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BizReport : Ecommerce archives : July 07, 2016

Report: B2C winning the subscription race

For most subscription services, B2C is leading B2B buyers. That's the takeaway from new data out from Recurly; researchers studied more than 25 million recurring transactions in 2015 and found most (90%) of recurring payments for physical goods are in the B2C category.

by Kristina Knight

In the digital space, about one-quarter (25%) of recurring payments originate with B2B businesses; many of these are for SaaS and cloud platforms.

"Companies of all sizes, from start-ups to global businesses, are turning to the subscription model to build healthy and loyal relationships with their customers over long periods of time," said Dan Burkhart, CEO of Recurly. "The metrics identified in our analysis provide guidance for product, promotions, and operations to help subscription businesses better understand how to maximize customer loyalty, leading to increased growth rates and revenue."

Other interesting findings from the report include:

• Churn/attrition rates average 9.9%, but decreased steadily from Q1 through Q4
• 12% of transactions failed each quarter (average), edging slightly higher between Q1 and Q4
• About 11% of the revenue from failed transactions was recovered over time

"Each billing cycle offers an opportunity to create and enforce customer loyalty by reinforcing value," Burkhart added. "Retention is vital to the success of subscription-based companies, creating economic loyalty and granting companies predictable revenue streams. Understanding and managing the metrics we have identified in our report, especially churn, will help businesses form closer relationships with their customers and deliver predictable revenue."

Tags: ecommerce, ecommerce trends, Recurly, subscription service, subscription service trends

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