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Subscription-Based Companies See Happy Holidays (And Renewals)

For all its many horrors, 2020 has turned out to be a surprisingly good time to sell subscriptions to consumers. The latest PYMNTS/Recurly Subscription Commerce Conversion Index found that some 15 million consumers have signed on to at least one subscription service since the pandemic began, and Recurly executive Emma Clark told PYMNTS that those customers are sticking. The number of trial subscriptions is spiking, but conversions are also on the rise.

In fact, Clark said industries are seeing those conversions rise across all sorts of categories. Although some areas are down, the trend is mostly toward growth. Consumers are looking for new channels for entertainment and education, as well as even safer and more convenient ways to shop for common household items – like cleaning supplies and razors – without having to venture out into the real world.

And then there’s the simple fact that eight months of living a locked-down COVID-19 lifestyle has gotten a lot of people down. Clark believes there’s something to be said for having products delivered right to the door once a month.

In short, it’s a good time to be in the subscription business.

“Businesses offering subscriptions across almost every single category – except for in-person entertainment like movie theaters – are really seeing the spike,” Clark said. “I think the key now is for them to look for ways to retain and grow that newfound subscriber base.”

That’s something she said businesses have a particularly powerful opportunity to do right now as the annual season of gift-giving gets underway.

Where Consumers Are Subscribing

Though subscription offerings on the whole have seen a boost over the past eight months, Clark said some areas have seen particular and persistent strength.

For example, educational subscriptions — particularly those geared toward elementary and middle-school kids — unsurprisingly spiked early on in the pandemic due to school closures. Clark said a dramatic increase started in March and has run pretty steadily through the COVID-19 period.

But she said a second, less-anticipated bump that Recurly has seen started in August and September, this time led by older learners looking for vocational training.

Digital entertainment was also a consumer favorite, particularly early in the pandemic period. Clark said that category flattened out a bit over the summer, but began spiking again in the fall. Between autumn TV schedules, the presidential election and sports coverage, Recurly sees no evidence of that trend petering out anytime soon.

One more sector — consumer goods — has seen subscription gains in “a little bit of an underdog story,” Clark said.

“Education and digital media seem pretty natural, given that those are digital services,” she said. “But when COVID first hit, we saw a pretty big dip in the number of goods subscriptions. I think a lot of those businesses allowed many customers to pause their subscriptions because we were all very uncertain of what was going on. However, as the new norms of month-to-month quarantine set in, people [began] to look for ways to access necessities through subscriptions.”

Clark said many have since become fairly habituated to continue doing so. She noted that consumer goods subscriptions have seen customers stay onboard even as stay-at-home restrictions loosened over the summer months.

Now that lockdowns are tightening again in some places, those same subscriptions can serve as a security blanket for customers, Clark said. They no longer have to worry about losing access to necessities, regardless of the status of stores’ shelves.

Giving The Gift Of Subscriptions

And now, the upcoming holiday season will present companies with opportunities to not only retain existing subscribers, but also grow them into 2021 and beyond.

Clark said that’s because the holiday not only presents businesses with opportunities to sell subscriptions to end users, but to offer them up as a gift option as well. That’s an opportunity to not only boost overall revenues, but to also do a lot of other things that benefit a business.

“Subscriptions are very successful in not only boosting holiday sales, but also in increasing brand awareness,” Clark said. “I think it’s a must during the holiday season for subscription businesses to provide the option of gifting.”

But that requires doing it right, which means an end-to-end process that makes it really easy for someone to receive the gift. For instance, Clark said the redemption process must be easy and seamless so recipients can actually start getting their subscription goods or services. Otherwise, they’ll never develop a relationship with the product.

Clark added that gift subscriptions require some follow-up. If someone gives a subscription to a friend or family member over the holidays, Recurly will track it to see whether the item or service is redeemed. Then, the company will measure how many subscriptions are renewed once the gift period has ended.

“That’s really important because there are generational differences to track,” Clark explained. “We might see a parent give a gift to a child, for example. And the question is: ‘After the fact, do they have the funds to be able to continue with that subscription after they’ve redeemed the gift?'”

An equally critical question is: “If they have the funds, will they want the subscription to continue?” Will the service present itself as so valuable or vital that they will carry on with it even when it’s on the subscriber’s own dime?

Clark said getting those customers to re-up requires perfecting and personalizing a subscription so that what’s offered goes from a “nice to have” to a “need to have.” As she noted, that’s something subscription services are becoming more and more adept at doing for the consumers who sign on for them.

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