Study shows the payment experience has massive impact on revenue, building brand trust and growing customer lifetime value

SAN FRANCISCO, May 14, 2024 /PRNewswire/ — Recurly, a leader in subscription management and recurring billing solutions, today announced the release of a commissioned study conducted by Forrester Consulting on behalf of Recurly. Titled “The Payment Experience Is Critical To Subscriber Growth And Retention,” the study sounds the alarm on pervasive payment challenges flatlining consumer subscription growth, with a staggering 100% of surveyed businesses acknowledging the detrimental impact of failed payments.

“We know the moment of payment is emotionally charged, but it’s not about the payment itself,” says Lina Tonk, CMO of Recurly. “The most successful businesses know it’s about the consumer experience and the value being provided. Choosing a strategic and mature billing and payments partner is imperative to nurturing subscriber relationships and fortifying subscription growth.”

Payment challenges create adverse effects on customer relationships, brand perception and subscriber value. According to the Recurly study, issues with payments led to 61% of respondents reporting revenue loss, 53% observing damaged subscriber relationships, and 45% witnessing a decline in brand perception. Only a mere 7% had confidence in their capacity to deliver superior subscription billing experiences.

With 65% of companies conceding that payment failures decrease customer lifetime value, the study emphasises the need for sophisticated monetisation strategies and an enterprise-grade subscription management platform that prioritises flexibility and scalability to accelerate growth.

Key recommendations within the Recurly study include:

• Prioritising both acquisition and retention to facilitate growth in subscription businesses.
• Investing in the right technology platforms that drive efficient operations and leverage data for insights.
• Adopting advanced churn mitigation techniques to preserve customer relationships and brand value.

These recommendations were informed based on the responses of more than 160 people in senior management positions at US and UK direct-to-consumer companies that participated in the study. The study highlights that while a significant percentage of subscription businesses struggle to anticipate and react to subscriber demands, the industry is poised for explosive growth when there’s an intentional focus on the payment experience.

To tap into the tremendous opportunity for growth through strategic billing and payment management, access the full study.

In addition, Recurly’s study will be presented at a virtual event on May 20th at 10 PT | 1 ET | 6 GMT, titled The critical payment experience in consumer subscriptions: Transform billing and payments into your growth engine, where attendees will join Jonas Flodh, CPO at Recurly, Lina Tonk, CMO at Recurly, and guest speaker Lily Varon, Principal Analyst at Forrester, as they discuss how optimising billing and payments can help drive consumer subscription growth. For more information, visit the events page.

About Recurly

Thousands of innovative companies across digital media, streaming, publishing, SaaS, education, consumer goods, and professional services industries rely on Recurly to unlock transformational growth using subscriptions. Recurly’s all-in-one, integrated platform removes the complexities of automating subscription billing at scale by enabling teams to manage and optimise their subscriber lifecycles with ease. Category-defining companies including Sling, Twitch, BarkBox, FabFitFun, Paramount, Lucid, and Sprout Social have chosen Recurly to manage billions of dollars in recurring revenues, future-proof their recurring billing and revenue management, and recover billions of dollars in lost revenue due to churn. Founded in 2009, Recurly is based in San Francisco, with offices in Boulder and London. For more information, visit https://recurly.com.

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BEIJING, May 14, 2024 /PRNewswire/ — A report from People’s Daily: Since the Industrial Revolution in the 18th century, the continuous development of productivity and economic globalization has led to the accelerated flow of production factors worldwide.

As a result, the distribution of manufacturing capacity in different countries and regions has been constantly changing, forming a dynamic global pattern of production capacity.

This is an objective phenomenon determined by economic laws under market economy, which requires a science-based and rational understanding.

The global production landscape is a result of economic globalization. Under open market economy, an international division of labor has been formed due to the comparative advantages of countries. Through international trade, they share the benefits brought about by this division of labor and specialization. This is the inherent logic behind economic globalization and free trade.

For example, according to a report by the Semiconductor Industry Association of the United States, semiconductor companies headquartered in the United States reported total sales of $275 billion in 2022, accounting for 48 percent of the global market. In the $180.5 billion semiconductor market in China, American companies held a share of 53.4 percent.

Another example is Japanese carmaker Toyota. The company sold nearly 10.31 million vehicles worldwide in the 2023 fiscal year, and nearly 8.78 million were sold outside Japan.

This situation, where production capacity exceeds domestic market demand in a country, is not “overcapacity” as claimed. Instead, it is a natural phenomenon of international division of labor and specialization based on comparative advantages during the process of economic globalization. It is one of the manifestations of market mechanisms.

The global production landscape is a result of the law of value. In market competition, capacity with higher production efficiency can obtain higher profits by offering lower prices, thereby eliminating capacity with lower efficiency. In this process, the coexistence of efficient and inefficient capacity is not indicative of overcapacity, but rather a necessary stage for the law of value to take effect.

For instance, with technological advancements and the growing popularity of green development concepts, new energy vehicles are gradually replacing traditional fuel-powered cars.

According to the International Energy Agency’s “Global Electric Vehicle (EV) Outlook 2024” report, global EV sales reached nearly 14 million units in 2023, accounting for 18 percent of the total. It is projected that by 2030, 1/3 of cars running on Chinese roads will be electric, while the proportion in the United States and the European Union is expected to approach 1/5.

Given the global trend of new energy vehicle development, the supply-demand gap in the global new energy vehicle industry is widening, indicating that efficient capacity is not in surplus but rather insufficient.

Therefore, it is the market that should determine, in the global context, which industries have overcapacity and identify surplus capacity. Excluding competition under the pretext of “overcapacity” goes against the fundamental principles and rules of a market economy and fails to meet the requirements of the law of value. It will inevitably lead to monopolies, inefficiency, and stagnation, which are detrimental to the long-term development of any country.

The global production landscape is a result of economic laws and technological innovation. Regions with active innovation and rapid technological progress tend to have a greater variety of production capacities and faster capacity upgrades. Competition, mergers, and acquisitions among capacities with different technological levels and routes are inevitable in this process.

The rise of China’s new energy vehicle industry can be attributed to the overall innovation in energy drive systems such as batteries and motors, which is driven by green and low-carbon development.

This innovation has led to the concentration of high-quality global new energy capacities in China. Last year, over half of the Tesla vehicles delivered worldwide were produced by the company’s Shanghai Gigafactory. International companies such as Bosch, Magna, and BASF have also expanded their research and development investments in the Chinese market.

The overall innovation and rise of China’s new energy vehicle industry not only meet the demands of the Chinese market, but also bridge the global supply-demand gap in the industry and contribute to green development.

Hildegard Muller, president of the German Association of the Automotive Industry, believes that the development of the Chinese EV industry and the vitality of the Chinese market are beneficial to the global automotive industry.

As the world’s largest manufacturing country and the largest exporter of goods, China is witnessing the rise of numerous emerging industries and enterprises, as well as a constant push for innovation and competition driven by technological advancements. This showcases the country’s economic vitality and creativity, rather than excessive investment and overcapacity.

The global realignment of production capacity driven by market forces will continue to progress despite setbacks. In recent years, some countries have pursued “decoupling” and implemented measures such as “small yard, high fence,” “friend-shoring,” and “capacity backup” for political purposes. These actions have resulted in excessive duplication of production and global overcapacity. Such anti-globalization actions that exclude competition and violate the principles of market economy, have raised global production costs, reduced economic efficiency, and harmed the welfare of global consumers and the interests of related industries.

Faced with the continued growth and development of China’s manufacturing industry, the correct and positive approach should be to engage in open and fair competition with Chinese companies, while also seeking opportunities for cooperation and mutual progress.

Openness brings progress, while seclusion leads to backwardness. This is an important lesson that China has learned from its history over the past two centuries, and it will continue to be tested in the new century.

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Strong performance of Natura Brand in Brazil combined with solid margin results from the Wave 2-implemented countries led to YoY profitability evolution and more than offset Avon International’s margin contraction amid sales deleverage

SÃO PAULO, May 14, 2024 /PRNewswire/ — Natura &Co’s (B3: NTCO3) first quarter 2024 financial results (Q1-24), released today, showed increased profitability driven by solid results from Natura &Co Latam, which is benefiting from the integration of Natura and Avon in the region (referred to as ‘Wave 2’), coupled with richer country and brand mix. This more than offset the margin contraction at Avon International amid sales deleveraging. Natura &Co’s consolidated net revenue reached BRL 6.1 billion in Q1-24, up 1.1% vs Q1-23 in constant currency (CC) and down 5.7% year-on-year (YoY) in Brazilian Reais (BRL).

At Natura &Co Latam, Q1-24 revenues grew 3.1% YoY in CC. Natura Brazil was again the highlight, reporting an 11.3% YoY increase in Q1-24 revenues, attesting strong momentum despite the tough comparative base from Q1-23 when the brand had achieved a 25% YoY growth rate in the region. This performance includes retail sales which showed robust growth in the country, fueled by solid same-store sales and a still strong pace of store openings. The brand opened 132 stores in the last twelve months (13 own and 113 franchised), reaching a total network of 896 stores (115 own and 781 franchised). The results were also boosted by the successful launch of a fragrance sales campaign called “Perfumada”, which contributed to a richer product mix.

This strong result in Natura Brazil was offset by Avon Latam, which is still delivering soft top-line, with revenues down 11.3% in Brazil and 11.8% in Hispanic Latam, as a result of the impacts in the regions where Wave 2 was already implemented, including a smaller number of representatives in the base. Worth noting that Avon Brazil already showed improving top-line trends throughout the quarter.

Avon International had a slow start in Q1 in terms of revenue, down by 4.7% YoY in CC. Despite a decrease in revenue, primarily attributed to challenges in the direct selling channel, Avon showed resilience in other areas. Efforts to strengthen Gross Margin and streamline operations led to only a slight decrease in Adjusted EBITDA margin of -60 bps YoY (ex TBS) despite sales deleverage. The company is also actively exploring opportunities from other distribution channels, including retailers. Avon is already being sold in the UK via Superdrug, in Italy via Naima stores and in Turkey via representative’s retail franchise stores.

Improved consolidated profitability is principally attributed to the expansion of gross margin that reached 65.2% in Q1-24, up 90 bps vs. Q1-23 driven by the strong gross margin expansion from Latam (+170 bps). Adjusted EBITDA reached BRL 683 million, and adjusted EBITDA margin expanded 110 bps YoY.

Q1-24 reported net loss was BRL 935 million, compared to a net loss of BRL 652 million in Q1-23, impacted by discontinued operations, higher taxes from country mix and FX losses and hyperinflation accounting impacts. The Underlying Net Income, which is net income excluding transformation costs, restructuring costs, discontinued operations and PPA effects, was BRL 116 million (vs. a loss of BRL 373 million in Q1-23 or BRL 260 million excluding TBS and Aesop). Excluding the one-off of BRL 137 million of losses related to transferring cash out from Argentina, Underlying Net Income would be a profit of BRL 21 million in the quarter.

Fabio Barbosa, Group CEO of Natura &Co, commented: “We are encouraged that the first quarter of the year showed positive recurring results with a consolidated margin expansion of 110 bps vs previous year, driven by solid results from Natura &Co Latam, benefiting from the Natura and Avon integration in the region, coupled with richer country and brand mix. This more than offset the margin contraction at Avon International amid sales deleveraging. From a cash conversion perspective, seasonal cash consumption also improved on a YoY basis to BRL-1.0 billion (excluding one-off discontinued operations tax payments), compared to a pro-forma (excluding TBS) of BRL -1.4 billion in the same period last year or BRL -1.8 billion reported in Q1-23.

The ongoing roll-out of Wave 2 is a pivotal step in our transformational process, and although we have experienced expected and unexpected challenges in its implementation, we continue to see sustainable improvements in key metrics such as productivity, cross selling, and better portfolio mix, resulting in gross margin improvement in all countries where Wave 2 was implemented. In Brazil, Avon still experienced headwinds impacting the top-line, but with an improving trend month over month, and we expect Avon’s top-line to stabilize in the second half of the year. We also saw significant margin expansion in Peru and Colombia as Wave 2 results start to impact the P&L in full while investments in channel and other one-offs start to fade away.

As expected, our integration initiative is driving improved savings in both G&A and selling expenses, although the latter is being offset by higher marketing investments and other initiatives focused on improving service levels. The solid start to the year gives us confidence that the initiatives we are implementing are beginning to deliver the expected results and we are extremely confident with the potential of the integration of both brands in Latam.

Avon International had a slow start of the year, following a solid Q4 2023 profitability performance. The new management team took office in January and is working on simplifying the market, focusing on key countries, and enhancing our portfolio with superior promotional execution. We believe these steps are crucial to stabilize revenues and keep us on track to improve profitability.

We are also continuing to study a possible separation of Avon and Natura, as we announced in February, in line with our goal of simplifying our corporate structure and giving more autonomy to the business units. We will inform the market as soon as we have news on this subject.

Lastly, but certainly not least, our hearts go out to all those affected by the devastating floods in the Rio Grande do Sul region of Brazil. We are closely monitoring the situation and extending our support to our vast network of nearly 100,000 people in the area, including Beauty Consultants, colleagues and partners. Through telemedicine and our Social Center, we are providing critical medical, social and psychological support. In addition, Natura &Co Latam will replenish lost inventory, forgive debts, defer payments for affected consultants and franchisees, and has designated two spaces as donation hubs for several companies to facilitate logistics. All these initiatives already exceed the amount of BRL 10 million.

With the aim of engaging our network to continue supporting those most affected, we have launched a matching funds initiative to help consultants most affected by the floods to rebuild their homes. For every real donated, Natura commits to matching it with another real. We expect to reach one million reais by May 30th.”

The full earning report and financial statements can be accessed at https://ri.naturaeco.com/en/.

About Natura &Co

Natura &Co is a global purpose-driven group uniting Natura and Avon brands. We connect more than 200 million clients worldwide, engaging them through 7 million dedicated Consultants and Representatives, 900 stores and franchises, and 22,000 employees. 

We believe in promoting real positive economic, social, and environmental impact. We believe that the world does not need another big company. The world needs symbols of change capable of blazing new trails and inspiring others to follow. We believe in the power of cooperation, co-creation, and collaboration for a better way of living and doing business. 

We are Natura &Co. 

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