Understanding current consumer trends, and how this is impacting subscriptions3 min readReading Time: 2 minutes
Amidst all of the troubles of Covid-19 and the disruption that has occurred this year, including ever-increasing prices, the cost of living and energy struggles, one less harmless change is the rise of the subscription service. So, what is the subscription economy, how has it escalated so quickly, and will the increasing cost of living have a detrimental impact on it? Read on to find out.
What is the subscription economy?
The subscription economy encompasses all services which can now be bought on subscription, or in effect, rented out, rather than bought outright. This includes popular film, video and music streaming sites or apps which can be used when a repeated payment is made. When signing up for a subscription, you don’t actually own the product or service you are paying for and will lose access to it if you stop making the payments.
What made subscriptions so popular?
The shift to a subscription-based consumer marketplace happened fairly rapidly and altered service consumption quite dramatically. While there was already a rise in the use of subscriptions beforehand, it could be argued that it was the impact of Covid which really escalated this kind of sales to the level we’re seeing now. During the pandemic, many subscription services saw their acceleration in consumer bases skyrocket. Stuck at home, it seems many people turned to video streaming and grocery subscriptions to get by.
The effect of the cost of living
If you run a subscription-based business, there may be some cause for concern due to the recent cost of living troubles. More than a third of consumers have reported cancelling at least one subscription service, blaming a lack of disposable income. This would also suggest that consumers see subscription services as luxuries which are expendable rather than core or necessary things.
In the United Kingdom we are already seeing customers dropping “luxury subscriptions” such as streaming subscriptions. The Guardian reported in August that around 800,000 UK households cancelled subscriptions to either Netflix or Amazon Prime Video between April and June of this year. Wider data released from Lloyds Bank’s April announcement reported by TechRound, revealed that over 1.2 million subscription payments have been ended by its customers since June of last year.
Google trend data for the generic term “cancel my subscription” has seen a 42% increase in searches in the United States from November 2020 to November 2022.
As prices continue to rise, it may be the case that more and more subscription services begin to suffer from losing customers. So what can you do to retain yours?
How to retain your subscription customers
If you are starting to see the effects of the rising cost of living reflected in your subscription levels, or you are worried the same may soon happen to you, there are some things you can try to retain your subscription customers. One of the best things to try is using Upzelo’s specifically tailored services. We can help you by analysing your audience, providing customer insights and using this to prevent subscribers from deleting their subscriptions. Furthermore, we can provide details about why customers may be removing themselves from your service and, using the collected data, help you to prevent this from happening again.
With the subscription economy facing its most difficult period following its rapid growth of the last 3 years you can’t risk losing your subscribers, so make sure to head to Upzelo today. Speak to a member of our team to find out how we can help you.