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Study shows major impact of subscription services on consumer loyalty

The success of subscription services in home entertainment could translate to other businesses and industries.

A new study conducted by Recurly, described as a leading subscription management platform, has shone light on the effectiveness of subscriptions when it comes to consumer loyalty. The study found that 51% of consumers are more loyal to brands and businesses with which they have a subscription. 42% of respondents claimed that they would spend more money on a brand or business with which they have an active subscription.

How subscription services earn consumer loyalty and spending

Projections conducted by UBS noted that the subscription industry will double in the next three years, with consumers embracing subscriptions for everything from home entertainment to out-of-home activities. It has been noted that in the US, businesses that felt the negative impact of pandemic restrictions are “diving head first into subscriptions to meet consumer demand”.

With retailers aiming to scale their operations in 2022, the implementation of subscription services has been observed to be a driver of growth. This has already been seen in the home entertainment industry, with companies such as Disney+ enjoying growth during the past two years. It is thought that adopting subscription-based models could be a stimulant for industries outside the home, such as the food and airline sectors.

Recurly Chief Marketing Officer Theresa McEndree said “Consumers love subscriptions. As people return to in-person experiences, they are carrying their love of subscriptions with them. It’s exciting to see accelerated growth in these categories”.

“For in-person businesses, subscriptions drive recurring revenue, loyalty, and growth as consumers establish their new spending habits and behaviours. We are beginning to see some exciting new subscription categories and concepts emerge, from trampoline parks to car washes to restaurants”.

Exclusivity is key for subscription services

40% of consumers in the US noted that having exclusive access to content or services is the main reason for making a new subscription. The industries with the biggest subscriber base and growth in the last two years are in home entertainment, with content kings in audio and video streaming taking the lion’s share.

According to the research, these industries are the most-subscribed to, and are expected to be the most-used in 2022.

“Providing exclusivity and creating consumer-led pricing models to these experience services is a major factor in successful retention and growth”, explained Theresa McEndree. “Recurly leans into understanding why and how subscriptions are purchased so we can partner with our customers for scale”.

When it comes to millennials and Gen-Z, 44% said that “access to exclusive and compelling content or services is a major driver of subscription popularity”. This could be exclusive access to a product, content or service, or unique bundling, exclusive offers or discounts. Reportedly, this leads to stronger preferences regarding certain brands, as consumers are expected to focus on different offerings from different companies, choosing which service suits them best.

Subscription services like Disney+ have enjoyed success in the past two years. (Photo: Disney)
Subscription services like Disney+ have enjoyed success in the past two years. (Photo: Disney)

Forecasting consumer behaviours and preferences

Businesses can stay ahead of their competitors by analysing and anticipating consumer subscription behaviours and preferences. Research shows that 49% of consumers see subscription services as a treat, with 67% of respondents claiming they prefer to pay for subscription services monthly.

It has been found that older generations prioritise convenience, while younger consumers hold stronger brand loyalty to their subscription services. For consumers aged 45 and over, priorities include having the option to have products delivered, as well as convenience of use and the option to set recurring payment processes.

As put by Recurly, “subscription models have helped usher in an age of convenience and “set it and forget it” options for consumers”.

Photo top of page: Roberto Nickson / Unsplash

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