiences tailored to their preferences, needs, and and their habits. And what whether it's, again, customized content or suggestions or personalized communications, emails, It really shows the brand understands and and values each individual subscriber. It makes them feel more connected and more more invested in the service overall.
I'm gonna pass it over to Niraj now to talk about how you can deliver on these expectations.
Awesome. Thanks, Dylan. That was some really strong stuff. A lot of what you said really resonated with me because, as you said, we're all subscribers, and I hope a lot of what Dylan said resonates with all of you as well. But, yeah, let's shift the conversation and discuss what it takes to to deliver the types of experiences Dylan mentioned.
So, you know, I think foundational to delivering any type of subscriber experience starts with building subscriber trust. So what does that mean? That means, like, managing payment failures in an upfront and easy way, ensuring system reliability so that when your subscribers wanna sign up wanna sign up for your services, they can, especially during those big events and those promotional campaigns that drive a lot of traffic to your site. Meeting global compliance needs, there are a lot of rules and regulations out there designed to protect the consumer, and we really wanna make sure we're adhering to those.
So in having the right fraud protection, prevention, and security mechanisms in place because the last thing you wanna do is compromise one of your subscribers or their data.
So, essentially, first and foremost, you wanna make sure you have all the basic things you need to ensure you're delivering a trustworthy experience to your subscribers before you even get to the personalized sorts of experiences.
And that's been a challenge for a lot of subscription businesses, especially doing that at scale. So how are they solving that?
Well, they're shifting to composable commerce, so that type of architecture. And switching from a one size fits all model to composable commerce allows businesses to build their their systems with more flexibility and control.
So instead of relying on a single rigid platform, companies can string together, like, best in breed solutions for things like payments, checkout, fraud prevention, subscriber management, churn management, essentially picking and choosing the best fit for each part of their business.
And furthermore, this modular setup where each tool connects easily with others makes it simple to adapt to market needs. So those are constantly evolving and shifting as we all know. Makes it easy to add new features or new capabilities and makes change it makes changes easier without having to overhaul your entire system.
So, ultimately, this approach helps businesses stay agile, grow sustainable grow sustainably over time, and deliver the strong customer experiences that they desire.
So one example of extending your platform to deliver some engaging subscriber experience is integrating your subscription platform with your customer engagement platform.
So if you think about it, if you combine your subscription data with your customer data, you can deliver really engaging personalized experiences across your subscribers' entire life cycle.
So if you know which plans your subscribers are on, what the upgrade and downgrade path look like for those plans, what sorts of offers and promotions are offered for each of those plans, and then also combine that with the knowledge of knowing which areas of your services your subscribers are or aren't using, you know, when they last used your services.
You can provide preemptive offers to encourage renewals. You can provide offers to upgrade and downgrade to increase growth and retention, or you can provide save offers to prevent cancellations.
And there are a lot of tech solutions out there that allow you to do that and create those sorts of experiences, engaging experiences right in your apps themselves.
And, of course, another way to deliver personalized experiences is using AI. Everyone's talking about AI. And a lot of what we hear about AI is how it's being used to create more engaging front end user experiences for your subscribers, like surfacing relevant content and information to your subscribers or, you know, when you're looking to compose some content, some marketing offers, using AI to come up with the most compelling messaging that that works best for your subscribers.
But at Recurly, we're taking a slightly different approach to using AI. We're looking to use it to accelerate your overall productivity when it comes to managing your business and growth. So more as an admin sort of tool than anything else. And so launching next year, Recurly Compass, will use AI to be an extension of your team, guiding you to better, smarter, and faster decision making around growing your subscription business.
So for example, we'll use AI to identify anomalies in your business. So you've got a churn problem or an acquisition problem. And then we'll use AI to make actionable recommendations on what you can do to address those problems, and then help you test and measure the effectiveness of those actions. So we wanna make sure we're closing the loop.
So a lot of exciting stuff that we're planning around AI. We'll be talking a lot more about that in in twenty twenty five.
Lastly, when we're thinking about creating engaging experiences for our customers, we often think about payments as as a means of influencing sorry. I need to stop here.
Alright. Lastly, we often don't think about payments as a means for influencing your subscriber experience. We'd rather just think about it as a transaction.
But, really, we should be thinking about payments as a more strategic component of delivering the experiences your desire your subscribers desire.
So offering payment options your subscribers prefer at sign up will drive conversion, obviously, and then offering the right payment methods for renewals will help drive retention.
So the more diversity you have in the payment methods you offer, especially if you're operating in multiple geos with multiple demographics, the more you can create a more personalized sort of experience from a payment perspective. And, again, by letting your consumers and your subscribers pay with their preferred payment method will allow you to really expand more efficiently and also retain your customers long term.
So to recap, you really want to be focused on the subscriber. And to do that in a more meaningful way, you've gotta pick the right sorts of technologies that help you engage with your subscribers across their entire life cycle, and then also make sure you've got those foundational pieces in place to create that sort of trustworthy sort of experience as well.
Alright. Thank you, Niraj. Thank you everyone for watching today. If we didn't get your question in the chat, please go to recurley dot com. Send us an email. We'll be happy to help you out, and we hope to talk to you soon.
Thanks, everyone.
