To provide benchmark data for each of these key areas, Recurly Research compiled data from nearly 2,000 subscription sites from January 2019-December 2019.

The data contained in this Annual Subscription Billing Metrics Report provides comparative subscription billing benchmarks to help subscription businesses make strategic decisions to drive improvements across critical key performance metrics.

We've included a broad span of industries including:

  • Box of the Month
  • Business Services
  • Consumer Services
  • Consumer Goods
  • Education
  • Healthcare
  • Internet of Things (IOT)
  • OTT / SVOD
  • Publishing and Entertainment
  • SaaS

2019 Churn Rates

Every subscription business deals with the challenges of churn, or what percent of subscribers cancel each month. Different industries have different factors that affect churn. Understanding these elements can help subscription businesses formulate effective strategies to combat churn because even slight fluctuations in churn can make a significant impact on the bottom line.

Churn Rates by Industry

All Industries

5.48% MEDIAN

B2B Industries

5.15% MEDIAN

B2C Industries

6.81% MEDIAN

25%
20%
15%
10%
5%
0%
 
 
   
 
 
 
 
   
 
 
 
 
   
 
 

Voluntary Churn

-%

Involuntary Churn

1.89%%

Different factors lead to different kinds of churn—each requiring a specific approach. Improving customer satisfaction reduces cancellations that result in voluntary churn while using decline management techniques minimizes payment declines that lead to involuntary churn.

KEY TAKEAWAYS
  • B2B companies generally see lower median churn than their B2C counterparts. This can be attributed to the fact that many B2B products and services require a larger dollar point of entry and thus a lengthier and more thought out vetting process.
  • B2B products are usually "stickier", as well, meaning it's more of a challenge to change platforms or providers.
  • SaaS has the lowest median churn rate of any industry and Box of the Month has the highest.
  • Involuntary churn (when a subscriber's payment attempt fails) tends to fall between 1.5-2% and Voluntary churn (when a subscriber decindes to cancel their subscription) is primarily between 3.5-7.5%.

Churn Rates by ARPC (Average Revenue per Customer)

15%
12%
9%
6%
3%
0%
 
 
   
 
 
 
 
   
 
 
 
 
   
 
 

Voluntary Churn

-%

Involuntary Churn

1.89%%

Price has an obvious effect on churn. Higher-priced subscriptions experience less churn, possibly because the purchase is more considered. Subscribers both sign up and cancel more readily in categories with lower price points.

KEY TAKEAWAYS
  • Generally, the higher a business's ARPC (Average Revenue Per Customer), the lower the churn rates will be. This is especially true for B2B businesses.
  • This may be because a high ARPC can be associated with enterprise software which often has 'inelastic' demand. In this case, the subscriber pays whatever price is set, often because the software is critical to operating their business.
  • At the high end of ARPC, B2C businesses see an uptick in churn due to the higher sticker price on the subscription that subscribers are purchasing. If subscribers don't realize the value of the product or service, they can be more prone to churn.

KEY TAKEAWAYS
  • Median Decline Rates are generally between 8-12%
  • Industries that have more B2C merchants are likely to have a larger range of decline rates
  • The top four decline reasons are all “soft” declines, which means that the transaction could not be processed at that time, however, it might be successful in the future if it is retried.
  • As ARPC increases, Median Decline Rate tends to go down

80%
70%
60%
50%
40%
30%
20%
10%
0%
47.6%
54.3%
38.2%
KEY TAKEAWAYS
  • B2B businesses see a higher rate of recovery across the most common failure types. This could be due to the fact that many of these companies have dedicated customer teams that manually reach out to customers to update their billing information vs relying on automated emails and outreach to do it.
  • Insufficient funds are the most likely top decline reason to be recovered. This is expected since most subscribers will replenish their card’s funds within several days of an “Insufficient Funds” notification, allowing the subsequent transaction to succeed.

Median Recovery Rates by Industry

  • Industry
  • ARPC
80%
70%
60%
50%
40%
30%
20%
10%
0%
45.40%
45.70%
46.69%
43.96%
50.51%
37.38%
48.64%
45.68%
41.42%
39.17%
52.42%
36.85%
45.18%
55.96%
55.96%
63.01%
51.25%

Overall

Consumer Goods

Box of the Month

Consumer Services

Business Services

Education

Healthcare

IoT

OTT

Publishing & Entertainment

SaaS

Industry Segment

< $10

$10-$25

$25-50

$50-100

$100-250

> $250

Price Point / ARPC
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KEY TAKEAWAYS
  • The SaaS and Business Services industry see the highest rates of recovery relative to the other industries
  • Generally, as the Average Revenue Per Customer goes up, the median Recovery Rate increases

Summary

The realities of churn, declines, and revenue recovery might not be going away, but armed with the right data you can take strategic action to drive improvements for your business.