Why the Best Subscription Brands Make It Easy to Leave

0:00When you allow someone to pause, you can still interact with that subscriber. You can remind them of the value that you provided to them. And as you mentioned, a lot of times that subscriber is going to come back. Maybe there was a seasonal reason why they walked away. Maybe it was a point in time in their life that they wanted to try something new. And a lot of times, as you mentioned, three out of four times those customers come back. and allowing a pause option kind of keeps stake in the game for that consumer.

0:39Welcome to Retail Remix. I'm Kate Robertson, Editor-in-Chief at Retail Touchpoints. Subscription acquisition rates have dropped 51 % since 2019, sliding from 6.23 % to just over 3%. So is the market cooling off or simply growing up? In this episode, I sit down with Rachel Sheriff, Chief Customer Officer at Recurly, a company that works with Nuuly, Twitch, NerdWallet, and Fortune. We dig into the real story behind subscription fatigue, what earns a subscription a permanent spot in your budget, and why the pause button is taking off, with adoption up 150 % year over year. Rachel also breaks down what's driving fashion rental from Newey's explosive growth to GLP-1 users refreshing their wardrobes.

1:30Plus, we'll talk about what retailers can take from all of it. Let's get into it.

1:37Thanks so much for joining us, Rachel. Thank you for having me. I'm excited to chat with you. Yeah, let's get right into it. Vercurly put out this really great report called the 2026 State of Subscriptions E-Commerce Report. And one of the glaring data points in the report is that subscription acquisition rates have dropped 51 % since 2019 from 6.23 % to just over 3%. From where you sit, what's actually happening at the top of the funnel? And does this signal a market that's cooling off? Yes, so we definitely have seen a shift, especially among our data, as you mentioned in our report. And I'm lucky that I spend a lot of time with our merchants and get to hear from them directly what they're focused on and what's going on in the market.

2:27And one thing that we've seen is probably around five years ago, the focus for subscription businesses and merchants was on acquiring as many subscribers as possible. And what we're seeing today as the market has shifted a little bit, I think there's a little bit more saturation of subscription options, is that the bigger challenge isn't acquisition. It's really keeping the subscribers that you already have. And what we're seeing is that consumers just have a lot more options than ever before. Think about yourself, me personally. I have subscriptions from everything from beauty to gyms to TV and content.

3:04I think because so many people have so many choices, they're being more deliberate about how they're going to spend their money and which services they're going to keep and which ones are really delivering enough value to earn a place on their monthly budget. And so I don't think that people are necessarily walking away from subscriptions. They're just being more intentional around which ones are we going to pay for month over month and making sure that they're getting value out of those subscriptions. And so we're seeing our merchants spend more money on things like customer experience, on onboarding, on giving a really personal experience with their, whether it's content, whether it's services, and really putting much more focus on retaining the subscribers they have and growing those subscribers than acquiring a new one.

3:55We hear, though, the term subscription fatigue all the time in the media, but you have sort of a more nuanced take from what I understand. More than half of consumers canceled something in the past year, usually because they weren't using it enough, yet plenty of memberships thrive. Is fatigue the wrong word then? Should we be calling it something else? I think fatigue might be oversimplifying it a bit. as you mentioned, we've seen that about 52 % of our consumers have canceled a subscription in the past 12 months. And you're right. It's because most often they weren't using it. I think a lot of that has to do with just the number of subscriptions that people have today.

4:36One thing I talk to our customers a lot about is the idea of a portfolio of subscriptions. And again, it's, you know, subscriptions that help you maybe manage your finances. It's subscriptions that help you manage your home, your shopping, your health. And I think that consumers are realizing that you can't subscribe to everything and you can't use everything. And so they're just, again, being much more intentional. And they're looking again at where am I getting real value? Because I have a limited amount of time. I have a limited amount of budget. And I'm only going to subscribe to those things that are really helping me day in and day out with, you know, my needs, whether again, It's home, personal, finances, and they're walking away from the ones that aren't.

5:23But I do think that consumers are still very active in the subscription market. I think it's an area that consumers find that they get a lot of value. I just think that they're realizing that they can't subscribe to everything and they want to pay for things that are actually going to deliver value. One example is, you know, Amazon Prime. I don't think I could live without Amazon Prime. It's flourishing. And so there are a lot of types of subscriptions that are really still growing. And they're seeing a lot of growth from their existing customers. They figure out ways to cross sell other lines of business, other products.

5:59And so those programs are continuing to grow where others, again, that maybe aren't keeping up pace with delivering that really great customer experience are the ones that are probably going to lose a lot of their subscribers. Yeah, Prime is such an interesting example because I think you're right. I think a lot of us who use it don't even give it a second thought. Whereas, I mean, I'm less of that person, but my husband is very diligent about assessing our TV streaming subscriptions and is always like, do we need this one? Do we need this one? Where I tend to be a bit like, well, we might. Like, I don't know.

6:33So when you think about the subscription services that have really earned a place, a permanent spot in someone's budget, how are they doing that? What are they investing in that really creates that kind of loyalty? I think where we're seeing subscription businesses really stand out are the ones that are really providing the most flexibility. You know, I mentioned before that folks have a lot of different, I would call them portfolios of subscription. And where they use them and when they use them may change over time. And I think subscriptions that offer that flexibility, whether it's payment flexibility, whether it's pause flexibility, I think that providing that earns a lot of trust.

7:14I think a lot of consumers are looking for transparency on things like, how do I get charged? How do I cancel that? How do I maybe provide feedback? I think offering that type of flexibility and transparency earns consumer trust. And so I think that that's where they earn more of that permanent spot in a consumer's budget. Another trend I found really fascinating is the rise of the pause. Yes. pause adoption grew 150 % year over year. But three out of four people who hit pause come back within months. I just did this recently with a personal training app I use called TrainWell. I was like, I wonder, this sounds terrible, but I was like, I wonder if AI could do a better job or just as good a job at creating personalized training regimes for me.

8:06And I didn't even go through with the pause. Like when the date came up, I just ended up renewing because I realized I don't have time to be messing with this. And I do really value this service. Are we seeing the industry replace the hard cancel with something softer? What does that mean? Does that create an opportunity for a brand to kind of check in with the customer or do something there when they hit pause? So I am a lover of the pause option, both as a consumer myself, but also as a tactic that we talk a lot to our merchants about. And I'll tell you why. You know, for a long time, I think that the idea of letting a customer walk away from a subscription made businesses really nervous.

8:52They didn't want to have any possibility that a customer would stop paying or permanently move away. But I think what they're finding is, just like you mentioned, when you allow someone to pause, you can still interact with that subscriber. You can remind them of the value that you provided to them. And as you mentioned, a lot of times that subscriber is going to come back. Maybe there was a seasonal reason why they walked away. Maybe it was a point in time in their life that they wanted to try something new. And a lot of times, as you mentioned, three out of four times, those customers come back.

9:30And allowing a pause option kind of keeps stake in the game for that consumer. Think about things from their credit card information or their billing information is still embedded. You still have the ability to interact with that customer. Again, to continue to provide value, to remind them, hey, we're still here. We want you back. I use pause all the time. I actually used it recently for a fitness app as well. We have an app here called ClassPass, and it allows you to go and try different fitness studios. And in the spring, I tend to travel a lot for work. And so I don't want to pay for something I'm not able to use.

10:08And ClassPass does a really nice job of, A, letting you cancel, but then also letting you take a break for a while and then come back when it's a better time for you. So I think that pause is a functionality that we're seeing a lot of our customers take advantage of. And I think, again, it shows, A, that flexibility that a lot of consumers actually expect now in a subscription business. And it also allows that transparency to say, hey, you know, we're going to let you walk away. We recognize that there may be a time that you need to take a break. But it also opens the door to that conversation with the customer that you can continue to have.

10:46So I think it is a really great thing for anyone who's thinking about entering the subscription business or thinking about how do I keep, you know, keep my consumers on my platform. I think it's a great thing for them to utilize. Let's talk about fashion rental. I know Nuuly, which is one of your clients under the UO umbrella, has seen explosive growth while others are kind of going through a restructure or a reset. what is Nuuly doing well or differently that you think is really resonating with subscribers? Well, I could not be happier to talk about one of our customers than Nuuly because I am a subscriber of Nuuly.

11:27I'm a big fan of Nuuly. So I can sing its praises with a lot of experience playing around with their product and with their platform. So I think what's making them so successful is they're actually really meeting consumers where they are today. Meaning I think people are being a lot more intentional about discretionary spending. I think that myself included, I look at wanting to maybe refresh my wardrobe, but not having to spend a whole lot of money for it. Or maybe I have a big event coming and I want something very special for that event, but I don't want to buy a dress or an outfit that I'm going to wear one time.

12:05And Nuuly makes it really easy to do that. And I think they really understand the broad swath of, you know, fashion and what some people like and body types and ages. And they've really brought a subscription model that meets a lot of needs for a lot of different women of all ages, of all sizes, of all tastes. And so I think really understanding kind of how consumers think about fashion, how consumers shop, how they want to spend money is what's making them really successful. And then on the platform side, they're doing all of the things that I talked about and we talked about earlier. They're being very flexible about how you pay, how you think about the timeline of your subscription.

12:52For example, you pay monthly, but you can always return your clothes early and order a new bag earlier than the month ends and it'll refresh. And you just have a lot of opportunity to let the product and let the platform work with how you think about shopping and when you need something. And I just think they've done a really, really nice job with that flexibility, with that customer experience and with that transparency. Nice. You were saying you share a subscription with your teenage daughter. How old is your daughter and how do you do you both log in, have separate memberships? How does that work?

13:27See, we could we could do that. But no, my daughter. So I have a teenage daughter. Obviously, I am not a teenager. And what's interesting is that we find clothes that both of our fashion senses. And so we share a box. And so the way that it works is with Nuuly, you get an option of six items, but then you can actually add to that and pay a little bit more. And so I let her pick out a couple of things and I pick out a couple of things and we share the subscription and they make it really, really easy to do that. Another thing that I love that they do is it gives you the opportunity to try something new and then you can buy it.

14:04And if it's an item that has been rented before, then there's a really nice discount on it. But a lot of times my daughter, who's very fashion forward as a teenager, she gets brand new items that still have tags on them. She gets to wear them for a month. And if it's something that she's earned her own money for, then she can choose to buy it. And so, again, I think that's a really great lesson on how to be flexible, how to meet the broad needs of a subscriber base. And it's actually a subscription that we have a lot of fun together as mother and daughter. And, you know, we look forward to that time each month of shopping and looking at what we both want.

14:40And then when the box comes, and so it actually brings a lot of, you know, surprise and delight for their customers as well. That's really fun. So you mentioned affordability might be driving subscriptions or even just wanting to test drive something before you buy it. Are there certain trends you've noticed among fashion subscribers, you know, that's really driving subscriptions? Like GLP-1 consumers, I think, is a big one we hear about a lot in retail. Uptake is remarkably rapid, we'll say. Tell me more about that and other trends that you've been noticing. Yes. Well, we've talked a lot about flexibility.

15:16So I think everybody hears that flexibility is really important. Think about, again, like the GLP-1s as a use case for somebody who their needs and their sizes and their tastes may change over time as they reap the rewards of, you know, losing weight and potentially changing, you know, the things that they typically would wear. But aside from flexibility, there are a lot more things that we're seeing as kind of table stakes for fashion subscription. So things like affordability, a lot of folks don't want to spend a lot of money on something they may wear once. Or maybe they want to try something new, try a new sense of fashion, and they don't want to commit to it for a big ticket item.

15:56And so I think affordability is really opening the door for fashion subscriptions. Nuuly, for example, has a really nice mix of lower end fashion items. They also have some designer brands in there as well. And it really lets you try before you buy and really get to enjoy maybe wearing something you typically wouldn't be able to afford. And so I think affordability is a really big driver, especially in fashion subscriptions. Sustainability is another factor. I think that many consumers want to enjoy trending brands and styles, but they're looking for a more sustainable way to enjoy fashion other than always having to buy new things.

16:35A big word, you know, probably 15 years ago in fashion was the idea of fast fashion. And really what that meant is things that are in style one season and not the next. And I think that the sustainability of a fashion subscription model allows you to really participate in fast fashion. Maybe wear something that's very trendy and on trend, but then you're not stuck with it and you're not wasting money. And I think that renting also makes a lot of sense for occasion wear. So I remember not too long ago, but maybe it was longer than I care to admit, but there was a season in my life where I was attending a ton of weddings.

17:15and wedding season can be very expensive for someone who's attending, whether it's a black tie wedding or a cocktail wedding. And so I think that renting makes it very affordable, sustainable to participate in occasion wear and focus on things that, again, maybe you're going to buy for a season of your life, but you don't want to invest all of your spending money on cocktail dresses and wedding dresses. So I think that it's a really, really nice option for folks that are kind of a season of life that may lean toward a different, you know, sense of fashion or things that they typically don't want to pay for long term.

17:51Right. So I could try the barrel pants trend maybe. Yes. I tried them and they're not for me, but they look really good on my teenage daughter. I was very, very curious about that. I'm still really curious how long that that style is going to last, but, you know, my daughter tends to love it. Nice. So do you see the subscription model growing among traditional retailers? Have you noticed anyone adopting subscriptions, you know, over the last six months or so that are kind of worth highlighting here? Yeah, I think we see a lot of retailers experimenting with subscription model is maybe the way that I would put it.

18:32And look, you know, not everybody can rent out clothes. It's not only for fashion retailers. We see retailers dipping their toes in things like events or VIP. Maybe it's a early access to something. And so I think it's anything where you can, hey, have a little bit of predictable revenue. But I think a lot of subscription in retail is actually more targeted toward let's give our consumers something special, something on top of what we offer day to day in the store. And maybe again, maybe it leads to more loyalty. Maybe it does lead to more spending in the store. But I do see a lot of experimentation from traditional retailers.

19:19One of the things that we see a lot at Recurly, and it's actually an area that we do really nicely with, is the mix of a digital plus physical good subscription. subscription so think about something a physical good that you would sell at a store maybe it's electronics it could be something like a appliance but you have some sort of digital program that wraps on top of that so you buy the appliance you may not buy it over and over again but what you could be buying over and over again in the subscription model is the analytics or the warranty or you know the digital exercise video that goes with your treadmill and so we see a lot of that experimentation too.

19:59And so it's an exciting time. It's really an exciting time to be in this business because I think that everyone's looking at, A, how do we drive more predictable revenue? But then more importantly, like how do we really deliver an amazing customer experience? So we develop a long-term relationship with our customers and our consumers and we can keep them around and they kind of grow as we grow and as we change our business model. And I think that that's one of the benefits subscriptions bring to their customers. But you have to be careful because as we talked about earlier, there's a lot of subscriptions in the market today and consumers are being a lot more intentional about what they're going to continue to pay for.

20:39And so really focusing on delivering value, really focusing on the flexibility that you can offer to your customers. And then finally, just that customer experience. You have to differentiate yourself from just the multitude of subscriptions out there. And I think that that's where you're going to see longevity as a business. And we should talk a little bit about Recurly itself. What have you developed as far as features go that are really enabling these businesses to succeed that you are proud of and want to highlight? Yes. So a lot of what we've developed recently has been very centered on helping to improve retention.

21:21Again, the number one thing I talk to and our customer success managers talk to our merchants about is how do we prevent customer churn? I think about that. Recurly at the end of the day is a subscription business. And my number one focus is retention. And so a lot of the features and functionality that we're really digging into are things that help improve that. And so things like, obviously, you know, we talked a lot about the pause capability. We actually have some functionality through a product that we call Engage that is very, very focused on customer experience. and it does everything from helping a customer onboard to your subscription product, whether it's learning how to navigate through it, maybe it's learning how to set up your backend financial system, or it's really about how do we make sure that the customer onboards into this platform so they get the most use out of it, to reminding customers who have canceled to come back.

22:21So it's a really like customer experience tool that allows the business to maintain a relationship and drive further engagement with our products. And so we're really excited about that. And then we're also really focused on enhancing our subscriber insights. It's really important that our merchants know how their subscribers interact with their products, with their platform, who different cohorts of customers are so they can think about offers. They can think about additional products, R &D. So really developing great analytics and great insights so that our customers can continue to improve their customer experience and just know more and more about who their customers are so they can really interact with them in a very personalized and customized way.

23:07So really everything focused, not everything, but a lot of things focused on retention is what you'll see coming out of Recurly today. Great. Well, we will leave it there. Thank you so much, Rachel, for joining us on Retail Remix. Yes. It was great to talk with you. thanks for joining us for another episode of retail remix be sure to subscribe so you don't miss a future episode you can find us on spotify apple podcasts youtube or your favorite podcast app until next time keep mixing it up