Research by Paysafe has found 27% of consumers expect to see their subscription payments to increase into the next year. This indicates a growing reliance on subscription services by consumers for news, nourishment, education and other services.
According to the global research Lost in Transactions, the surge in demand was also partly due to COVID-19. This was because people opted to subscribe for service out of safety concerns. Subscriptions offer an easy way of getting badly needed goods and services without the need to return to the checkout counter. consumers are looking for simple and hassle-free shopping experiences. And as subscription model businesses meet this demand consumers are buying-in. In fact, 69% of Americans have multiple subscriptions, with 28% stating they have at least four subscriptions.
Lost in Transactions Survey on Subscription Businesses
Globally, 27% say they will increase their number of subscriptions. These include consumers in the US (36%), Italy (25%), Canada (23%) and the UK (21%). All giving subscription providers further reason for optimism.
The research canvased consumers in the US, UK, Canada, Germany, Austria, Italy and Bulgaria in April 2020. And the survey reveals two common threads, cost and convenience. Almost half (44%) of consumers agree subscriptions are a better value than other payment options for a similar service or product. A significantly more number (53%) agree subscriptions are a more convenient method of paying for goods or services they regularly use. Canada follows the US with the highest number of those with multiple subscriptions with 50% of them having multiple subscriptions. Others include Germany (49%), the UK (47%) and Austria (45%) who have multiple subscriptions.
The Research in Detail
Only 10% said their number of subscriptions was likely to decrease either slightly (6%) or significantly (5%).
Despite the optimism, concern still exists among consumers when it comes to subscriptions. For example, 46% of those surveyed admit to having concerns about the hassles involved when canceling subscriptions. Others (34%) also find it difficult to keep track of their subscriptions. A third (35%) of consumers admit to overpaying for a subscription service that they have stopped using but failed to cancel.
Not surprisingly the major concern stems from subscriptions being too difficult to cancel. Almost (46%) agree that they find themselves being tied into frustrating long-term financial commitments. At the end of the spectrum, only 26% did not find this to be an issue, suggesting significant room for improvement.
In terms of key demographics, younger consumers give subscriptions the most nods. The youngest demographic in the research (18-24 years old) had the most subscriptions, on average having 2.35 subscriptions. And 38% of these consumers expect to increase their number of subscriptions over the next 12 months. Besides looking to subscription services in entertainment they are showing a growing affinity to online shopping and being similarly flexible with regards to their payment methods.
This signals opportunities for businesses to design their subscription models to appeal to a younger customer base.
Besides those under 24 years of age, other age demographics also say they would increase their subscriptions. Those in the 25-34 (35%) and 35-44 (37%) age group are worth noting.
Despite the rosy outlook, the research does offer a warning. While there is potential for short-term gains, businesses need to focus on nurturing customer relationships and optimize subscription payments. These it said will better position businesses for long-term success.
Perks of a Subscription-based Model
The research should act as a spotlight for small businesses looking to work on a subscription-based model. Businesses following a subscription business model sell products or services in return for monthly or yearly recurring subscription revenue. The goal here is to focus more on holding on to existing customers than new customer acquisition.
This comes in handy for businesses engaged mostly in the service sector. Web designers, marketers, financial services, are just some examples. They can take lessons from the success of software-as-a-service (SaaS) companies. Through this model, they not only generate recurring revenues but also strengthen their customer’s relationships.
At the operational level, it allows flexibility in terms of your offering. knowing your clients means knowing their pain points and their needs, you can use this to customize the offering for better impact. At the sales point, you can add offerings for subscribers to ascend to higher plans without having to reinvent the wheel. Last but not least, you enjoy lasting customer relationships. because of the subscription, your relationship is not based on a one-off sale but continued loyalty and joint development of products and services.
Get the latest headlines from Small Business Trends. Follow us on Google News.