Subscription Box Answers

What Subbly's Churn Report Reveals About Subscription Boxes

• Liam Brennan

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Subbly recently released a fascinating churn insights report, revealing key data from subscription box businesses across their platform for 2024. In this episode, I dive into the most important takeaways and share my thoughts on what these insights mean for subscription box owners.

Check out the full report here: Subbly's Churn Data Report

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Speaker 1:

Welcome to Subscription Box Answers with your host, liam Brennan. You're no rubbish, no crap. Straight to the point podcast with real, actionable tips, real strategies and insights from the industry which will help you start and grow your own successful subscription box business. You ask the questions, you ask the questions, you ask the questions. Liam gives the answers. It's as simple as that.

Speaker 2:

Welcome back to a brand new episode of Subscription Box Answers. As always, I hope you're having a really good day and I hope 2025 has gone well for your business so far. Now, on today's episode, we're back discussing churn. In the last few days, subli shared a really interesting report with me. They're churn insights for 2024 across their entire platform. Now, we all know Subli is a pretty big subscription box platform. There are so many different niches using this platform and so many different kinds of subscription first businesses. Now, what they've done is they've compiled a really detailed report about churn rates across everything. So if you have a subscription box business or any kind of subscription business, you're going to find this information really interesting. Now, it's a really detailed report with loads of really detailed graphs. So I'm not going to cover the entire thing in this episode, but what I will do is link to it below so you can go over and have a read yourself. But on today's episode, I just want to cover a few things I found interesting from this report and share my thoughts. So let's jump into it.

Speaker 2:

Churn is obviously a big part of growth. If you want to grow any kind of subscription box business, you need to take your churn and retention really seriously. But this is especially important going into Q1 of each year. I've covered this previously, but this is because so many people in the subscription box industry do well during Q4. Consumers they come out, they spend more money. It's a great time to grow your business, but then when we get into January, things can change for some niches because a lot of consumers overextend themselves at Christmas. They spend a lot of money. Then they come into January and they're like new year, new me, I need to sort out my finances. I'm going to cancel all my subscriptions. So yeah, if you want to build a really good subscription business, you need to have retention mechanisms in play, especially around this time of year. But anyway, let's jump into it. So the first thing I wanted to share is which I found really interesting. The first thing I wanted to share is which I found really interesting.

Speaker 2:

The median churn rate across all merchants and verticals and models on the platform was 7.44%. So that's really good. That's really good to see. If you have 7.44% churn, it means you're keeping people signed up for a very long time. It means, on average, you're keeping people signed up for around 13 to 14 months, okay, which is really really good Around 13 and a half months, I think, think now for a direct-to-consumer business. This is excellent. Obviously we're not running SaaS companies like email providers or subscription platforms or metric software or mission critical things where businesses need to use them to actually operate. If you're running something like that, you can keep people signed up for way longer. But with a direct-to-consumer business, you will have higher churn rates, but you should also be able to sign people up a lot quicker and cheaply compared to a lot of SaaS companies. But 7.44 is really good to see.

Speaker 2:

Now what they've done is they've broken down the average churn rate dependent on the country, and I'm going to go through this right. So Netherlands has the highest churn rate at 16.2%, then it's Hong Kong at 16.1%, then it's France at 15.4%, then Australia 14.4%. Now Australia is doing quite well with subscription boxes at the minute. The market has really grown over there in the last few years. Then the Philippines 14.3%, then Ireland my country at 14.2%, then the United States at 11.8%, then Germany at 10.9%, then the UK at 10.5% that's where we have the majority of our subscribers in BusterBox Then Canada 8.9%, then Denmark 8.3 percent and then New Zealand at 5.2 percent. So you can see that this varies a lot depending where the customers are based and a lot of this depends on cultural factors, customer behaviors. The average person earns in each of these countries. I know if you're targeting consumers with a lower average salary, it can be harder to get them to sign up to a subscription and it can be harder to keep them because they simply don't have as much disposable income. Also, the fact the Netherlands has the highest churn may be down to how they process payments over there. I know it's a bit different compared to other countries and I remember hearing about it um a few years ago from somebody funny enough with a dog subscription box and I was thinking in the back of my head that is crazy. I don't know how you can have a good churn rate if that's how you process payments. The next point I wanted to jump into is churn by stores, product category. So I'm going to read out what they have here and then I'll share my thoughts.

Speaker 2:

Our subscription verticals reveal interesting patterns in customer retention. Arts and DIY leads with the lowest churn rate, reflecting how customers who invest time and resources in creative pursuits tend to stay longer. Pet-related subscriptions follow closely behind, driven by the strong emotional bonds between pet owners and their animals. While, surprisingly, we found fashion and health-related subscriptions generally show higher churn rates, fashion shows a broader range of churn rates and a higher peak, including more volatile consumer behavior in this category. However, since the median churn rate remains normal, this pattern may simply reflect that purchasing behaviors around fashion are more complex. For instance, customers want to try to close on and returns are more common. Health-related subscriptions generally show higher churn rates compared to food and beverage, despite their related nature. This suggests consumers view health products as more optional than food. However, the relationships are complex, as health-conscious consumers often consider food and nutrition integral to their health routine. So I'm not surprised about arts and DIY having the lowest churn rates.

Speaker 2:

They're very passionate consumers and the product is actually being used each month. It has utility. They're completing projects, it's not just a load of random products being dumped in a box. Pet related subscriptions fall on closely behind in second Doesn't surprise me either, because dogs and pets in general are great customers. They never give out about anything. They're always happy. You can literally give a dog anything and the dog will be happy. The owner, on the other hand, may not be happy for some reason, but if the box makes the dog happy overall and the owner isn't happy about a certain product or something, they're probably going to let it slide and they're going to probably pay for a bit longer. With fashion it's completely different, completely different. If there's something wrong with some of the products they don't fit, they're the wrong style, they don't suit the person, they don't like them for whatever, they'll cancel straight away. So I'm definitely not surprised about that.

Speaker 2:

Now the health related subscriptions show higher churn rates compared to food and beverage subscriptions. That's interesting, really interesting, because I know for a fact that food and beverage, especially meal delivery kits like HelloFresh, blue Apron and all the other ones that have popped up in the last few years, I know in general mail delivery kits have a pretty high churn rate and if you look into any of the data that's shared by HelloFresh or Blue Apron, that will back up what I'm saying. It's a known problem with mail delivery kits. The churn rate can be high. Customers have very, very little loyalty. What happens is everybody has really good offers on the first few boxes. Customers will sign up for the offers and then they'll jump between the mail delivery services. So it can be quite a challenging business, not saying impossible, but definitely a challenging business.

Speaker 2:

The next point I wanted to bring up now I actually found this pretty surprising and interesting, so I wanted to share it the relationship between churn and average order value. So conventional wisdom suggests that higher price subscriptions would face greater customer churn, as people are typically more cautious about maintaining expensive commitments. However, subli's data reveals a fascinating insight there is absolutely no correlation between average order value and churn rates. This means that customers are just as likely to maintain their subscription whether they're paying $10 or $100 per month. Really interesting stuff. Now in BusterBox we have seen a bit different compared to that. Our price does influence our churn rate. When we have a higher price, even by a few pounds, that can make a big difference to our churn rate, because customers don't feel like they're getting value for what's in the box. Like they're getting value for what's in the box, whereas if it's a lower price, it feels good value, it's under the threshold that they're willing to pay for a monthly service and they stay signed up a lot longer. So I say this probably means in general and there can be different niches and different locations where the price does have a big impact on the churn.

Speaker 2:

Now, the last thing I wanted to share with you is churn by merchant size, with different subscription models. Larger businesses tend to have significantly lower churn. Among them, memberships boast the lowest churn rates, whereas subscription boxes demonstrate the highest churn among larger businesses. This is obviously because to get big, you have to have some kind of product market fit. You will find it nearly impossible to scale up if you don't have any kind of product market fit and there isn't any real demand for your subscription box. If you have product market fit, you're obviously going to keep people longer and it makes it easier to scale up. So yeah, it rolls hand in hand.

Speaker 2:

Now, I hope you found this episode interesting. There's a lot more information here and, like I said, I'm going to link to this report in the show notes head over. Take a read of it and you'll definitely learn something from it. Now we'll be back next week at the exact same time and, as always, if you have a question want answered on the show, head over to subscriptionboxresourcescom, join the free facebook group and post your question there. And, just as a reminder, subscription box experts opens on the 11th of february. I'm only opening it to 50 businesses. That's it. There's already a lot of people on the wait list. If you're interested, head over to subscriptionboxexpertscom right now and join the wait list and I'll help you make 2025 the best year yet in your subscription box. Have a great day and chat to you next week.