2026 State of Subscriptions Webinar: The new rules for retention, AI, and trust

Welcome everyone to the twenty twenty six state of subscriptions, the new rules for retention, AI, and trust. My name is Ellen Law. I am a strategic customer success manager here at Recurly and your moderator for today. Over the next minutes, expect an exclusive look at the twenty twenty six state of subscriptions report, including trends, behaviors, and actionable insights that top brands are using to win, engage, and retain subscribers globally. Plus, hear firsthand strategies from our incredible panelists at Fortune, Small PDF, Univision, and Audiobooks. Also, this is my personal favorite piece of content from Recurly annually, so let's go ahead and dive in.

For those that are joining us for the first time, Recurly was founded in two thousand nine. We're a global company with offices in Texas, Colorado, the UK, Colombia, and India. We have over twenty two hundred customers across over seventy six million unique subscribers.

Just last year alone, we recovered over one point three billion dollars in failed payments for our customers. And on average, they saw 16x ROI just on our revenue recovery capabilities alone.

So what makes twenty twenty six special? This year, we've also included consumer survey data and provided a two thousand twenty six readiness checklist at the end of the report. So you can take these insights and actually put them into action.

Now I'm gonna pass it over to Brian, who will be walking us through some of the key highlights from this year's report.

Thanks, Helen. I'm here to take us through the highlights of this year's data subscriptions report. But before I do, quick introduction. My name is Brian Geier, and I lead the business analytics team here at Recurly, which is responsible for putting the data together behind this report. One of the coolest things that my team gets to do each year is dig into the trends happening within the subscription ecosystem, so I'm excited to go through a few of those things today.

So the biggest thing that we saw come out of this year's status subscriptions report is that the growth model has changed. Specifically, growth is now driven by optimization across the subscription life cycle rather than your typical marketing activities.

Those are still important, but we're seeing the subscription ecosystem get more and more competitive as consumers kind of settle down into their preferences and stop trying as many services. Seventy seven percent of consumers now say that they have the right number of subscriptions. This really highlights how competitive it is. Additionally, acquisition growth has slowed to three percent this year. After COVID, when subscriptions exploded, growth was over four percent, so this is a really marked slowdown.

There are a lot of aspects of the growth model optimization that we're gonna cover, but the first one is churn.

So why do subscribers leave? The real driver behind churn is engagement, and sometimes what looks like price sensitivity might really be value sensitivity in disguise. If you look at the top three cancellation reasons on this slide, you'll see that the first one is fifty one percent of people saying that they weren't using the service enough, forty five percent said the price felt too high, and thirty two percent lost interest. But really, what these three things could ladder up to is really a lack of engagement and a lack of getting value from the service.

So how do you drive engagement? It's about showing and proving value to consumers when it matters the most. Turn is often the highest at the beginning of the subscription life cycle, and that's when it's most important to drive engagement and prove value.

Outside of engagement, there are certain situations in which subscribers will churn but don't really want to. Maybe the subscriber's going on a long vacation, and they don't need a subscription until they return, or maybe their favorite sport is in the off season, or maybe life just gets busy, and they don't have time right now. For those consumers, pause is a great feature that gives them flexibility while giving the business predictability of revenue. If your subscription business isn't providing pause, you're essentially forcing your customers to cancel when they don't want to. This is evidenced by the fact that seventy five percent of paused subscribers eventually return to active status, and thirty eight percent of consumers actually prefer pausing over canceling. So pause can be a really effective churn mitigation tool.

So we talked about churn, how to prevent it with engagement, and using pause. But what if it does happen? Is it a failure? And the answer is no.

For years, subscription businesses have treated churn as a failure or permanent exit. But today, churn is really just a phase in the subscription life cycle. Last year, twenty five percent of new sign ups were actually driven by returning customers who have formally canceled. What does this mean?

It means that your former subscribers aren't lost. They're really just your highest intent girl channel that you can tap into in the future.

Alright. Next, let's talk about another growth lever, which is plan design. Seventy eight percent of merchants are now offering both monthly and annual plans. Why is that? It's because monthly and annual plans each serve a different purpose. Monthly plans drive higher conversions but come with higher volatility and higher churn. Annual plans are stabilizers but are harder to sell upfront.

The goal with plan optimization, though, isn't really to pick a winner or to pick which one is best. The goal is to design a mix where the plans complement each other and can be offered to the right consumer in the right place. Different consumers have different preferences, and it's important to meet consumers where they're at.

We spend a lot of time and budget trying to convince people to sign up for preventing churn, but we often overlook revenue that's already ours. Right now, nine percent of renewals fail, and it's not because consumers wanna leave but because of a payment glitch. In twenty twenty five alone, we saw over a billion dollars of recovered revenue across multiple industries on the Recurly platform. This is money that otherwise would have been lost and highlights the fact that payment recovery is not just a back office function. It's actually one of the fastest and most cost effective ways to grow your top line. Because customers have already said yes to your service, you just have to make sure the transaction follows through, and that's what payments are all about.

Alright, and lastly, AI.

The era of wait and see with AI is really over. We're soon seeing a lot of companies adapt AI, and forty percent of companies are now using AI operationally to do day to day tasks that would have otherwise been done by humans. What's more interesting, though, is that consumers are ready for it as well, too. Forty three percent of consumers now say they are comfortable letting AI manage their subscriptions. So not only are we seeing merchants adopt the usage of AI for their subscriptions, we're also seeing consumers use it as well, too.

Alright. So these are a few key highlights. Let's bring it to life though with the panel. I'm gonna turn it back over to Ellen so that we can get into our discussion with panelists.

Thank you so much, Brian. And now I am so excited to get into our panelist discussion.

Today's conversation is grounded in data from the state of subscriptions report and brought to life by leaders across media, SaaS, and streaming. I will let our fabulous panelists introduce themselves starting with Erin.

Hi, everyone. I'm Erin O'Neill. I'm head of life cycle for Audiobooks dot com. As you can probably imagine, Audiobooks dot com is a audiobook retailer and first and foremost a subscription.

And my work my work focuses on ways to engage and retain subscribers. So ultimately, turning any sign ups into long term and happy subscribers. I'm excited to tell you more about that today.

Thanks, Erin. I'll pass it over to Yannick since you're next up on my screen.

Alright. Hi, everyone. I'm Yannick, VP of product management at Televisa Univision.

I lead the partnerships and subscriber growth product teams at Vicks, which is the world's largest Spanish language streaming service.

My team focuses on scaling a global subscriber base across both direct to consumer and b to b channels. So we specifically look at how we can leverage product features from payment innovation to AI driven personalization and so on to first find new users, but also to build that long term trust to prevent churn. I'm excited to be here. Thanks for having me.

Stefan, I'll pass it over to you.

Hello, everyone. So my name is Stephan Turquet. So I'm principal product manager at Small PDF, an online PDF software, where I lead monetization and payment localization.

I've spent the last few years working, on payment infrastructure and building, a multi gateway setup supporting multiple, payment methods across different regions.

And this work has taught me a lot on how act payment acceptance and regional preferences can really make or break retention. So today, I'm very glad to be to be here with you and to share my experience serving, millions of users globally.

Awesome. Miriam, you wanna bring us home?

Yeah. Of course. Hi, everyone. My name is Miriam Zogby. I'm the senior director of growth here at Fortune.

Fortune is a large media publication. We have some strong IPs in Fortune five hundred. I lead our subscription business here and focus on both the acquisition and retention side of that. So in addition to working closely with product to build out sort of better products that our subscribers can engage with, so that way we can acquire them.

We also work very closely with our editorial team to provide sort of have our subscriber base provide and support the journalism that we're trying to produce and sort of that utilitarian journalism and analysis that a lot of people that work in the Fortune five hundred or people that work in in business use sort of in their in their day to day.

Awesome. Thanks, Miriam. Great to meet you all.

Erin, first question for you. At Audiobooks dot com, are you treating a cancellation as a permanent breakup, or do you have specific tactics in place that treat these past users differently than a cold lead?

Absolutely. Yeah. I think it's a great question because we've seen industry shift a bit more towards needing to incorporate cancellation into our idea of a subscriber's life cycle. It's becoming more common.

As you wrote in the report, Subscriptions generally are a really saturated market. And so we're finding we're not just competing for the audiobook listener anymore, but we're competing for that share of wallet against other subscriptions. And so being able to see cancellation as part of the life cycle and not necessarily being scared of it allows us to open up doors to focus on bringing those subscribers back and doing so in a way that's very personalized to them. So, yeah, you mentioned if there's a way to treat it differently than a cold lead, the answer to that is, of course, absolutely.

It's really important too.

And so what we're seeing when it comes to win back is shifting away from these more generic price offers, which is a benefit to us because we're seeing people come back organically if we can properly personalize our approach to them.

And to take a step back, cancels have given us a lot of information about their preferences or why they might have canceled or even while they were with us, what features were really impactful to them and important to them. And so being able to know those things, know little tidbits of what they valued and found really important is ultimately the key to getting them back. And so that should be leveraged.

For an example at audiobooks dot com and how we might do that, if a user signs up and searches for a specific book and then cancels, we know that that person was initially impacted likely by a recommendation of a specific book. And so understanding that that's what got them in the door in the first place is extremely beneficial to us. We know that continuing to hit them over time with additional audiobook recommendations is gonna be more impactful than trying to get them a price offer.

And we can get even more granular onto their experience by looking at when they were with us and they downloaded that book, how did they engage with it. So for example, if they listened all the way through, that's a strong indicator that they actually really liked the content of that book. And making recommendations similar to what they would have liked is gonna benefit us more. But if, for example, they dropped off ten or twenty percent into the book, then we know that their initial interest in getting a recommendation wasn't followed through, but they still had that excitement about a recommendation in general. And so we'll hit them with a variety of different recommendations.

Maybe like New York Times bestsellers, staff picks, popular listens from last month.

So as you can see, even with a really short subscription, we had this user for a short period of time. It's still possible to get an idea of what they value and to reiterate that back to them.

That's so interesting, and it reminds me of how we have the theme around isn't goodbye anymore. It's almost just one other data point that you're able to use and then serve them really personalized content, that their journey continues on whether or not they hit cancel or not. That's so interesting. It also reminds me of one other data point from the report, which is the number one reason for cancellation, actually by fifty one percent, was because, I quote, I wasn't using it enough.

So with competition being so fierce in the audiobook space like you mentioned, how do you detect dormant users before they actually hit that cancel button? And then what's your strategy for reengaging those customers that maybe haven't logged in in, you know, thirty plus days?

Yeah.

I think you used the word dormancy, and that is somewhat tied to inactivity. And from my perspective, that's almost a bit too late to really intersect the user experience to jump in and help them back on the right path. Because once a user is inactive, that means we're no longer an active part of their daily routine, and that's where we need to be, like you mentioned, to participate in such a competitive environment.

So when we look at dormancy, we think of it not necessarily as a moment, but more of a trend.

And that's where we're constantly monitoring each individual user's behavioral patterns, their engagement, how often they are downloading new books, how often they're listening, how often they're finishing those books. And instead of just looking for one off indicators of disengagement, we're looking for changes in user engagement to start to catch when that user's behavior is starting to eliminate us from their daily routine.

So how we would do that in terms of reengagement and my best approach to try and reengage user is to put ourselves in their shoes and understand what is going on in their day to day that's pushing them away from the service. So often when I think of audiobooks, I think of people who love books but need to be able to access them on a more convenient basis, on the go or wherever they're doing chores or commuting.

And so having a bit of empathy, let's say, of their time and how busy these users are is something that really benefits us. So instead of creating huge milestones that we want them to work towards, we're mindful of these short snippets of time that they have and nudge towards short wins. So for us that looks like jump in for ten minutes or why not just jump in for one chapter.

Another way that we really try to navigate re engagement and this is what we're seeing more and more commonly is being very cautious of what I call subscriber remorse.

And what that means to me is we we often talk in subscription about reinforcing the value.

But with that, we need to be mindful that we're reinforcing the value that that specific user sees in our product and not just generally blasting them with, hey, here's every possible feature you could be using and doing that frequently. The reason that we avoid these mass communication of features, especially in reengagement, is it can cause this subscriber's remorse where people see all of these features that they're paying for but not necessarily using.

So when it comes to reengagement, we need to be very mindful of value anchoring and reiterating what's important to that specific user while also making sure we're not overcommunicating the things that they're not necessarily using.

I see everyone here nodding their heads. I feel like we're all thinking more how we should be reading more too, thanks to that explanation. But, that personalization really jumped out at me when you were talking through that and making sure the messaging that you're getting in front of the user is personal to them. On that same vein of personalization, I know that usage and habit can look very differently depending on where that customer is located geographically and what device they're on, like you mentioned where they're actually downloading. So, Yannick, I've I've got a quick question for you. With a mobile first audience in Mexico and across Latin America, how do recommendations and this idea of personalization help drive habitual usage? And follow-up, are there any engagement signals that matter more in these markets versus the US?

On the on the first part of your question, I think I think habitual usage is about winning multiple micro moments with the day. So whether it's it's a weekday morning commute or it's a or it's a lunch break, We're we're moving away from waiting for that evening prime time to proactively now creating those daily hooks. So we've done a few things. Right? First, you mentioned mobile first.

So for example, we recently launched microdramas, which are high quality one to two minute episodes that were created just for that mobile audience and for those micro moments. It's a perfect entry point for the user to come in and come in multiple times a day, right, to create that habitual usage you're talking about. The other one is is live content. Whether that's sports or news, those are great daily anchors. We have such a vast programming of sports at Vicks that we can leverage that.

And and the last one would be we focus on behavioral triggers to bridge the gap between we have that massive library and and bridging that gap between having so much content and the user's intent when they actually open the app. So we're doing a few things there. On one hand, we push to reduce the user's time to content and to predict what is the intent at that moment of the day.

So that's one thing. On the other hand, we're trying to work on regional personalization. So how do we solve that behind the scenes? We use large language models to enrich our metadata and try to understand the user's true intent. I would tell you that we know every time. The truth is we're still working on that, right, I think all of us are.

And then we tune our recommendations to reflect those regional nuances.

I mean, the ultimate goal here, and and and we'll get there, but it's to to give a subscriber in, like, Mexico City, for example, a local experience that's gonna be different than a subscriber in Miami or a subscriber in Bogota. Like, you really need to to create that local experience.

So it was for the, I think, for the first part of your question. For the follow-up on the on the engagement signals, I think it starts with watch time for us as a universal, call it, KPI signal.

But then we, yes, we do look at some signals specifically by geo. One example would be offline downloads. So in the US, everybody is used every mobile user is used to have unlimited data plans. Right? So we track more of the stream quality.

But if you look at Latin America where data is gonna be more expensive, a completed download event is already a a huge signal of intent. It tells us that the user maybe is home downloading that content to prepare for that morning commute that I was talking about for that moment. Right? Another one would be payment renewal.

So in the US, we mostly rely on passive auto renews. You set your credit card. You almost forget about it. Right?

It gets money gets pulled in every month.

But in Mexico, for example, we're gonna track more the carrier billing and the prepaid top ups.

And when you have a user manually spending their limited prepaid balance on our subscription after their payday, that's that's a big signal of loyalty.

Yep.

You're doing great foreshadowing into questions I'm gonna be asking you later on payment friction and revenue recovery, so thank you for that. But before we dive into there, on the same theme of personalization, I think another stat that we found that you alluded to is that one of the most common reasons for people to disengage isn't necessarily because they didn't like your product, but it's that the plan itself no longer fits their life. Right? They have different things going on or their commute looks different or the way they need the content is different. So I actually want us to shift over into pricing and plan design and how flexibility plays a big part into retention.

So I think from the conversation we've had thus far, it's very clear that loyalty just doesn't come from great engagement. It's also shaped by the choices that we give the subscribers initially. Right? So when people feel in control, they're more likely to stay. So, Stefan, I'm gonna pass one over to you. I am curious. The report suggests that flexibility, like the ability to pause or to switch your plan, is now table stakes.

Have you experimented with pause features or microsubscriptions, like short term passes?

And how do you balance giving users an out without encouraging churn?

So another two parter for you.

Absolutely.

So first of all, before kind of going into the specifics, I would say that when it comes to to retention, it's really about I mean, the foundation of it for both conversion and retention is always the product itself. So you need to make sure that your product is really delivering the value that people are expecting, and therefore, you don't have to offer so much flexibility for people because they really like the the product that they are using or at least you are solving a big problem for them. So, yeah, once again, make sure that they experience the highest value as fast as possible so they can justify why they will pay or why they should still pay, for your product.

And that being said, when it comes to experiencing with pausing or the second one was sorry. Can you repeat again the the Yes. Second one?

The experiment with either paused subscriptions or micro subscriptions, like short term passes.

Exactly. So for for pausing subscription, this is something that we are currently experimenting, and, basically, we are, kind of still researching about it, because we have two types of agents on small PDFs. We have the very engaged users, so kind of, like, the the power users that are using us, like, on a on a daily basis or several times on a per week. And then we have the very transactional users that are just coming from for for, like, a onetime type of, like, a use case.

And then we have, like, another type of audience that is, like, in between. And within this audience, we we see a lot of, like, teachers or students. And then they they are very cautious about their their their spendings, particularly students, but as well teachers because they don't want to pay from their very own pockets. So they have limited budget when it comes, I mean, like, from from from the schools.

So, therefore, if they can save a little bit of money when they do not need it, so for instance, during the holidays or other moments where they they do not have to to work with documents, then this is the moment that they really wish that it could save some some money. And, unfortunately, until now, basically, that was, like, the main reason for cancellation for these people that they were giving us as qualitative feedback. Like, sorry, but I need I need a break for for a few months. And some of them actually never came back after.

So that's why this is something that we have very high confidence that by introducing POSE, we will be able to recover these people once they they they need the the product again.

And then when it comes to microsubscription, actually, this is something as well that we are considering for another segment, so the segment that is a bit more transactional in the sense that right now, we have a bunch of premium feature or pro features, the way that that that we call them.

And people are actually starting a trial to go around the limitations and then cancel the trial. So it means that they are giving getting, like, the the full product for zero or, even sometimes even worse because they forget to cancel the the the free trial. They get charged, and then they ask you for refund. Or even worse, they raise a disputes, to which, often, it's really hard to to basically fight and win.

So we lose twice the the money, so we have to refund them. And on top of that, we get extra fees. So we are losing a lot with, the the transactional, type of audience, and providing microsubscription might mitigate, basically, this problem. So it means that we can extract a little bit of value from from these users while still delivering the the the full products.

So this would be for this audience. And as well, there is other geographies where they are not so fan of subscriptions.

For example, in India, this is very common to actually have this prepaid subscription where they can directly top up a certain amount so they can go for one month, three months, six months, and then and then they have access to the products. And this will be a good way, basically, to increase conversion but as well retention.

And some reports are as well showing that despite that this is not a subscription, there is still an element of loyalty, and they come back again because you offered them the rights kind of, like, payment first payment method, but as well, like, the the the the the payment, I would not say billing cycle, but the the the way of paying, basically.

Wow.

I'm in awe of the level of granularity that you know your customer so well and exactly why they need your product and when and when they might need a break, which doesn't mean they're leaving you forever. It's truly based on their lifestyle or their situation. They just need a break with the product. The microsubscription piece, I'm glad you brought that up because in the same vein of flexibility and offering, you know, microsubscriptions monthly, two month, three month, annual, Miriam, I'm I'm curious from your perspective. So we've actually found that over seventy seven percent of consumers prefer monthly payments for flexibility.

But how does a publication like Fortune balance the need for stability of annual plans but with this consumer demand for monthly control? I'm curious.

Yeah. Great question. I mean, I think the keyword there in that question is balance. Right?

I very rarely have I seen success on the upfront of presenting a single offer. Inevitably, you end up alienating a group of folks, and people are just expecting a lot more flexibility attached to that. We're also gonna expand it where we're not just thinking of it in terms of monthly versus annual. I think we're taking the annual bucket and expanding it sort of on the flip side to micropayments to higher tier memberships and sort of premium annual products.

So when we present the offer, I think it's really important for us to highlight choice to the user. The thing that we try to avoid and and the flip side to presenting multiple offers on a page is that you have somewhat of that, like, decision fatigue. It takes users just a minute to process what you're trying to describe. And we've tested very heavily and will continue to test essentially in not just pricing, not just term, but like price expression.

And what's the presentation of the offers together. We've seen a lot of success in presenting them side by side and in the same terms. So for example, you have an offer that is five dollars a month. We highlight that there's flexibility attached to that.

However, the best value is in our annual digital, which is three dollars a month. I'm making up numbers here. But just having that clear comparison side by side in terms of offering, I think is really important for us. And then presenting that that premium tier product alongside that, so that way, users that are looking for that deeper engagement, not just the micro payments, they have a pathway there to it.

That sounds sorry, I know there's a lot of noise in the box.

Please let me know if you need me to to repeat any of that.

But the the other piece is, you know, we work really closely with finance to understand what is the mix that we need to balance both in year revenue and sort of the longer term growth that we need. Recurring revenue is a great thing, and this is one of the reasons that publishers that have relied on recurring revenue and have a strong subscription base have been able to face some of the headwinds that are within the media business.

But the there is a business benefit to monthly subscriptions as well, and a lot of that is in your revenue. So there are moments when, in finance, we need to build up a business case and have investment this year to build up that longer term growth. And I think just being really clear on what that mix rate needs to be for us to have the investment needed to build sort of some of those larger projects, premium products that we want to bring into market to have that longer term growth and finding that that proper balance between the two.

Only thing I'll I'll add to that as well is for monthly subscribers, what we've started to do and have seen some success with is seeding the the premium product to them earlier. So an example of that is for our monthly, all digital subscribers. We give them access to the digital magazine. So that way, can see essentially what does the magazine look like, how is it different, how is it a little bit more visual.

And when we're going to upsell them to a physical print magazine, they're already in some way engaged with it, and the use cases is already there. So that way, we can move people from monthly to then annual longer term.

I love that. So showcasing some of the benefits if they were to move to a premium plan and get them hooked and and really see the value and benefits that they would get. I love that. That's really cool.

And as someone with analysis paralysis, I I love how you were describing that the the thought and process that you went into the clearest, easiest way to showcase this that would be, easiest for your customers to understand the difference between the plans. So, I think that's great. Something about plans as I'm as I'm sure you're thinking in a quick pivot here. So we know that great plans, like the ones that you've described, need great systems behind them.

So we are going to transition and talk a little bit more about AI and operations.

So, Brian, you've been on mute for a little while. It's time for you to be put in the hot seat. With AI and operations, you are quoted in the report as saying that growth is about connecting conversion, payment, and retention in one loop. Where do you see the most merchants breaking this loop today? And is it at the payment failure stage or earlier in the engagement stage? I'm curious.

You know, I think it's a a bit of both those things, but one of the biggest opportunities, I think, is actually after cancellation, and really optimizing within the win back cohort. So Erin touched on it earlier. She has some great data points, but I think when you when you think about the win back cohort, there's a pool of customers who have canceled with you previously, and it could be fairly large in in comparison to your active subscriber base. You know a lot about those those subscribers, what they engaged with in the past, what they didn't engage with in the past, and utilizing that information to help bring them back into subscription lifecycle is super important.

It's not that cancellation means the end necessarily, but it's about continuing them and thinking about it as a continuation. So there is a ton of opportunity within the traditional subscriber life cycle to make optimizations, but I think that there's a lot of low hanging fruit within the win within the win back cohort to make even further optimizations and continue to drive a higher and higher percentage of new subscribers coming from that win back cohort. So back when I was at a couple different subscription businesses, we used that really heavily because you have those great data points, and you can use those great data points to figure out when is the right time to market to them, and then how exactly do you market to them.

What offers would be What what's the right offer to present to them, and when is the right offer to present to them? And it tends to work very, very well, and you can do a lot of personalization and a lot of tailoring with the marketing and the offers that you have to drive a lot of success there. So I think, like, that that that's one for me that I that I'm personally most excited about, and I think a a lot more merchants should take advantage of that, in in addition to, like, the traditional growth loops that we've talked about as well.

So Okay.

If you saw my eyes darting while you were answering, I promise I was listening, but I also you brought up you reminded me of that one cool stat that we talked about earlier from report, which is nearly one in four new subscriptions now come from former subscribers, which stuck with me while you were explaining that. So that's yeah. I think Yeah.

And and in addition to that too, it's it's continued to grow every single year as more and more companies take advantage of it, and the subscription ecosystem gets more and more competitive. Like, you have to tap into that cohort more because there just isn't as many new customers entering the ecosystem as there was in years past.

So Now I can't wait to pick your brain a little bit on AI, since you and I talk about it a lot in our daily lives as well.

We're moving towards agentic AI. So systems that don't just analyze the data, but they actually take action as well.

Beyond basic chatbots, how do you envision AI involving or, sorry, evolving in the subscription economy?

I think, you know, there's been a lot of conversations about this already, but, like, there's so much optimization to do within narrow cohorts of subscribers, and I think that's where AgenTik AI could really help out a lot, because it's hard to have a human involved with all these tiny little micro cohorts and taking actions off these micro cohorts. And you can you can do that and should do that, and a lot of companies are, but I think the big opportunity for AgenTic AI is to help make those optimizations automatically with really micro cohorts.

I think we're a little ways away from that, but I think we're heading in that direction, and I think it'll be great once we get there. In the meantime, though, I think where AI really plays a big role too is just helping understand the data, and not only understanding the data, but understanding where it's at. One of the biggest challenges in my world is making sure that the users of our dashboards know actually which dashboards they can go get answers to their questions from. So one of the ways in which we've been using a lot of AI internally is just helping everyone understand where they can go get answers to basic questions so that they're not so that they're actually getting answers to those questions and that they're actually asking them in the first place.

So it's two really twofold. It's about making sure that people have knowledge of where to go get basic information, and that's why we have an app with Compass. It's like, hey, you've got questions about your data. Compass can help answer the direct question, then also help you go deeper into, like, which dashboard you should go to zoom in.

But then long term, agentic AI is gonna be a really big focus to help make optimizations with really narrow cohorts across the the subscriber life cycle.

K.

Miriam, I'm curious from your perspective. So our report also mentions that consumers are most comfortable with AI in high trust areas like fraud prevention and personalization. So in media and publishing, how are you using AI to personalize the subscriber journey to prevent the lack of use churn?

Yeah. I think we use personalization, I would say, and sort of AI to generate two areas. A common example I like to use is, you know, whenever I'm sick home, I feel like after two days, I've watched all of Netflix. There's a powerful personalization engine there.

Along with a powerful personalization engine and working with product to ingest the data points that we have a full view of our customer profile, what they're engaging with, what we believe they would be interested in next, and taking essentially some sort of I I think the next best action for the user logic, not just for the conversion path, but also once they're on file, what channels do we present them and what content do we have that and cater it to, what their region is, what their industry profession is, perhaps what company they work for for us at Fortune. For example, if you work at Apple, you might be interested in hearing news about Apple as a company and what our analysis of Apple is.

The other piece of it is giving that information to our editorial team. And Fortune, a lot of props sort of our newsroom as they've been early adopters of AI at at Fortune to help produce what our subscribers are interested in. So we know sort of our subscribers are interested in that, like, high profile journalism. They're interested in that analysis and that in-depth reporting.

That takes a lot of manpower to produce.

And they have focused really heavily on powering sort of the insights that we're getting from a personalization engine and using that to bring up to speed our ability to produce that in-depth reporting that's needed to power a personalization engine and have that be somewhat of that that feedback loop. So that way, our users don't end up in a position where they're like, I've read everything about this topic that you've had to say today, and we can keep up to a certain extent with the demand of the user attached to that that personalization engine and keep that habituation going.

And they've done it in a in a in a great way where, you know, there are guardrails. It's not taking away from our journalism.

It's just allowing us to get past the the the grunt work, I think, to produce some of our our best reporting.

Kite, you described it almost sound like a perfect loop that you're using AI for. It's not only the presenting of material to your customers, but using it to fuel exactly what you're gonna be presenting to them. So, I imagined a loop in my in my brain, but that's that's great to hear. I think, at the end of the day, and all these creative ways you guys are using AI is amazing.

But, Yannick, I I told you I'd bring it back to you for payments and friction. So all of this is amazing, but it's not gonna matter if payments break. Right? Like, at the end of the day, we have to make sure that that's moving smoothly.

So I do wanna dig in a bit into payment friction and recovery. So my first question is for you. With direct billing, in app purchases, and partner or carrier billing all in play, where do you see the biggest sources of payment friction today? Is it during acquisition, or is it during renewal?

So VIX is available in nineteen countries.

So I think the biggest source of friction depends on where you're looking at and which market you're looking at. So in Latin America, for example, the friction starts with the acquisition, and I'll use a data point. So for example, if you look at Mexico, about thirty five to forty percent of the population has a bank account. So if we only accepted credit cards, we would already lose, like, the majority of our market. Right? We would lose, like, sixty to sixty five percent.

Now I believe that we solve some of that by taking the payment layer almost out of the app. So what do we do? We partnered with convenience stores with ecommerce platform. We allow our users not to pay for that subscription using cash payment, using digital wallets, things that they're like, method of payments they're already using in their daily life every day. The point here is if we can't get them through the door already, there is no renewal to worry about. Now if you look at the US, completely different story.

Bank penetration is at a hundred percent or near a hundred percent. The biggest friction is not about getting them to sign up. It's about getting them to renew and to keep that payment alive.

Specifically, the main the main point of of friction is, at least for us, is involuntary churn, right, which happens when a card expires or it can get a flight for fraud. So we we do a few things on the retention side, but, also, what we do is we fight that by leaning into in app purchase, you mentioned direct you mentioned carrier billing. We have some partnerships in place, right, to set up, bundles.

And by billing through the app stores or utility bill, we always use that evergreen payment method that the users already use for many other things, which is less likely to expire, more likely to be, you know, updated very quickly.

Anya?

Yannick, I cannot wait to clip the beginning of that response for the way consumers buy is so different outside of the US for my customers that are trying to expand in other markets.

I'm clipping that, and I'm sharing that out. Thank you. Thank you for that.

Brian, I'm curious from Recurly's standpoint now. So on the renewal side, I would say more of this. We're seeing software companies reclaimed over a hundred and fifty five million, I think it was, in revenue during Dunning last year. So for other merchants that are listening to this amazing webinar today, what would you say is the lowest hanging fruit in payment recovery that they are missing right now?

I would say the lowest hanging fruit is something that folks like yourself in the customer success world have been really, thinking about and pushing with our merchants, and that's just making sure that dunning is as long as possible. So, dunning, for those of you that aren't aware, is the communication process that you have with merchants when a payment method fails, and trying to make sure that they update their payment method and continue to be part of the subscription ecosystem. So when I say as long as possible, it really depends on the type of plan that they're on, but for monthly plans, that would be like twenty eight days because you don't wanna straddle into a second billing month, but setting it as long as possible for monthly plans at twenty eight days and for quarterly plans at like sixty days, at least, really make a big difference, because every day counts, and every day is an opportunity to reengage with subscribers.

Maybe they have the funds they need now to to stay subscribed, or maybe it was that their credit card got lost and they had to get it updated, but setting Dunning as long as possible is the lowest hanging fruit. Beyond that, making sure that you have an account updater service turned on. Mercurly's got several of them plugged in to the platform directly. That just happens behind the scenes automatically as cards get updated, cards get lost, cards get stolen, etcetera.

The subscription service can see zero downtime when that happens without having the person have to go in and manually update something. So making sure you have account updater enabled is is really important. And then beyond that, those are the two two really low hanging fruits, but beyond that, there's tons of optimization opportunities within narrow cohorts. You know, I just mentioned, you know, different geographic regions require different optimizations and different payment methods.

Those all start to become really important once you get beyond the low hanging fruit, and I think that's where things like AB testing can become really important in understanding what works well, what doesn't work well, and continuing to iterate and get better and better over time.

Great. For those listening that work with a customer success manager at Recurly, you're exactly right. We we talk about Dunning Length a lot, and I'm sure that's ringing a bell for a lot of folks on the phone, but I think that's interesting to point out. And then second part to that question, which, Brian, you may have answered this in the second half, but I'm curious. Are there any other longer term goals that businesses should be thinking about for twenty twenty six?

I think the biggest long term goal is how do you make these optimizations at scale? You know, I mentioned Agenetic AI playing a role in that.

I think that is a key piece of it, but it's really thinking about, like, how do you make these optimizations without doing an analysis and doing a test and implementing the changes and going through product and engineering cycles and, like, scaling up those efforts is super important. And I I think Recruly's got a lot of great functionality to allow that to happen at scale, but it's really important to be able to do this within narrow cohorts and do it really quickly because things change. Consumer preferences change. Your business changes.

The content changes. Everything's changing. So it's all about making optimizations really quickly and doing it at scale. I think that's what businesses should focus on the most in twenty twenty six and beyond.

Great. So I want everyone to take a big deep breath. We've made it through the the standard questions. We covered engagement. We covered pricing. We covered AI and payments. So to wrap things up, I wanna do a quick zoom out with a lightning round for our amazing panelists today.

Two questions for the group. Erin, I'll pass it back over to you first, and then we'll go through them. What are your thoughts on AI? I'm sure there's a million. And how will it evolve within the subscription industry?

Yeah. I think Brian touched on that beautifully. I think we're moving away from using AI to gather insight and we're moving towards using it for action.

Action on our behalf through agentic AI allows us to become much more personalized in what we're providing to the user. And for example, it might not be just telling us who will churn, but it's actually intercepting that churn for us, doing things in real lot in real time to make action to help improve towards KPIs. So, yeah, that shift away from insight and into more action is where I think we're headed.

Thoughts from anyone else?

Okay.

I I I don't mind going.

I think we also really I mean, I think we also really shifted from, like, being reactive to a cancellation to being proactive.

So I don't wanna say what used to be in the day, but, like, before you you had that cancel event and you spend all that time trying to win that user back. Right? Now we try to leverage, you know, whether that's models or AI and so on to identify all those patterns.

And with all those parameters that we have access to today, whether that's login or frequency or usage, we try to actually detect the cancel before it happens.

And being able to detect that in advance and being able to give or trigger personalized, like, cancel save offer before that last screen, I I think is, I think is key.

More action, proactive insights. Any other thoughts from the group before our second last lightning round question?

Sure. I believe that, yes, AI will be rather, like, transparent for for consumers, and it's gonna really, like, power merchants to basically have better performances overall. Not only on the retention side of things, but I I believe, like, at every steps of the funnel, like, from conversion, being able to better understand the segment people from the get go and have all of this personalization as, as previously discussed, but as well to keep people engaged at the right level. Right? So we mentioned as well before that engaging maybe too much with some some type of audience might actually trigger cancellations for them because they might not be using the product that much. So, therefore, with AI being more proactive and learning from not only your own system, but potentially from other channels, that might actually help having this very personal experience for every single users and customers of your platform to convert, engage, retain, and potentially save or recover.

True. I'm having that proactive conversation with a lot of my customers right now and not waiting until the event happens, but using data to see and catch them before just like you guys outlined.

Okay. I've got one more lightning round question for the group, related. But what subscription trends do you believe will define success in the next twelve months?

I can jump in here again.

I think to wrap that into a nutshell, I think we're moving away from more of a convincing or growth mindset. Here's why you should be with us and sign up, and moving more towards retention, which looks like reinforcing value, as I've mentioned, specific to what the user is enjoying or finds value in.

Often about gaining trust, I think those elements, reinforcing value and gaining trust, work hand in hand with a more retention focused industry or environment.

And that'll look like, as we've discussed, flexible plan options, perhaps bundling subscriptions, and then also just a focus on improving user experiences.

I think very well said. I'll I'll add to that. I think there's gonna be more of a shift to almost like word-of-mouth marketing, I think, for acquisition. So having subscription offers include group subscriptions, having family share plans. So that way, you're not just dealing with one subscriber at a time and from an acquisition perspective.

And then it plays this loop for retention as well. Because as you get a premium subscription for Spotify, it's not just you that's using it, it's your family. So it acts as a retention lover as well.

And I think that that will help sort of subscriber subscription businesses move to that like Google zero world that I think a lot of businesses are prepping for.

I'll jump into I think and we we talked about preventing churn, so I think agent TKI integrations are gonna continue to prevent churn and help us and probably, like, boost it. Right? So those agent will be able to predict churn probably in real time at some point, and acting on on those with the right personalized response will be key. The second one is the, for me, the forever flexibility.

I mean, mastering those upsell and downsell flows, giving the users that flexibility to move freely between your tiers within your subscription, but at some point, maybe even between services. We're seeing so many bundles out there.

I think that's an area that still need to be worked on.

I will follow-up on my side as well on on the flexibility or actually double doubling down on flexibility.

And, potentially, I mean and recently, we have seen Apple introducing a new type of, I mean, a new product that is available through different ways. So this Apple Creator Studio, you can either buy a perpetual license for a specific software, or you can actually make a subscription, and then you have basically a bundle of of software. And this is one of the example of flexibility and with different types of commitments. So I think this is an area where we're gonna probably evolve. So you have different options at your disposal from how products are being packaged or bundled, how you're paying for them through payment method, billing cycles, how, as Henrik said, how do you go through the different plans, upgrade, downgrade, within the platform. And, yeah, so, basically, going full on flexibility.

What a great snippet to close on. Full on flexibility. Stefan, thank you. Team, thank you so much for all of these thoughtful insights.

As amazing as the report is, hearing firsthand from you all on how you're executing it in your program and your day to day life is invaluable. So thank you so much. Just as a quick reminder to everyone listening, you can download the full twenty twenty six state of subscriptions report, and this session will be available on demand. So another big, huge thank you to all of our panelists and to everyone that joined us today for twenty twenty six native subscriptions.

Thank you so much.

Thank you.

Thank you very much.

Thanks, Simon.