Essential benchmarks and trends for consumer subscription businesses for faster, profitable growth
SAN FRANCISCO, Jan. 23, 2024 /PRNewswire/ — Recurly, a leading subscription management and billing platform, today announced the release of its highly anticipated 2024 State of Subscriptions report. Drawing on data across millions of subscribers and billions of transactions, this report reveals benchmarks and trends and then pairs them with best practices to help subscription businesses drive strong growth strategies in the coming year.
“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 Joe Rohrlich, CEO at Recurly. “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 optimize their business—while they continue to develop the long-term subscriber relationships that define success in our industry.”
Noteworthy Trends
- 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%, measuring the proportion of trial users who transition into paying subscribers, confirming consumers still favor trials.
- The median signup success rate stood at 89%, 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% increase in active subscribers and when comparing this to 2020, growth surges to 105%.
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% in 2023.
- The median churn rate across all industries was 4%, staying consistent year-over-year.
- Recurly saved 72% of at-risk subscribers using recovery events, extending their subscription by a median of 141 days, with 38% 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. 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,” says Rohrlich.
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. Personalization is underutilized—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 personalize the subscription offer (plan length, product, price, payment, and promotion) at scale can boost both revenues and relationships.
- In 2023, 28% of Recurly customers offered plan customizations to allow subscribers to personalize their subscriptions, resulting in $2.2 billion in incremental revenue.
- From 2020 to 2023, incremental revenue from product add-ons increased by 272% for Recurly customers utilizing the feature.
- The subscription pause feature gives subscribers the ability to temporarily suspend the subscription. In 2023, 40% 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% 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% of total transactions in Recurly in 2023, 45% of respondents in our survey cited PayPal as their preferred payment method, followed by credit cards (39%) and ACH, debit, and checking account withdrawal (23%).
- APMs presented a significantly lower risk of fraud (<1%) when compared to credit (17%) and debit cards (11%) last year, as many APMs offer additional security measures that benefit both businesses and consumers.
Additional insights—including benchmarks by industry—are included in the report. To access the comprehensive 2024 State of Subscriptions report, click here. In addition, you are invited to attend the 2024 State of Subscriptions: Industry Benchmarks & Trends virtual event on February 1st at 9 AM PT / 12 PM ET / 5 PM BST and hear from industry leaders about exclusive findings from the 2024 State of Subscriptions report, register here.
About Recurly
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 optimize their subscriber lifecycles with ease. Category-defining companies, including Sling, Twitch, Bark, 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 https://recurly.com.
SOURCE Recurly
