67% of subscription businesses concerned about evolving consumer needs as demand for flexibility rises
- If given the choice, 63% of US subscribers would rather accept an offer than cancel their subscription, 46% would rather downgrade than cancel and 39% would rather pause than cancel. However, only 50% of subscription businesses offer pause functionality.
- 67% of US subscription businesses say changing customer demand is the top impact factor on profitability in the next 10 years, followed by tech disruption (52%).
- The majority (73%) of subscribers are interested in a consolidated subscription management solution, and 61% would like to be able to view and manage all subscriptions in their banking app. Yet, only 2% currently use a single app to manage subscriptions.
- In the last six months, 67% of subscription businesses have seen up to 20% of their customers churn and return, showing that serial churners have become mainstream.
26 June 2024: The majority of subscription businesses are being challenged to keep pace with the rapid evolution of consumer demands and tech, according to new research from embedded subscription management company Minna Technologies.
The research from Minna Technologies’ latest report, Subscription Economy: Evolution Not Revolution, in partnership with specialist management consultancy FT Strategies and global market research firm Savanta, highlights a growing gap between what consumers expect from their subscriptions and what businesses offer. 67% of subscription businesses name changing customer demand as the top impact factor on profitability in the next 10 years, followed by tech disruption (52%).
The data suggests that subscribers expect greater subscription flexibility, including the ability to pause (39%), manage multiple subscriptions in one place (73%), and have a seamless churn and return experience. Yet, just half of US subscription businesses offer pause functionality (50%). Despite a willingness for nearly one in two (45%) Gen Z and millennial consumers to switch banks for consolidated subscription management, only 2% of consumers currently use a single app to manage subscriptions.
46% of consumers state they would rather change their plan than cancel if given the option, revealing that businesses could cut cancelation rates by half. 63% of subscribers are also likely to stay for offers.
With more than a third (37%) of US subscribers spending more on subscriptions compared to 12 months ago and the average US subscriber having 8.2 subscriptions and spending $1,416 per year on subscriptions, the majority (73%) of subscribers are interested in a single app to view and manage all their subscriptions in one place. 61% of subscribers would like to be able to view and manage their subscriptions in their banking app, which 64% of subscribers trust more than subscription platforms or app stores. Gen Z and millennial subscribers are especially interested, with eight in ten (80%) 18-44-year-olds wanting this functionality and nearly one in two (45%) willing to switch banks for this.
Subscriptions have a strong lifestyle appeal and reflect an evolving mindset of flexibility and exploration. Almost half (47%) of consumers believe that subscriptions give them access to a certain lifestyle, 63% prefer paying monthly to an annual fee, 55% think owning anything they don’t need now is a waste of time and 51% like exploring different brands and services. Serial churners, who habitually unsubscribe and resubscribe, continue to grow and have become mainstream as subscribers become savvier, with two-thirds (67%) of businesses reporting that up to 20% of their churners return within 6 months.
Despite these challenges, there is an opportunity for businesses to track and meet these changing demands with continual experimentation enabled by tech. 93% of businesses recognize AI’s crucial role in customer service and retention. There are growing opportunities to leverage AI to enhance subscriptions products and increase their monetization appeal. 83% of subscription businesses have already either invested or are planning to invest in AI to enhance services including customer support, user experience and personalization of pricing and products.
Amanda Mesler, Chair and CEO of Minna Technologies, said:
“This is no longer a static, one-size-fits-all proposition but an ongoing value exchange. Businesses need to focus on enhancing flexibility, convenience and control for customers. Customer demand for consolidation has led to the emergence of new channels to manage subscriptions, such as banking apps and aggregators.”
Ben Catterall, VP Solution Consulting, Aptitude Software, said:
“Continuous experimentation and flexibility, exploring product diversification, hybrid paid content models and alternative formats is becoming increasingly important. Flexibility is crucial; refining subscription models to offer subscribers more choice and control is essential for developing sustainable recurring revenue strategies.”
-ENDS-
Notes to Editors
Press contacts – Seven Consultancy: minna@seven-consultancy.com
Methodology
The quantitative business and consumer research was conducted by leading global market research and intelligence provider Savanta, with survey input from Minna Technologies and specialist management consultancy FT Strategies.
Savanta surveyed 103 enterprise subscription business decision-makers across the US. The business survey respondents were Board members, C-Suite executives, managing directors, directors and owners from businesses which sell products and services to consumers using subscriptions. Their job roles include management and strategy, finance, procurement, operations, technology, data and analysis, marketing, customer acquisition, and product development. The annual turnover of the businesses surveyed ranges from $10 million to over $1 billion. Respondents represent a range of industries and are directly involved in subscriptions as part of their job role.
Savanta also surveyed 2,031 US consumers, with a nationally representative sample by age (18 to 65+) and gender. All research was conducted between March 28th and April 16th 2024.
ABOUT MINNA TECHNOLOGIES
Minna Technologies is the global market leader for subscription management embedded in banking and fintech apps, partnering with top-tier banks, fintechs and subscription businesses. Minna is the only B2B2C platform with an automated subscription management engine, bank-grade compliance and global subscriptions and payments coverage. We power the global subscription economy, helping businesses grow revenue, reduce operational costs, and drive engagement, retention and lifetime value for over 120 million users.
ABOUT FT STRATEGIES
FT Strategies powers customer growth by providing the expert insight, integrity and consulting excellence required to transform the future of businesses based on real world, first-hand experience.
Staffed by the experts who successfully transformed the FT’s business model in the face of disruption, FT Strategies works with organizations worldwide, from a wide range of sectors, helping them increase recurring revenue, monetise audiences, grow subscriptions, build engagement, create a customer-centric culture, transform organizations, build new products and ventures, and future-proof businesses.
