The retention revolution: Why flexibility is the new growth lever

Hey, everyone. And thanks for joining us today. We're so excited to have you here with us. I'm Sean O'Connor, senior sales engineer at Recurly. And joining me today is Blake Birdwell.

I'm a senior product marketing manager at Recurly.

Today, we're gonna be talking about a shift we're seeing across the subscription market with an understanding that retention is changing. For the longest time, customer retention strategies was something that was initiated at the very end of a subscriber journey, a churn event. Someone clicked cancel and the brand had one last chance to save them before that cancellation went into effect. That click to cancel was the go live plan, lights, camera, and action.

But this isn't really how subscribers behave anymore. You know, two thirds of all consumers carry one to four subscriptions, some many many more, and expectations and experiences have changed. People are going to want to pause, upgrade and downgrade, reengage, and sometimes leave and churn out for reasons that have nothing to do whether they like your brand or not. We're gonna spend this session talking about why customer retention flexibility is such an important growth lever, what subscribers can expect from brands, and how options like pauses, downgrades, save flows, win backs, and more can help keep customers connected.

That's right. But before we get into those insights and all those useful tactics, let me quickly reintroduce Recurly for anyone who may be less familiar. So Recurly helps d to c brands manage and grow their subscription businesses. Automating recurring billing and payments, recovering lost revenue, retaining subscribers, driving end product engagement and even automating revenue recognition at the end of the whole thing.

Teams usually come to us needing help with the same few things. So things like reducing churn and building more flexible subscriber experiences. Two things as you'll pick up on play a huge role in positive retention. So that's exactly where we're gonna dig into today.

And here's the thing about retention I'll kind of queue us up with. It's not just one moment at the end of a journey anymore. It shows up everywhere. How someone signs up, how they manage their plan, how a failed payment turns into a successful one, even how they come back after canceling.

And one more quick note, just so you have context here, want you to know where we're getting all of these data from. The stats and trends we'll walk through are pulled from a curly's annual state of subscriptions report.

This combines third party consumer data along with the curly's own platform data. It's over seventy six million unique subscribers across more than twenty three hundred merchants. All that data here for you today. So as we flash massive numbers and shockingly low percentages on the screen, know that this isn't just theory. It's actually grounded in what subscribers are actually telling us and what we're seeing play out across real subscription businesses.

Okay. Let's talk about the first trend.

So let's start with how expectations have shifted. Not this obvious stuff, what's becoming table stakes. That it's like subscribers wanting more value, better pricing. Sure. That's always going to be true. It's obviously not the shift we're talking about today. The shift is control.

Subscribers expect it everywhere and all the time.

So things like win back and retention strategies, these aren't new concepts. Your team's probably been running save campaigns for years. What's changed is subscribers now expect those same strategies built into your product experience itself. No more waiting on support ticket or digging through account settings.

No more random discounts showing up when someone's already decided to leave. Also, let's look at the before row. Look at how this used to work. It might even look familiar.

Pricing was fixed, sign up was generic, retention meet meant just periodic outreach, and renewal was of course assumed. It was automatic, terms were fixed. There's absolutely no flexibility to move up or down with however it fits your life.

And so when someone showed signs of leaving, we presented a binary choice, stay or cancel.

And that worked for a while because the market was still growing quickly, acquisition was much cheaper, and a lot of consumers were still building their subscription habits. But in twenty twenty six, subscribers are more intentional. You may even relate to that yourself.

They know what they use, what they value and what they'll keep paying for. And so the expectation has shifted. It's control at every step. And so looking at twenty twenty six, acquisition now means a lower commitment entry point. Things like micro subscriptions, even flexible plans. Onboarding should be self serve and frictionless.

Retention should happen in real time in the product when the pain is most relevant, not on some sort of campaign calendar after the fact. Renewal now means the possibility of changing plans without haggling. You don't to make the case for why you wanna go up or down or use more or less of whatever it is that you want to do with your money. In churn, it's not binary anymore, pausing, downgrades, grace periods, cancel, save, promos, all available at the moment someone shows intent to leave. That's the big shift. Flexibility gives subscribers more ways to adjust this relationship instead of just ending it. And for brands that creates more chances to preserve that relationship instead of just treating every moment moment of hesitation as a lost customer.

So this shift matters because the old retention playbook was dependent on a subscriber leaving first and that's just natural. Right? The subscriber clicked cancel and then your brand reacts. We had to wait for the signal to do something about it. One of the advantages of recurring relationships is that your subscribers are going to leave signals and clues before they turn completely. These signals matter for taking more proactive steps. Subscribers are more intentional about what they're keeping.

And about seventy seven of them say that they have the right amount of subscriptions. So if they wanted to cancel, it doesn't always mean that they're unhappy with your brand or service. Sometimes they're just not using the product enough. Sometimes the timing is off. Maybe the value isn't clear in that moment.

Plan no longer fits what they need or sometimes there's a payment issue that causes involuntary churn even though the subscriber never intended to leave. But before someone cancel, they're leaving little breadcrumbs. They're leaving little clues. And here's a list of seven, that's right, seven commonly seen changes in user behavior that shows, why someone may churn out.

This includes declining usage, lower engagement, missed renewals, billing issues, repeated visits to your account settings page, cancellation page visits, and comparing plans without taking action. Seven giant areas. All of these moments can point to intent before subscriber ever reaches the cancel screen. That intent doesn't always say, hey, I'm leaving for Git.

It's just another data point we can reflect on. In fact, that state of subscription report that Blake mentioned, we know that nearly one in four new sign ups are from a previously churned customer.

About twenty five percent of your customers that used your service came back. So it's not fully even net new. It's a return. It's cyclical.

People are gonna leave. They're gonna come back. They're gonna change their plans. And our goal is to extend that point in time just when they are subscribers.

And this is where a lot of teams run into what we call the intent gap. The intent gap is when most subscription businesses have more signals than they realize. They can see one of those seven things I rattled off earlier like declining usage, but these signals are living in different places. Product behavior is living over here in Google Analytics four, billing data can live over there in your CRM, maybe payment history is somewhere else.

But by the time the team connects the dots, the subscriber's already made a decision.

So the opportunity isn't about spotting churn risk necessarily. It's about shortening the distance between the signal and the response. If someone is showing low usage, the answer may be education or a value reminder. If someone has a payment issue, the answer is gonna be recovery.

If someone's price sensitive, the answer may be to downgrade. If the issue is temporary, of course, a pause is always going to be better than a full cancellation. The signal matters because it changes what the right response should be. And this is happening as cancellation transparency becomes an even bigger part of subscription conversation.

Consumers want easier ways to manage their subscriptions and regulatory shifts are reinforcing the need for clearer, more flexible cancellation experiences. So this isn't about hiding the cancellation button, but it's about giving subscribers better options before cancellation becomes their only path.

That's right. So let's talk about one of the clearest examples of the shift and that's the pause which you may be intimately familiar with yourself. It's one of the most effective retention options out there and honestly one of the easiest to roll out. Per our data, when a pause button showed up next to the cancel button, pause usage jumped three hundred and thirty seven percent.

There's your first massive percentage I'll throw at you. It's a behavioral signal. Subscribers aren't always ready to leave. Sometimes they just need more time, more control, or a better fit option in the moment.

So as you'd expect, pause works best when the reason for leaving is temporary. Travel, seasonality, they're between paychecks, they have too much of your product, or they just simply need a break. Sometimes it happens. One thing I'd recommend, you gotta ask subscribers why they're pausing. That's invaluable data. Price, usage, seasonality, whatever it is. That insight doesn't just shape your pause strategy, it has the potential to shape your whole retention strategy and even your product strategy.

Again, the goal isn't offering pause to every subscriber every time. Okay. We're trying to get away from these unintentional sort of tactics. The goal is knowing when pause can beat cancellation.

So your follow-up matters. Pause is powerful, but it it only works as part of a holistic life cycle strategy. So follow-up matters just as much. How long are people pausing?

When do they come back? Are they getting a reminder before it ends? Do they return to the same plan or do they downgrade? That's where the real learning happens.

So think for a couple examples, high pause adoption, low return return rate. Your reactivation experience probably needs a little bit more work. High pause adoption with a strong return rate, subscribers are not rejecting your product. They just need the flexibility and you have the power to give them that.

We see the same need for flexibility in plan structure too. Monthly plans give more flexibility and tend to recover a fifty three percent better than annual plans, but they bring more volatility, of course.

Annual plans run steadier obviously and drive sixty percent more revenue per user, but they present a less approachable entry point that we just talked about. So this isn't about one model beating the other. It's about different describers needing different options at different moments.

And here's some more of those compelling figures for you. Nearly four in ten consumers say they would rather pause than cancel. And seventy five percent of pause subscribers come back within months.

So flexibility isn't just a nice to have. It's honestly, it's how you preserve revenue and you keep that relationship alive and and meet subscribers where they actually are.

So we just talked about the signals. But now let's go ahead and talk about what to do with them. So can recognize that subscribers need more options. So the next question is, which option makes sense and when? This is where flexible retention really gets more practical, and we wanna match the right action to the right subscriber signal. So let's rock through this list really, really quickly.

If someone is showing low usage, they may need a project education flow, a reminder of value or a temporary pause. This is a tricky one because there may not be logging into the website itself, but it's off-site usage.

Reminders about underutilized aspects like historical videos or behind the scenes footage are gonna be really valuable here. Look at that customer intent, see where they're going, see where they're not, and see if you can reengage them that way.

If someone is price sensitive, a downgrade or a different plan may be more effective than a discount. Discounts can be temporary selves though. They may come back, and the issues may come back next billing cycle, so scoot their plan down instead.

If it's a temporary need, of course, let them pause for a billing cycle rather than park or hibernate their account. And if there's a billing issue, a grace period or recovery flow can really help prevent that churn. And if someone has already canceled, the right win back can bring them back when the timing is a little bit better. So straightforward enough.

Yeah. So one thing we see a lot is that teams default to discounts. These discounts are easy to understand and they're gonna be easy to track. Someone tries to cancel, you offer twenty percent off, and you can see whether or not they stayed.

Coming back to that as a of a short term solution. And depending on the churn issue, a discount may not create more customer value. They may need a different type of recovery experience and sometimes even draw a line in the sand. So the big picture here is that the goal is to stop making discounts the only answer, you know, and not assume that it ever was for your organization, but there's gonna be a lot more flexibility behind that.

So here's a little breakdown window at the bottom of the screen for some steps to take. I know it almost sounds like a tautology, but it is gonna be relatively straightforward. The subscriber shows intent, the brand identifies the reason, you're gonna offer them the right path, and then that subscriber ideally takes action and of course we measure the outcome. This is what's going to systematize flexible retention.

And the more you learn from these particular outcomes, the better the system gets. You start to understand which save pass work for which subscribers, which offers are overused, where payment issues are creating avoidable and unavoidable churn, and where your pricing or packaging might even need to change. That's why retention becomes less reactive and ultimately a little bit more strategic.

Right. So to Sean's point, once you understand the signal, the next step, is to make it easy. Make that experience dead simple. A great example would be, your ability to offer subscribers, you know, the ability to manage their subscription in a single click. That's huge. Think about a frictionless that could be. Pause, a downgrade, accept a save offer, even updating your payment method, reactivating after a pause, adjusting your plan all without friction, all with one single click.

So every flexible experience we've talked about shares the same thread and this is control. When subscribers can control their subscription, they're less likely to feel trapped by it. Doesn't that make sense?

And that matters because retention isn't just what's about stopping today's cancellation. It's about whether the subscriber comes back, upgrades later recommends the brand and stays open to reengaging at all.

A flexible experience sends a completely different message. It says, know your you know your needs change. We're happy to adjust. We're human just like you are. That's the difference between a subscriber leaving completely and simply changing how they stay connected to you. So the real shift is this, from stay to cancel to a menu of paths that fit the moment. Each one is another way for the subscriber to stay in the relationship.

Even if that original subscription doesn't fit the same way anymore. And for brands, each path is another chance to protect revenue without creating another frustrating experience.

So flexibility doesn't only matter at the point of cancellation. It matters before someone becomes a full subscriber. Free trials and discounts used to be one of the go to ways to bring in new subscribers, but our data suggests that's not working out the way that it used to.

Over our data collection period, we saw traditional trial conversions dropping from forty seven percent in twenty twenty one to thirty four percent in twenty twenty five. So about a thirteen percent drop, decently substantially, you know. So sure, market saturation and parallel products and overall ubiquity in the market space is going to be part of that. But this is also gonna be a larger shift happening where consumers are becoming more selective. They're looking for clear value, more control, and a price point that's ultimately gonna feel worth it. This is where discounts, in particular free trials, can fall short. They may get someone in the door, but that doesn't always create the kind of commitment or value connection that's gonna keep them around.

Short term passes, interestingly enough, are starting to fill that gap a little bit. Daily, weekend, game passes, and other micro subscription offers give consumers a lower friction way to experience value without committing to a full subscription right away. We're starting to see this work. These short term offers now convert about thirteen percent of their buyers into recurring subscriptions.

And remember what we saw in that drop off from the forty seven percent to thirty four percent? Candidly, curious coincidence here with that thirteen percent lift. Interestingly, this all just circles back to retention because the way that someone enters the subscription relationship often shapes how they behave later on. If that first commitment feels flexible and low risk, the brand has more room to build trust before asking for a bigger commitment.

The free trial was a a commit to monthly can paradoxically be more of a hill to climb over than paying for a weekend pass and getting what they want right then and there.

Sometimes the right path and the best path to a long term subscriber relationship isn't pushing someone straight into the highest value plan despite the fact I know that's what our CFOs want. Let's start a little bit softer with that. So sometimes giving them an easier yes and then building from there is the way to go. Be flexible with your trials and your plan offerings and ultimately it's that acquisition that needs to have a flexible entry point that's going to lead to a long term relationship.

So as with any good tactic, it means nothing if you can't measure it. So these strategies, everything we've talked about today only gets better if you're actually measuring what's happening.

It's not enough just to measure whether churn went up or down. I know that's where we started, but it it's it goes well beyond that. That does not tell the full story. You just need to understand this decision path, before cancellation, which offers work for which reasons.

What happens after someone pauses, downgrades, resumes, or comes back? So here are a couple examples of what to look for. So before cancellation, you should track usage changes. That's your earliest signal that something shifting before intent even shows up.

During your safe path, track the save rate by the reason. Not only will it help you match which offer fits the moment, but it could eliminate other areas of product friction that billing simply can't solve for.

And after the action, track LTV after the save. That's the number that tells you whether the intervention is actually working, not just whether it delayed was already inevitable.

But the point isn't building this whole dashboard of just random data that you can gaze upon, it's using that data to make your decisions.

High downgrade acceptance points to pricing friction, not a product problem. Strong win back conversion means that the relationship wasn't actually over. Cancellations after failed payments, that's a recovery issue, not necessarily a product issue. You start to see why it's important to measure the intent that got us there.

So measurement should really at the end of the day, answer three questions.

What did the subscriber need? What did we offer? And did that keep them in? This is where flexible retention pays off. For teams that can see not just who's leaving but why and which intervention tactic actually kept them invested.

So I don't know if we've drilled this point home or not but subscriber relationships aren't linear anymore, they're cyclical.

So the way we measure them has to be cyclical too. Think life cycle based.

Flexibility and control, almost antithetical but they really work well together. So as we bring this all together, the question really becomes is how do teams actually act on these signals? Recognizing churn is only gonna be half the battle. In the second half, the real value come from being able to respond while the subscriber is still making a decision, not when they've made it.

And that's where Recurly Engage is going to come in. Engage is a low code platform that helps your growth and product teams deliver real time personalized in app prompts across web, mobile, and TV to really drive subscriber actions like upgrades, cancellation saves, and plan changes that execute instantly into your billing system. And this key piece is the billing context. Two subscribers may both click cancel and that click may mean very, very different things.

One could be on that monthly plan, the other may be halfway through an annual plan. Maybe one of them had a recent card failure payment event that was recovered and the other maybe visited an upgrade page several times that last month. One's a brand new subscriber and the other's been with you for years.

Why show the same generic cancel save messaging for all these disparate signals you've collected? A billing aware experience understands the context behind it and helps you determine what should happen next. Should that subscriber see a pause option, a downgrade, payment update prompt, you make the call and AB test your way to success. That's the difference between simply showing a prompt and giving someone the right next step based on their plan, their history, and behavior. With Engage, we're seeing brands reduce churn by ten to forty percent, drive a sixteen percent uplift in product adoption, and increase upsells by thirty seven percent. Is this just more relevant experience delivered in the product with the billing actions built in?

So before we wrap, I'll bring this back to the main idea from today. Retention is about giving subscribers better options throughout the life cycle, not just trying to stop the cancellation at the very end. We discussed a few of these things. Sometimes that means offering a pause before they cancel. Maybe it means giving them a lower tier plan, maybe a short term pass.

The key is recognizing the signal, understanding the reason, and offering the right path and measuring what keeps subscribers in that relationship. Ultimately, that's what flexible retention is really about. If you have any questions or wanna talk through this, what this look like for your business, please feel free to reach out to recurring the team. And we're gonna go ahead and leave this chat open for the next three to four minutes so you can continue to put in chats here that we'll be able to get to.

And don't forget to check out some of the takeaway assets that are gonna be available to us. They're a great resource to help you bring in some of the ideas back to your team and allow you to start thinking about where flexibility could fit into your own retention strategy. So thank you so so much for spending some of your time with us today. I've been Sean.

And I'm Blake Bardwell. Thanks for tuning in, everyone. Appreciate it.