Recurly’s ninth annual State of Subscriptions report revealed a decline in subscriber acquisition rates, which puts the focus on retention efforts as key to subscription success.
Researchers at Recurly analyzed data from millions of consumers, thereby “providing deep insight into the massive subscription economy’s evolution,” the report’s authors said, adding that they offer “strategies and one-of-a-kind solutions for merchants to overcome the industry’s ever-evolving nature and subscription challenges to drive growth.”
The data showed that subscriber acquisition rates dropped to 2.8 percent, which is down from 4.1 percent in 2021. As a result, the report said deploying strategies such as personalized engagement, flexible payment options and loyalty incentives are no longer optional — “they are essential to thriving in this dynamic market.”
“This data underlines why more and more businesses across industries from travel to fashion are turning to subscription models,” said Joe Rohrlich, chief executive officer of Recurly. “Even as customer acquisition declines, retention is increasing — a clear sign that consumers want to find and stick with subscriptions that best fit in with their lives.”
The CEO said subscribers want to be treated to the most personalized experience possible, “and the onus is on businesses to provide products and services that create best-in-class customer experiences.”
Other findings from the research showed a decline in the effectiveness of free trials. “Free trial conversion fell from 46 percent to 33 percent,” the company said. “The focus is shifting to attracting high-quality subscribers, as increasing market penetration in many industries has decreased the effectiveness of free trials.”
The data also revealed the cyclicality of subscriptions. The researchers found that 20 percent of acquisitions are returning subscribers. “Over $200 million was generated from subscribers who resubscribed after pausing,” the report’s authors said. “Businesses offering a pause option saw 25 percent of subscribers pause instead of canceling.”
The report showed an increase in fraudulent transactions, which increased by 29 percent, “mainly targeting the sign-up flow and credit/debit cards,” the report stated. There was also a 19 percent year-over-year increase “in alternative payment method usage, which helps mitigate this risk while aligning with consumer preferences.”
Recurly offers subscription management solutions. Clients include Speedo, Rocksbox, AllTrails and CBS, among many others.
