Navigating the Retention Landscape: Key Takeaways from Chargebee Subscription Data

Chargebee is leading the charge in revolutionizing subscription management, arming you with a powerful suite tailored to create a seamless subscriber experience. With Chargebee Retention, we’re not just reactive; we’re proactive. By ramping up subscriber engagement, automating financial processes, and boosting revenue retention, we empower you to tackle churn head-on.

“Chargebee Retention is not just a reactive tool—it’s a strategic partner empowering you to achieve sustainable growth and operational excellence. By transforming engagement at every touchpoint of the customer lifecycle, Chargebee ensures that you can efficiently respond to market needs and maintain a competitive edge.”

– Adam Lifshitz, Condé Nast

Now, with the exciting debut of Retention AI, we’re taking personalization to the next level. Imagine unlocking AI-generated offers that instantly captivate subscribers, fostering deeper loyalty and engagement in seconds. It’s not just about numbers; it’s about building genuine connections that keep subscribers coming back for more.

Insights from the 2024 State of Subscription and Revenue Growth Report

When it comes to driving efficient growth this year, retention is top of mind for many subscription leaders. In fact, in Chargebee’s 2024 State of Subscriptions and Revenue Growth Report, 86% of subscription leaders agree that customer retention is a higher or equal priority than acquisition. Based on this finding, we expect to see increased investments in existing customers to maximize revenue per user.

Let’s take a look at some of the other key findings from the report:

Revenue growth: 96% of subscription leaders anticipate revenue to grow in 2024 which is a 20 percentage point increase from 75% in 2023. This uptick reflects a measured optimism in the industry with a keen focus on efficient growth.

Churn rates: 60% expect an increase in churn rates, showing an improvement from 64% in 2023. 30% expect churn to decrease, and 10% expect it to remain flat.

Pricing adjustments: 73% of leaders plan to increase prices this year, emphasizing maximizing revenue per user.

Read this recent post about pricing optimization strategies for tips. 

Staying competitive:

To maintain a competitive edge, 35% of SaaS companies are strengthening customer relationships and community-building efforts, emphasizing a consumer-centric user experience. 23% are focusing on innovation, and 22% on market research to navigate the increasingly competitive landscape.

Subscription leaders’ top priorities

Improve customer retention: 47% of leaders are prioritizing customer retention more than ever, using technology to creatively improve subscriber loyalty and revenue.

Improve the customer experience: 43% are focused on converting one-time purchases into subscribers to maximize CLTV (customer lifetime value).

Subscriber growth focus:

Retention remains a top priority, underscored by its role in sustainable growth strategies.

• B2C companies are leveraging churn deflection solutions to see immediate results, particularly through dynamic pricing and lifecycle management that enhances subscriber LTV
• Expansion and renewals are also emphasized, reflecting ongoing efforts to broaden and maintain customer bases

Key concerns for the subscription industry in 2024

Key challenges include staying up-to-date with technology (14%), maintaining growth trajectories (11%), and boosting profitability (11%). Chargebee’s solutions are strategically designed to support these areas through advanced tech and adaptive strategies.

Customer retention strategies

Leaders are actively improving customer engagement by adopting loyalty programs (31%), implementing pauses, discounts, and other incentives (29%) to prevent cancellations, and investing in automation and tools (27%) to improve the online customer experience. These strategies include testing a range of discount offers at the point of cancellation to engage at-risk customers proactively.

By evaluating the impact of these save offers, you gain insights that help extend retention strategies throughout the entire customer lifecycle to cover end-to-end use cases beyond just the point of cancellation.

Read more about this in the Observations from Chargebee Retention’s benchmark data section below. 

Observations from Chargebee Retention’s benchmark data

The Chargebee Retention Benchmarks are our first in-product view of the proprietary churn and deflection benchmarking we have built over the last several years. These benchmarks allow you to see how your rates relate to the low, median, and high for each of the following four metrics.

• Deflect rate
• Save rate
• Active deflect rate
• Passive deflect rate

Our latest benchmarks uncover key insights into consumer behavior and market dynamics by highlighting the primary reasons for subscription cancellations:

Pricing (31%): The leading cause of cancellations is pricing, significantly affected by rising global inflation. This sensitivity has pushed the percentage from the usual 20% to an unusual high of 31%, indicating a heightened concern over costs among consumers and businesses.

Not enough time (16%): This reason often reflects a perceived lack of value, suggesting that the product or service needs to be more compelling to justify the time investment from users.

Missing features (15%): A substantial number of cancellations occur because the product lacks specific features users find essential, pointing to potential areas for product enhancement.

No longer needed (15%): Many users feel that the service or product no longer aligns with their needs or circumstances.

Integration issues (8%): Challenges in integrating the product with other tools or systems also lead to cancellations, though it affects a smaller segment of the user base.

Understanding why customers cancel subscriptions allows you to tailor your retention strategies more effectively. By aligning save offers such as discounts, extensions, and plan changes directly with these identified cancellation triggers, businesses can proactively address concerns and significantly enhance the chances of retaining their subscribers. Here are the highest-performing save offers from the last quarter: 

Discounts: The most effective save offer overall, with an acceptance rate of 17%. In the B2C sectors, this type of offer is even more successful, achieving an acceptance rate of 21%.

Gifts and credits: Gift and credit offers also perform well, garnering an acceptance rate of 13%. This suggests that value-added options appeal to customers looking for immediate tangible benefits.

Extensions are particularly effective in the SaaS domain, where free trials are prevalent. Their high acceptance rate of 14% indicates that additional time can drive users over a critical decision point to retain.

Plan changes: These are most effective in the SaaS sector, underscoring the need for flexible service offerings.

Pauses: Popular in the B2C sector with an acceptance rate of 15%, showing that customers value flexibility when it comes to their subscriptions.

Ready to retain more subscribers?

Explore the proactive power of Chargebee Retention and how it can transform your business.

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Methodology: Benchmarks compiled leveraging cancellation data from Q12024 with outliers removed.