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May 30, 2025
How Can Subscription Brands Reduce Churn as Consumers Tighten Budgets?
While the latest consumer sentiment numbers for May — derived from University of Michigan data outlined by TipRanks — show at least a temporary halt in what has been a steady decline, the index still shows a fall of 24.5% year-over-year.
In short, the U.S. consumer is increasingly concerned about their finances and employment status and is therefore scrutinizing expenses more thoroughly than they might have in days past. That means monthly subscriptions, whether to services or to products, are often first to be cut.
That presents a problem for subscription brands.
Subscription Brands Offer Discounts, Deploy Personalized Messaging, and Use AI Tools To Reduce Churn
In conversations with businesses attending SubSummit — a subscription-focused retail and e-commerce conference that began in Dallas on May 28 — Modern Retail noted that a consistent theme throughout these discussions was the importance of customer retention.
The outlet quoted Joe Rohrlich, CEO of subscription management company Recurly, as saying that “retention is the new growth metric” in the segment.
“In a lot of ways, this is the whole promise of a subscription business anyway — that it’s bringing you into a longer-term, predictable revenue stream,” Rohrlich added.
Rohrlich pointed to the importance of the value proposition in reducing voluntary churn — that is, when customers no longer deem that $10, $15, $20, or more monthly cost to be worth it to them.
One way of mitigating that churn? John Roman, CEO of outdoor and survival gear mystery box subscription brand BattlBox, indicated that his company did so by offering exclusive discounts to active subscribers. Members gain access to the BattlVault, where they receive exclusive pricing on approximately 1,500 SKUs.
Reinforcing the value proposition is also key to language app Babbel’s retention strategy, according to Julie Hansen, chief revenue officer and U.S. CEO. Hansen stated that Babbel leaned heavily on motivational reminders, customized to match each subscriber’s data profile, to reduce voluntary churn. These reminders could take the form of hints to subscribers related to what they could learn in an upcoming lesson.
“We have the basic tenet that engagement will yield retention, and I think that’s right, but we’ve never before thought about [retention] as proactively as we are,” Hansen said, also mentioning that Babble is in the early stages of using AI to analyze data to better “understand when people are losing interest or losing motivation, and help to motivate them more.”
Meat and seafood delivery service ButcherBox also signaled a shift away from mass marketing, pivoting toward more personalized communication with subscribers.
“We’ve done a lot of work on transforming from what we used to call our ‘monolith behavior,’ which meant that we would send out every email to every single customer with the same exact offer at the same exact time,” the brand’s chief commercial officer, Reba Hatcher, said.
Hatcher was keen to mention ButcherBox’s commitment to deeper discounts and the creation of its loyalty program, Sizzle Society, as being instrumental in the fight against churn.
“For us, it’s about doubling down on the discounts we can give, the loyalty program we can build and the product offerings we have, and doing what we’ve always done but at hyper speed,” she said.
Discussion Questions
Are discounts the best way to entice subscribers to stay on board as a paying customer? Why or why not?
What other methods not mentioned might be considered to reduce voluntary churn?
Which subscription services or brands are doing the best job of retention, in your opinion? What strategies have they deployed to maximum effect? In contrast, which services or brands are performing poorly in this regard?
Poll
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Bradley Cooper
Associate VP, Technology, SASR Workforce Solutions
Michael Mollitor
Consultant, Michael Mollitor Consulting
Pamela Kaplan
Principal, PK Consulting
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Basically, by adding real value so that consumers do not want to cancel. Why does Amazon Prime have a relatively low churn rate? Because people use it all the time for delivery, they enjoy the content on Prime Video, and they get some extra benefits like discounted fuel and other perks. The cost is lower than the value to most consumers. That’s something all subscription services can learn from.
In my opinion, discounts are never the Long Term solution for earning a customer’s loyalty. Discounts are a short term solution that if abused, can make a brand look desperate and train the customer to depend on a sale. If a product/service is good, and the customer can feel the value as well as feel appreciated, this is how you keep a customer for life.
Amen. A wise and respected grocery researcher with thousands of reports in markets with stores of all sizes and types that discounts do not buy loyalty. They buy sales in the short-term. But it’s up to the marketing, product, and operations teams to earn customer loyalty.
Competing on price is a slippery slope, but doesn’t offer any unique differentiation. Convenience or surprise are the key ways subscription boxes can maintain a reason for being. A discount may provide a stay of execution, but these models will need a core strategy to stay relevant.
Consistently providing customers clear value and meaningful benefits while staying engaged with them on the customer journey is one of the best ways to keep paying subscribers. Very little of this effort has anything to do with additional discounts, as even those are valuable too. Besides Amazon, Costco and upscale small market store chain Erewhon are among the best at keeping subscribing customers onboard.
Ensuring the product or services of the subscription is delivering the value it promises, bundling products or services, or even partnering with other businesses. It is not necessarily the $10 or $15 per month cost – it is the cost of this x 10 or x 20. When multiplied across channels and aggregated – this can lead to several hundreds of dollars of costs per individual per month. The ones who retain the most value will be the last to be cut.
There is no blanked answer or solution in all cases. So, in that sense, I will go another direction.
The seamless user experience and personalized content recommendations provided by brands such as Netflix and Spotify result in high levels of retention.
Utilizing the right type of data and analytics, with the right timing, ensures that content is tailored to individual tastes, which keeps subscribers engaged. In addition, they regularly update their content libraries and release exclusive releases, creating a sense of value and novelty that encourages long-term loyalty.
I’d rather have something unique “for subscribers only” compared to a discount. That has certainly hooked me in the past with various subscriptions I’ve tried.
It’s all about value. If the value is intermittent, then loyalty does not exist. Between news services that get you for $6.00 a month and raise you to $39.99 (immediate opt out which results in an offer togo back to the earlier price) to streaming services that offer two weeks of worthwhile content a year (one month and out) it only makes sense to be selective in the duration/frequency of one’s subscription services.
Agree. Amazon tops for cross functionality, benefits (which can vary) to different members of the family, and entertainment (creating an emotion and/or family time connection to “Prime”). Likewise, pet service companies also hit multiple ‘family’ members.
Apparel or surprise box formats are the other end. They might discount & promo a lot, without decreasing churn. High discretionary/ Low constant-value service. Apparel has a tough time (sale, resale, rental) as the product is valued, more than the digital channel it was obtained through.
To put it briefly, the most successful subscription brands are following the same strategies as successful retailers have always used: paying attention to their customers, tailoring their offerings, and changing quickly. With the aid of contemporary tools, it’s a moment of simplicity. To answer the discussion questions, I would say this.
1.Are discounts the best way to entice subscribers to stay on board as a paying customer? Why or why not? Discounts aren’t the best long-term solution, but they can help retain subscribers in the short term, depending on your retail and merchandising experience. They run the risk of undervaluing the product and drawing in less devoted clients. Instead, concentrate on providing regular value, providing special offers or content, and fostering connections and a sense of community.
2.What other methods not mentioned might be considered to reduce voluntary churn?
Here are some additional successful churn-reduction strategies based on my experience:
Proactive engagement: Use data to identify at-risk subscribers and get in touch before problems arise.
Flexible options: Instead of canceling, let users pause or modify their plans.
User input: To enhance the experience, gather and act upon user input.
Loyalty incentives: To forge closer ties, offer praise, prizes, or recommendations.
Good onboarding: Reduce early drop-off by delivering value early.
3.Which subscription services or brands are doing the best job of retention, in your opinion? What strategies have they deployed to maximum effect? In contrast, which services or brands are performing poorly in this regard?
Strong value, personalization, and community are three strategies that top-performing subscription brands like Amazon Prime, Dollar Shave Club, and Peloton use to improve retention. These tactics complement my retail and merchandising skills. On the other hand, due to low engagement and a lack of differentiation, services like Blue Apron and certain streaming platforms suffer.
Offering flexibility (to change or skip orders), unique products, and special benefits are much better ways of retaining subscribers long-term than price discounts.
The brands that keep subscribers are the ones offering real value – personalized experiences, exclusive perks, and a reason to stick around. If the only tool in your kit is a discount, that’s a sign the core offering and experience aren’t holding up.