As much as £102billion of revenue could be lost annually by subscription companies in 2025 due to bad subscription practices, according to subscription management and billing software, Recurly.
Much lost revenue often boils down to failed payments, or expired or lost cards (also known as ‘involuntary churn’). At a time when consumers are cutting back on costs across the board due to the pressures caused by the cost of living crisis, these unnecessary losses could severely impact subscription companies’ bottom lines.
As the global subscription industry continues to grow with a projected market value of £1.2 trillion by 2025, even the largest businesses in the industry are experiencing significant lost recurring revenue, as well as losing subscribers.
The £102billion of lost revenue would be a major challenge – highlighted by the fact that it could represent around 8.6 per cent of the £1.2trillion industry in 2025.
Jonas Flodh, CPO at Recurly, explains the importance of addressing the issue: “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.
“Recurly is the only company that addresses churn pre and post-transaction, leveraging machine learning and data models trained for over a decade. We have the smartest churn management solutions in the industry, based on vast amounts of data powering our churn algorithms.
“Some of our customers have reduced churn to as low as one per cent. That translates to material revenue retention and happier subscribers.”
Tackling bad subscription practices
To minimise the risk of lost revenue, subscription businesses must apply both proactive and reactive techniques that deploy a full array of strategies, including advanced automation and machine learning to remove friction in the payment experience.
Some subscription platforms leverage static rules, but the best combine years of data with AI-powered transaction retry models to refine and improve—even optimising for a specific data set can optimise automated retries.
Since Recurly’s churn management solutions help prevent failure before it happens, subscription companies can retain revenue with a 96 per cent average renewal invoice paid rate, while subscribers have a better consumer experience, especially when paired with other best practices like backup payment methods, dynamic gateway routing, and customised dunning strategies.