Subscriptions and streaming: Zuora on preventing customer churn after the pandemic spike

It’s no secret that streaming services experienced a massive surge during the early stages of Covid-19. The trend for subscription businesses more broadly in 2020 was growth and resilience: four out of five either continued to grow, or experienced limited negative impact due to the pandemic, according to data tracked and provided by subscriptions management company Zuora. But will this continue as consumers look to the future and consider their post-pandemic finances? 

To find out more, Zuora’s Daniel Hess, Head of Media and Entertainment Strategy, and Nick Cherrier, Senior Strategist – Subscribed Strategy Group at Zuora joined John Schlaefli, FIPP’s Chief Revenue Officer at the D2C Summit in June. As the pandemic moves into a different phase, they talked about the trends they’ve observed in subscriptions and customer retention – and ways to approach the problem of churn.

Watch the full video, including extra Q&A content, here:

Profitable growth now powered by subscriptions 

Cherrier began by describing how media has outperformed all other subscription industries throughout this recent period, experiencing the highest subscription growth rate between March and May 2020 before trending back towards baseline levels. 

“In the last couple of years publishers have kept growing in the subscription-specific space,” explained Cherrier. “And this holds even if publishers’ businesses at a wider level have contracted.”

The New York Times is the well-known poster child for digital subscription success, with digital subs now accounting for 77 per cent of its revenue. In the two years between 2019 Q1 and 2021 Q1, the paper’s subscription revenue grew by 22 per cent. “Profitable growth is now being powered by subscriptions,” said Cherrier.

In contrast, ad revenue has gone down and it’s going ever more digital, with the paper shifting from 40 per cent of its advertising revenue being digital in 2019 Q1, to 61 per cent in 2021 Q1. “But this is due to print’s decline, not because digital advertising is growing massively,” Cherrier explained. 

The good news is that churn has been reducing … because OTT video streaming services are moving away from strategies of acquisition and more towards customer retention.

Nick Cherrier

Video streaming acceleration

According to data from Zuora’s Subscription Economy Index Report, published in March 2021, the average US consumer had about 12 paid media and entertainment subscriptions prior to the onset of Covid-19. 

Skipping to the present day, 23 per cent of those same consumers have added at least one paid video streaming service to their mix, whether that’s Disney+, Hulu, Netflix, or another service. Sports subscription services have grown too, for example, like Australia-based Kayo which recently reached one million subscribers.

“The good news is that churn has been reducing,” said Cherrier. “And that’s because we’re noticing that OTT video streaming services are moving away from strategies of acquisition – new launches and free trials – and more towards customer retention. This market is now highly competitive, and a certain maturity level has been reached.”

It’s about the customer, not the product 

For Cherrier and the Zuora team, those that will succeed in this busy marketplace will be the services that put the customer first. 

“The focus should not be on using data to target audiences with ads, but to be constantly improving the subscriber experience,” said Cherrier. “Audience targeting is important, but we should be thinking about how to use that data differently to make the experience better.”

In this emerging landscape, Cherrier anticipates that the key measure of success will be net retention rate – or judging how companies have improved in monetising existing customers specifically.

Not all churn is created equal 

Churn is a particular concern for many subscription businesses finding their way after the initial pandemic spike. The standard average monthly customer churn rate is about six per cent, while the rate for the best-performing companies is about two per cent, according to Cherrier.

In terms of average monthly sign-ups, those numbers are eight per cent for more typical companies, and 18 per cent for “all star” companies that are high-performing and doing everything right.

Whether churn is involuntary or voluntary, and whether it could be avoided, are things that Cherrier recommends thinking about from . “Not all churn is equal, and therefore it should not be treated the same,” he said. 

“There are payment failures, for instance, and lots of reasons why that might happen. Our all stars are very adept at preventing this from happening. The all stars also provide more agility and flexibility, generally by providing a platform where subscribers can log in and make changes to their individual subscription themselves. All star companies are five times more nimble at this than standard companies. 

“These benchmarks are all linked to smoothness of the process, and successful media companies know this. Flexibility is probably the biggest way to retain subscribers – it gives the customer what they want.” 


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