Last week in Dallas, the Subscription Trade Association (SUBTA) put on their annual SubSummit. With the subscription commerce economy on pace to surpass $1 trillion in revenue by 2027, this event has become the premier event for brands with recurring-revenue models.  

Now in its eighth year, the event brought together more than 500 attendees in 40-plus sessions, with a mix of established household names and challenger brands, to discuss how to scale, optimize and efficiently/effectively grow their businesses.  

Here are six key takeaways: 

1. Hypergrowth has slowed 

A major subtext of conversations at SubSummit was that VC funding for brands with recurring-revenue models has slowed. Cash just isn’t as freely available to create new customer bases as it was just a few short years ago. The new mindset is to preserve cash and “ride out the wave.” 

Gone are the days when customer acquisition trumped first-order economics. Brands need to be sure that the first order is a profitable one. And while we’ve all heard that “retention is the new acquisition,” keeping the right (read: profitable) customers is critical to brand success. 

Our take: Marketers need to be more creative and specific about how they approach customer acquisition. There needs to be a North Star strategy informed by data — and a clear pathway to get there.  

2. Testing is expensive, but critical! 

In a session titled “Growth & Profitability in a New Era of Customer Acquisition,” Josh Marehbian, CFO of subscription lifestyle brand FabFitFun, emphasized how important testing is. And he spoke about what an amazing channel influencer marketing was for FabFitFun in the beginning, but the oversaturated market has had an impact and they’ve pulled back. 

Our take: Marketers need to understand the investment relative to risk-reward, and that testing is the only way to achieve the KPIs we’re optimizing. The tools are available to have line-of-sight to incremental movements, and marketers must take advantage of them.

Testing must include all components of the UX — from the way you market to prospects, to the buy buttons on your website, to the value-adds for loyal customers. But regardless, you should always be testing to determine optimal approaches to maximize your marketing dollars. 

3. It’s no longer mobile-first… It’s AI-first 

In a session titled “Generative AI: A Deeper Dive Into AI and How to Leverage It,” Octane AI Co-founder and President Ben Parr talked about how the last 10 or so years have been “mobile-first” — but now it’s “AI-first.” 

Generative AI’s ability to transform the workflow for monotonous standard activities and processes and integrate them seamlessly within our lives is changing everything. For example, Parr talked about how he’s using Zapier in combination with GPT-4 so that when a meeting is added to his calendar, there is automatically research done on the individual(s) and company(s) joining the call. 

Some of the specific AI technologies Parr referenced were GPT-4, LaMDA, PaLM, Midjourney, Stable Diffusion, LLaMA and Anthropic. The best resource Parr left us with: 

Our take: Generative AI gets to the first draft of everything faster. It allows you to produce more and do it more quickly. All this just six months in (it’s hard to believe the first version of ChatGPT was only launched last November). And AI will always be smarter tomorrow than it is today.  

4. Personalization can and should happen in stages 

We’ve all seen studies citing how consumers want a more “personalized” experience as well as plenty of stats about how personalization increases sales/conversions. But in a session titled “Acquisition in the Game of Retention: Playing the Game in Easy Mode,” Coterie Head of Growth Ankur Goyal talked about how personalization doesn’t need to be that personal at the early stages (regarding growth and specific to funnel). Simplicity can be a theme. And testing to tipping points of incrementality is suggested.

Our take: Marketers need a plan re: how quick and granular they need to go in trying to understand customers. The key to success is to put the customer first and to develop a relationship with those customers through personalized experiences.  

5. Serial churn is a real thing 

In a session titled “Streaming’s Next Big Need: A Case for Bundling and Aggregators,” EshapTV Founder Evan Shapiro dropped a thought-provoking statement: “Churn is the new channel-changing.” Throughout SubSummit, leaders of multiple brands spoke about early failures in their businesses of not focusing enough on churning customers and too much on acquisition.

Our take: Retention and acquisition are equally important although there was a general lean by many attendees that given current economic conditions, focusing on your best customers now is more important than the unknowns around securing new ones.   

6. That said, the right retention is critical 

The bar keeps getting raised with customer expectations, and subscription commerce is a very competitive environment. So, it’s critical to hold onto the profitable customers. To successfully retain customers, brands must be able to identify which customers are worth keeping.  

Several SubSummit panelists recommended segmenting and understanding customers to identify those with real LTV (loyalists) and those that are serial churners (the short-timers). According to Pymnts CEO Karen Webster, 48% of your customer portfolio (the short-timers) are not worth retention. They only drive, on average, just 7% of your revenue. The loyalists, on the other hand, while just 30% of your customers, drive, on average, 79% of your revenue.   

Our take: Successful subscription brands develop meaningful relationships with their loyalists — while also focusing on converting as many customers in the middle of the bell curve to the loyalist category.