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Recurly Benefits Pause Feature Subscription Products May2020It’s in the interest of any subscription-based company to keep churn rate low. With an estimated 27.4 million US consumers at risk of canceling at least one subscription in the next 6 months, subscription services are looking for effective ways to retain subscribers – and according to new research [download page] from Recurly, a pause feature could be one productive approach. Indeed, among at-risk subscribers, half (51.8%) say they would be very or extremely likely to pause a subscription if the option was available.

In terms of the average churn risk, B2C subscription services are looking at a potential 16.4% of subscribers who are “somewhat,” “very,” or “extremely” likely to cancel their respective service, based on Recurly’s survey of almost 2,000 subscription customers. Education and training services face the highest potential churn rate (25.2%), while streaming services have the lowest share of subscribers likely to cancel (11.7%). Separate figures from Parks Associates illustrate the strength of streaming subscriptions, with more than 3 in 4 US households now having at least one such service, though it also notes that churn rates are increasing for these services. In other categories, one-quarter (24.2%) of consumer retail product subscribers are likely to cancel, with a similar share of digital media services subscribers being at risk (23%).

Across the board, consumers show considerable interest in using a pause feature rather than canceling altogether. Just as education and training services face the highest potential cancellation rate, they have the highest percentage (66.4%) of subscribers who would pause their subscription were it available. Digital media subscribers follow (55.3%), while half (49.5%) of at-risk subscribers would pause a streaming subscription and 45.8% would pause a consumer retail product subscription.

Subscription services can consider this in terms of the share of their subscriber base that could be retained with a pause feature. Because many consumers using streaming services already use a pause feature, and cancellation rates are low anyway, this type sees the lowest share of subscribers that could be retained (5.8%). Conversely, education and training services could retain the highest share of subscribers with a pause feature (16.8%), followed by digital media (12.7%) and consumer retail products (11.1%).

Recurly’s study finds that frequent usage is correlated with reduced churn, while seasonal subscriptions are at a higher risk of cancellation. For consumer retail products, 14.5% of at-risk consumers in this category say they constantly use their subscription, while 45.8% of this group only use their subscription during certain times of the year. In education and training, 8.6% of those likely to cancel use their subscription constantly, but 53.4% only use it during certain times of the year. This may explain why these subscribers would be more enticed by a pause feature.

Besides frequency of use, there are plenty of reasons why a subscriber might choose to cancel their plan and therefore many approaches that services can take to improve customer retention. Across all service types, the #1 most-cited reason for cancellation is the customer no longer being able to afford their subscription (14.6%). At #2 is a reduced interest due to price increases (10.7%), followed by a subscription costing more than it is worth at #3 (10.9%).

However, individual subscription types buck some overall trends: nearly 1 in 5 (18.1% of) education and training subscribers cancel because they no longer want their products (compared to 8.5% overall) and 15.4% of consumer retail product subscribers cancel having only purchased for one time when needed (compared to 4.7% overall).

The full report can be accessed here.

About the Data: Based on a survey of 1,968 consumers who have used a subscription service.

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