Failed payments could cost subscription companies more than £102B in 2025
Latest solutions can help boost revenue up to 8.6% annually
LONDON, UK - 9 January 2024 – Recurly: The global subscription industry continues to grow with a projected market value of $1.5 trillion (£1.2 trillion) by 2025, but one challenge continues to impact many leading subscription companies - subscriber churn. Through the complexities of recurring billing and payments, businesses are estimated to leave a projected £102 billion on the table from involuntary churn alone in 2025.
Involuntary churn is when a subscription payment stops due to a payment error—an expired or reported lost card, gateway failure, or one of 2,000 additional reasons. It is one of the top, but manageable, challenges facing the subscription industry today. For even the largest subscription businesses, this can result in significant lost recurring revenue, lost subscribers, and a poor brand experience.
To understand the potential economic impact of involuntary churn, Recurly analysed billions of data points to identify its impact on the industry overall. The analysis shows that inadequate churn management can collectively lead to an estimated £102 billion loss when looking at the $1.5 trillion (£1.2 trillion) subscription industry. This is calculated from an average 8.6% revenue lift that subscription businesses experience when implementing Recurly’s data-driven churn management solutions.
“Subscriber churn is the enemy of every brand we speak to. Many businesses have basic, manual solutions in place to manage churn, specifically involuntary, but they don’t realise how much they can move the needle with a better strategy and automated tools,” said Jonas Flodh, CPO at Recurly. “Recurly is the only company that addresses churn pre- and post-transaction, leveraging machine learning and data models trained for over a decade. We have the smartest churn management solutions in the industry, based on vast amounts of data powering our churn algorithms. Some of our customers have reduced churn to as low as 1%. That translates to material revenue retention and happier subscribers."
To minimise the risk of lost revenue, subscription businesses must apply both proactive and reactive techniques that deploy a full array of strategies, including advanced automation and machine learning to remove friction in the payment experience. Some subscription platforms leverage static rules, but the best combine years of data with AI-powered transaction retry models to refine and improve—even optimising for a specific data set can optimise automated retries.
Since Recurly’s churn management solutions help prevent failure before it happens, subscription companies can retain revenue with a 96% average renewal invoice paid rate, while subscribers have a better consumer experience, especially when paired with other best practices like backup payment methods, dynamic gateway routing, and customised dunning strategies.
Businesses can see how their revenue is impacted by issues such as churn through the recovered revenue calculator here, and by reserving a copy of the Recurly industry report, The 2024 State of Subscriptions today.
Thousands of innovative companies across digital media, streaming, publishing, SaaS, education, consumer goods, and professional services industries rely on Recurly to unlock transformational growth using subscriptions. Recurly’s all-in-one, integrated platform removes the complexities of automating subscription billing at scale by enabling teams to manage and optimise their subscriber lifecycles with ease. Category-defining companies including Sling, Twitch, BarkBox, FabFitFun, Paramount, Lucid, and Sprout Social have chosen Recurly to manage billions of dollars in recurring revenues, future-proof their recurring billing and revenue management, and recover billions of dollars in lost revenue due to churn. Founded in 2009, Recurly is based in San Francisco, with offices in Boulder and London. For more information, visit Recurly.Back To List