In Conversation with Eric Crowley

Consumer Subscription Software – Enhancing Everyday Life

November 06, 2024

San Francisco, 6 November 2024 - We sat down with Eric Crowley, Partner at GP Bullhound, who leads the firm’s Consumer Subscription Software (CSS) practice. Eric recently advised Flo Health on its $200+ million Series C investment from General Atlantic, which propelled Flo Health’s valuation past $1 billion, marking it as the first purely digital women’s health app to reach unicorn status. In this interview, Eric shares key insights from GP Bullhound’s recent CSS report, covering topics from the rise of the "Chief Household Officer" to strategies for managing churn, offering valuable takeaways for companies in this dynamic space.

Team

Eric Crowley

Sector

Consumer Subscription Software

Region

Your recent Consumer Subscription Software (CSS) report has sparked a lot of interest. What feedback have you received from the market since its release, and what key points are resonating most?

The concept of the Chief Household Officer (CHO) has really resonated. The idea that one person in the household is increasingly managing everything from finances to meal planning and even youth sports coordination has captured the attention of companies. Businesses are realizing they need to build tailored solutions that cater specifically to this demographic. As more families turn to subscription services for convenience, the CHO is emerging as a central decision-maker in how households consume and organize their digital tools. Companies like Blue Apron for meal planning, Mint for financial management, and TeamSnap for youth sports coordination are prime examples of businesses catering specifically to this demographic by offering tailored solutions.

Were there any findings in the report that prompted unexpected discussions or surprised you?

Yes, the focus on churn management and win-back strategies stood out. What surprised many people is just how effective these strategies can be. For instance, we found that businesses implementing win-back strategies can reduce churn by up to 30%, which is a significant metric for any company looking to improve profitability without spending heavily on new customer acquisition.

Looking ahead to 2025, what trends from the report do you think will most significantly impact the consumer subscription market?

One of the most impactful trends will be the winner-takes-all dynamic. Companies that manage to secure dominance in their niche markets are commanding revenue multiples up to 6x higher than their competitors. This highlights how critical it is for businesses to create strong network effects and deliver premium content to stay ahead. We expect this dynamic to intensify as competition grows in the subscription space.

Based on the feedback so far, are there any areas from the report that you think companies should prioritize as they plan for the year ahead?

A clear area of focus should be on retention and revenue growth strategies. The report shows that public CSS companies have seen their forward revenue multiples rebound from 5.4x to 6.9x between 2022 and 2024. This indicates that businesses prioritizing growth, profitability, and strong retention rates are being rewarded by investors. Companies that exceed the Rule of 40—a key metric where growth plus profit margins exceed 40%—can command EV/revenue multiples of up to 10x, significantly outperforming their peers. The focus should be on finding the right balance between growth and profitability to drive long-term value.

To explore more about GP Bullhound’s insights into the evolving Consumer Subscription Software landscape, including the latest trends and strategies companies can adopt, read the full report here: Consumer Subscription Software 2024: Enhancing Everyday Life.