The Evolution of Consumer Subscription Preferences: What Do They Really Want (And Don't Want) Now?
The subscription economy is mainly driven by three major categories: streaming services like Netflix and Spotify, retail memberships like Amazon Prime and Costco, and digital subscriptions like Masterclass, The New York Times, Wall Street Journal, and Forbes.
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With the subscription business being a significant industry, even smaller segments like e-commerce products on subscription amount to over $300 billion
This industry is accelerating, with SUBTA expecting a 50% increase in the upcoming year. This growth is not solely attributed to existing companies selling more via subscriptions, but also to the rising number of companies adopting this model.
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Consumers are primarily provoked to subscribe by free trials, competitive pricing, and convenience to buy it anyway by dropping prices and with discounts. One of the popular companies Amazon has capitalised on this trend with programs like "try before you buy." Also, it provides customers with a risk-free way to try the product or programme or services which increases conversion rates, boosts customer engagement, and increases customer retention.
Once you subscribe, convenience often becomes more important than price, especially in sectors like beauty and personal care, where the average order value of subscription companies has increased by 12% year-over-year.
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According to the SUBTA report, consumers can express a desire for "bundling (where they can buy and pay for multiple subscriptions for services with one charge)," allowing them to purchase and pay for multiple subscription services with a single charge.
This presents a challenge for brands but also opens opportunities for strategic combinations of subscription services, as seen in the streaming market with the combined package offerings from Disney+, Hulu, and HBO Max.
Advertisements on social media are one of the most effective ways to reach consumers under 45, while TV and email are more effective for older demographics. Even seniors are embracing subscriptions, particularly for auto-refill prescription drugs, which leads to higher adherence to medication regimens.
Interestingly, this makes it easy for consumers to unsubscribe is an important aspect of attracting and retaining subscribers. A smooth unsubscription process can significantly increase the likelihood of customers resubscribing. Technology can play a pivotal role in making this experience frictionless.
While consumers tend to spend more time once they subscribe, high costs and the need to reduce spending are among the top reasons for unsubscribing. Here are the things:
72% of consumers are aware of the exact number of companies they are subscribed to, indicating a need for regular communication to keep them updated on the value they receive from their subscriptions.
What's the catch?
The subscription model is expanding rapidly, encompassing a wide range of categories and products. As convenience and cost-effectiveness drive this growth, it's clear that the subscription economy is set to become a dominant channel for purchasing a variety of products.
