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Retail subscription commerce has gained remarkable traction, with a growing number of consumers seeking streamlined ways to explore fresh content and services in a curated setting.
The statistics substantiate this trend. According to the “Subscription Commerce Tracker®,” a collaboration between PYMNTS and Vindicia, the average consumer spent $273 per month on subscriptions in 2021, marking a 15% increase from $237 in 2018.
Consequently, providers aspiring to sustain user engagement and subscription renewals must heed customer preferences and fulfill their expectations. With Apple recently surpassing the milestone of 1 billion paid subscriptions and Amazon reporting a remarkable 14% upswing in subscription services revenues in Q2 2022, these brands appear to have mastered the art of transforming subscribers into staunch brand advocates.
Apple’s achievement of 1 billion paid subscriptions can be largely attributed to its robust ecosystem. Services like Apple Music, Apple TV+, Apple News+, Apple One, and iCloud are intricately woven into the Apple ecosystem, simplifying the process for users to subscribe to multiple services. This seamlessness has significantly bolstered conversion rates.
Additionally, Apple’s focus on personalization has played a pivotal role in retaining subscribers, responding to the growing demand for tailored experiences. Leveraging advanced data analytics, the company customizes content recommendations and offers. The introduction of bundled services like the Apple One subscription has further heightened retention rates and curtailed churn.
Amazon’s ecosystem is equally noteworthy. Brian Bogosian, CEO of sticky.io, highlighted Amazon’s adeptness in customer acquisition through elements like discount pricing, flexible delivery schedules, and user-friendly subscription management. Notably, sticky.io’s research in collaboration with PYMNTS emphasized the prevalence of Amazon’s Subscribe and Save program, underscoring the retailer’s dominance and providing insights for other subscription merchants to enhance their offerings.
Loyalty as the Cornerstone of Subscription Triumph Both Apple and Amazon have garnered dedicated subscriber bases that are instrumental in driving their revenues. Recent research by PYMNTS identified the top three aspects that loyal subscribers value the most: guarantees or refunds, the flexibility to modify product selection within plans, and the option to pause services.
Addressing these priorities translates into enhanced customer retention, particularly considering that loyal subscribers significantly contribute to revenue generation. These loyalists exhibit a high lifetime value (LTV), spending an average of $65 per subscription each month and maintaining subscriptions for an average of 30 months.
Bogosian underscores this sentiment, affirming that “loyalty is undoubtedly a key strategy to maintain subscription continuity.” However, achieving loyalty doesn’t mark the end goal. The research indicates that 37% of loyal retail subscribers would cancel their subscriptions if perks like free shipping were removed. Additionally, undesirable experiences such as excessive promotional materials, unauthorized subscription renewals, and subpar customer service can lead to subscription cancellations.
While ecosystems serve as essential foundations for cultivating a devoted customer base, successful brands cannot become complacent. They must continuously elevate the bar of loyalty through innovative and finely tailored offerings to allure and retain customers over the long term.
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