Retail Subscriptions Show Staying Power, But the Wrong Approach Will Still Get Merchants Canceled
Do you subscribe to the idea that subscription spikes are falling off? If so, then you’re in for a stunner. Consumers are not only acquiring more subscriptions, but they’re now also less likely to cancel them.
That’s a relief, at least for the subscription merchants who get it right. Those that don’t could find themselves losing part of the estimated $2.2 billion in monthly recurring charges from roughly 12 million consumers (14.4% of all subscribers) who say cancellations are in their immediate future.
We get a clearer picture of what keeps subscription fans onboard in PYMNTS’ November 2021 Subscription Commerce Conversion Index: The Exclusive Access Effect Edition, produced in collaboration with sticky.io. U.S. retail subscription spend now stands at $15 billion, up 67% in just three months.
That not only contradicts fears of a subscription cancellation wave, but radically reverses it. Consumers surveyed report having twice the number of retail subscriptions as in Q1, now averaging five apiece. Additionally, “more consumers than ever intend to keep the subscriptions they have — and sign up for even more in the future,” with 51% saying they’ll hold onto existing subscriptions and acquire more.
Behind the refreshed outlook are shifting consumer beliefs and behaviors around the value of retail subscriptions, with the Index finding access to desirable and hard-to-get items to be a main driver. That’s making direct-to-consumer (D2C) subscriptions pop, with 64% of subscribers now using D2C.
Access to unique products is a motivator for 15% of millennials and 16% of bridge millennials to try and keep subscriptions, for example. It’s a valuable data point for subscription merchants who need strategies to keep consumers signing up and sticking around after free trials end.
Get the study: The Subscription Commerce Conversion Index: The Exclusive Access Effect Edition
Product Access, Rewards Prove Powerful
Subscription merchants have a lot to lose by not responding to changes in consumer preference — especially given how much subscription fans are spending on their assorted services.
Typical subscribers are spending almost $38 per month on each service, averaging nearly $188 on the five retail subscriptions monthly. That’s compared to a monthly average spend of about $107 in Q1.
What’s got people spending more on a higher number of subscriptions? In a word: access.
“The most common reason D2C subscribers give for subscribing to brands directly is that doing so gives them access to better products,” the new Index states, with fully half of D2C subscribers pointing to a better class of product, and almost as many (49%) saying that D2C is a hedge against fakes and substitutions.
“Better pricing, better customer service, better access to product-specific coupons or discounts and better rewards also are near the top of the list of reasons for using D2C subscriptions, and these factors are gaining importance,” per the Index.
Download now: The Subscription Commerce Conversion Index: The Exclusive Access Effect Edition
Trust, Trials Add to D2C Traction
Going deeper into what’s keeping D2C subscriptions hot, PYMNTS found that “offering free shipping, guarantee or refund policies, pause features and buy buttons all have increased for the fourth consecutive quarter, for example.”
Subscription merchants are getting the message, as data shows that six of the 15 key features known to improve the experience are offered by more merchants than previously seen.
With top performers in The Subscription Commerce Conversion Index outperforming bottom performers by a 47-point spread, the latter would be wise to improve product ratings and reviews, quick add-to-cart features, more plan options and a better feature/control mix.
Trust is often a factor, and the Index finds it at work — mainly against bottom performers who need to pump up guarantees, refund policies and password restrictions for a start.
That said, plans to cancel subscriptions outright are lower than ever measured, with only 5.8% of subscribers who entered via free trial saying they will bail when the trial expires. That’s compared to 12% who said they would do so in the previous quarter.
As the Index states: “Better pricing, better customer service, better access to product-specific coupons or discounts and better rewards also are near the top of the list of reasons for using D2C subscriptions, and these factors are gaining importance.”
Read it now: The Subscription Commerce Conversion Index: The Exclusive Access Effect Edition