Dive Brief:
- When it comes to subscription businesses, half offer discount coupons, typically 25% off, two-thirds offer free trials, of which one third leads to conversions, and 80% require customers to put their credit card on file to access the trial, according to data on 2,000 companies analyzed by subscription platform provider Recurly.
- There are differences in the figures between business-to-business and business-to-consumer sectors, but they’re mostly marginal.
- Roughly 40% offer more than one payment option. About 20% include a digital wallet option and 20% offer a direct debit option. With direct debit, there’s a material difference between B2B and B2C sectors: a quarter of B2B companies offer it compared to about 10% for those in B2C.
Dive Insight:
Almost two-thirds of companies offer both annual and monthly subscription options. Two-thirds have a one-time purchase option, typically adding 7% in additional annual revenue. Close to a quarter allow customers to pause their subscriptions. Pausing tends to be a money-maker. Companies typically increase their revenue 3% from paused subscribers that resume. That’s money they wouldn’t have seen if they only allowed cancellations.
The churn rate is typically 4%, although it tends to be higher in B2C companies, 5.7% vs. 3.6%, and payment declines – payments that don’t get through because the bank says no – is an average 6.5%. Depending on the reason for the decline, between one third and two thirds eventually get re-submitted and the transaction completed. Most of the declines stem from insufficient funds in the customer's account.
Roughly a fifth of companies accept at least one other currency in addition to the U.S. dollar and for those that do, the other currency generates about 20% of revenue, although the benefit is higher in the B2B sector. B2B sees a revenue bump of 22% while B2C sees 16%. This is probably because B2B transactions tend to involve more high-priced, custom deals that need to be resistant to currency value fluctuations, Recurly says.
