The subscription economy is expected to reach $1.5 trillion by 2025, up from $650 billion this year as consumers enroll in everything from food boxes to wine club memberships. Yet subscription merchants face the constant challenge of how to retain their members. When a customer is unhappy with a service and cancel, that’s active churn. To counter cancellations, companies must offer easy onboarding, a variety of payment methods and ways to renew, options to pause and less expensive options. Doing so will require subscription box providers to leverage the right features as well as compelling payment solutions to keep subscribers engaged long term.
The June Subscription Commerce Tracker® is a data-rich examination of the retention challenges that subscription box companies are currently facing, particularly as consumers begin to venture out more from their homes and to physical retail stores.
Around The Subscription Commerce World
Subscription companies must reexamine customer renewal policies to make sure they are meeting all relevant legal requirements, according to McDermott Will & Emery. The Chicago-based international business law firm said automatic renewals have gained the attention of regulators and have become the focus of whether companies are meeting state and federal consumer protection laws. These transactions have created a risk for business-to-consumer companies. The legal risks related to automatic renewals have increased as the popularity of subscription services has risen.
Nearly one-third of Americans have enrolled in a retail subscription box service at an average monthly cost of $57, according to a survey. One in 10 are paying more than $100 each month on physical and digital subscriptions while 71 percent said they subscribe or plan to subscribe to a monthly product. Researcher Pamela Danzinger said that despite being at home through the pandemic, the appetite for shopping hasn’t disappeared among consumers. From subscription food to flower boxes, these services have helped consumers get through 2020, she noted.
Media subscription services also increased as readers sought information about the pandemic. One recent report said its largest clients saw subscriptions grow by nearly 58 percent over the past year. Today, newspapers and online media organizations face the challenge of keeping these subscribers and attracting new ones as the world begins to emerge from the crisis. The report highlighted a few areas where media subscription providers could focus to engage and retain customers, such as with strong onboarding procedures with frictionless payment solutions as well as annual subscriptions and free trials as tools to drive engagement.
For more on these and other subscription commerce news items, download this month’s Tracker.
Bean Box On Its Product-Driven Approach To Subscriber Retention
Subscription box brands must strategize for ongoing personalized engagement if they want to maintain long-term relationships with the new subscribers gained within the last year. For Seattle-based coffee subscription service Bean Box, that has meant focusing on value, variety and quality products to keep consumers satisfied. In an interview with PYMNTS, CEO Matthew Berk discusses why companies trying to do everything they can to hold on to subscribers, including putting up roadblocks to canceling, is not the answer. Berk instead said cancellation processes should be made easy, too, because customers who cancel often renew their subscriptions later or return to buy more because they had positive experiences.
The United States is the leader of subscription services, with 69 percent of U.S. consumers subscribing to several services. Canada is the next highest with 50 percent, followed by Germany at 49 percent and the United Kingdom is 47 percent. Retaining customers and the guaranteed monthly income is crucial for these businesses to work to maintain despite their popularity. This month’s Deep Dive explores the strategies that companies can leverage to keep subscribers engaged.
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