Subscription management and billing platform Recurly’s 2024 State of Subscriptions report finds that subscriber fatigue is overestimated, with growth continuing to be strong.

Noteworthy Trends

1. Subscriber fatigue is overestimated—growth continues to be strong.
   Data shows that while acquisition rates and free trial conversions went down—correlated to a market-wide reduction of acquisition spend and ‘growth at all costs’ mentality—overall subscriber retention improved. While subscriber preferences are ever-evolving, subscriptions themselves remain firmly planted within daily routines.

• The median trial-to-paid conversion rate was 50 per cent, measuring the proportion of trial users who transition into paying subscribers, confirming consumers still favour trials.
• The median signup success rate stood at 89 per cent, which measures the percentage of initial subscription transactions that were approved. This metric is significant, as it reflects the effectiveness of the checkout process and backend payment processing.
• Over the past year, Recurly saw a 16 per cent increase in active subscribers and when comparing this to 2020, growth surges to 105 per cent.

2.             Brands build relationships—attention moves to the most profitable subscribers. 

Recovery events, defined as instances where technology actively prevents involuntary churn, have become key in preserving subscriber relationships. For instance, the renewal invoice paid rate, the percentage of all renewal invoices that are paid in their final state, came in at 96 per cent in 2023.

• The median churn rate across all industries was 4 per cent, staying consistent year-over-year.
• Recurly saved 72 per cent of at-risk subscribers using recovery events, extending their subscription by a median of 141 days, with 38 per cent of a subscriber’s total lifetime happening after a recovery event.
• In 2023, Recurly recovered $1.2 billion in subscription revenue through its churn management solutions using a full array of strategies, combining years of transactional data to feed AI-powered transaction retry models to predict and recover potentially lost revenue.

“Recurly is excited to announce a major new platform feature, built-in benchmarks, available to all customers,” declared Joe Rohrlich, CEO at Recurly. It is an essential addition that allows our customers to directly compare key performance metrics against similar businesses within their industry. This will offer a clear view of where they stand in the competitive subscription landscape over specific timelines.”

Built-in benchmarks will be part of two new dashboards: renewal invoice paid rate and renewal invoice decline rate. Additional benchmarking metrics will be added in the coming months and will deliver comprehensive insights across subscriber acquisition and retention to help Recurly customers better gauge the health of their subscription businesses.

3.             Personalisation is underutilised—unique subscription offers boost loyalty.
   An exceptional subscriber experience grants subscribers co-ownership, enabling them to create a subscription that aligns with their specific needs while allowing for future adjustments. The ability to personalise the subscription offer (plan length, product, price, payment, and promotion) at scale can boost both revenues and relationships.

• In 2023, 28 per cent of Recurly customers offered plan customisations to allow subscribers to personalise their subscriptions, resulting in $2.2 billion in incremental revenue.
• From 2020 to 2023, incremental revenue from product add-ons increased by 272 per cent for Recurly customers utilising the feature.
• The subscription pause feature gives subscribers the ability to temporarily suspend the subscription. In 2023, 40 per cent of Recurly customers enabled pause, demonstrating the widespread adoption of this feature to prevent cancellations.

4.             Payment types impact the subscriber experience—improving the convenience and likelihood of successful payments.
   Payments drive the subscriber experience and establish the framework for preferred payment methods, affordability considerations, and subscription payment success.

• The most popular payment method was debit cards, accounting for 46 per cent of global transactions in Recurly. Both debit and credit cards have grown in popularity since 2020.
• Although alternative payment methods (APMs) make up a small percentage of total transactions, their significance is indisputable. While PayPal only made up 19 per cent of total transactions in Recurly in 2023, 45 per cent of respondents in the survey cited PayPal as their preferred payment method, followed by credit cards (39 per cent) and ACH, debit, and checking account withdrawal (23 per cent).
• APMs presented a significantly lower risk of fraud (<1 per cent) when compared to credit (17 per cent) and debit cards (11 per cent) last year, as many APMs offer additional security measures that benefit both businesses and consumers.

“Recurly prides itself on partnership with its customers—taking our expertise in growing subscriber lifetime value with the world’s biggest brands and applying those insights and best practices to benefit all of our customers,” says Rohrlich. “The State of Subscriptions report brings this to life, identifying the significant benchmarks and trends throughout the subscriber lifecycle to help those in the industry understand and optimise their business—while they continue to develop the long-term subscriber relationships that define success in our industry.”

Other posts by Colin Mann:

1. Analysis: SVoDs drive $220bn content spend
2. A TikToking clock heading towards regeneration – or not?
3. European pay-radio: Getting ready

Categories: Articles, Consumer Behaviour, Markets, Research

Tags: recurly, Subscriptions