The global subscription industry continues to grow with a projected market value of US$1.5 trillion by 2025, but one challenge continues to plague many leading subscription companies—subscriber churn. The complexities of recurring billing and payments can leave some companies with a proverbial ‘leaky bucket,’ leaving a projected estimate of US$129 billion on the table from involuntary churn alone in 2025.
Involuntary churn is when a subscription payment stops due to a payment error—an expired or reported lost card, gateway failure or one of 2,000 additional reasons. It is one of the top but manageable challenges facing the subscription industry today. For even the largest subscription businesses, this can result in significant lost recurring revenue, lost subscribers and poor brand experience.
To understand the potential economic impact of involuntary churn, Recurly, a data-driven churn management solution provider, analysed billions of data points to identify its impact on the industry overall. The analysis shows that inadequate churn management can collectively lead to an estimated $129 billion loss when looking at this US$1.5 trillion industry. This analysis was derived from the average 8.6% revenue lift that subscription businesses experience when implementing Recurly’s data-driven churn management solutions.
“Subscriber churn is the enemy of every brand we speak to. Many businesses have basic, manual solutions in place to manage churn, specifically involuntary, but they don’t realise how much they can move the needle with a better strategy and automated tools,” said Jonas Flodh, CPO at Recurly.