DTC consumerism shift: What subscriptions need to do
The pandemic has paved the way for consumer re-evaluation, leading us to the direct-to-consumer (DTC) shift. Emerging consumer models continue to grow, bringing new consumer values, new buying behaviors, and new demands. As a result of this shift to a DTC, subscription-run commerce landscape, businesses must focus on their brand, the customer experience, and an omnichannel approach to consumerism. In this article, I share more about the reimagined consumer and how subscription businesses can pivot their strategies to align with new customer priorities.
What is the DTC shift?
According to a study by Accenture, motivations have shifted as a result of the pandemic. While still important, price and quality have moved aside to allow consumers to focus on health and safety, product origin, and trust and reputation of a business and its offerings. Furthermore, with 97% of consumers preferring some degree of flexibility between working remotely and working in an office, new habits and routines have forced us to adapt to a hybrid consumer world.
Globally, the majority of consumers have tried new shopping behaviors since the onset of COVID-19. The findings are telling of how consumer loyalty has been redefined: Most consumers would rather switch brands or retailers than wait for out-of-stock items, and they demand benefits that provide both rational and emotional satisfaction. One of the easiest ways to satisfy these demands and grow a business is through a recurring revenue business model.
In a recent survey from Recurly about pandemic impacts on subscriber sentiment, we found that 86% of U.S. consumers spend up to $200 per month on subscriptions, and 49% of view subscriptions as a way to treat themselves. According to Insider Intelligence, U.S. digital D2C sales are expected to reach $175 billion by 2023. 19% of consumers still prioritize price, and the most important reason for a subscription sign-up is the good value for the price.
Subscriptions do it all - value, quality, variety, and convenience. They are a top driver of loyalty and revenue growth for brands looking to grow. For the reimagined consumer, there isn’t much on the market that can satisfy all of these needs as thoughtfully, consistently, and with personalization in mind.
Own your brand, customer experience & data
For many, the pandemic forced consumers to completely revise their personal purpose and rethink what is important in life. As a result, consumers are looking for a brand that can fulfill them both rationally and emotionally. The recent influx of new values, emerging generational distinctions, and supply chain challenges create ample opportunity for subscription businesses to tailor their brand and offerings to fit the reimagined consumer. This also means the customer experience must adapt as well - to the consumer seeking convenience, the consumer seeking competitive pricing, and the consumer seeking a reliable product or service. More insights into the new consumer mean better data to better serve customer needs. Leverage the information from your data library of buying behaviors, preferences, and consumer sentiment to own your brand, your audience, and your customer journey.
Build community & brand loyalty
25% of consumers prefer social and community benefits as part of their overall customer experience. While convenience remains top of mind, novelty and curated experiences have piqued the interest of reimagined consumers. Recurly’s recent survey of subscriber sentiment revealed that as pandemic restrictions ease, consumers are most eager to spend their money on in-person dining (46%), domestic travel (45%), and in-person entertainment (43%), and part of the DTC shift means a migration from ownership to experience.
Stepping away from a strictly transactional relationship, a holistic approach consisting of personalized content and communications, events, and a thoughtfully curated customer experience contributes to the community and experience aspects consumers seek. By creating more opportunities for consumers to buy into more experiences and rediscover value, businesses can encourage brand loyalty and increase customer lifetime value and AOV. In fact, Recurly’s survey results found that U.S. consumers feel more loyal to (51%) and spend more money (42%) with brands and businesses they subscribe to. Ultimately, subscription businesses must align their offerings to consumer priorities by focusing on creating both community and convenience.
An omnichannel approach
60 to 70% of consumers are shopping with a multi-channel approach, discovering finds via wholesale, ecommerce, retail, and partnerships. As a matter of fact, social media has become the new window shopping for the reimagined consumer. Driven by work-from-home benefits and pandemic restrictions, these consumers are shopping across all categories in an omnichannel way, from groceries and personal care products to fitness and wellness services and furniture. Additional studies found that 23% of global consumers predicted an increase in spending across categories such as grocery, takeaway food, home entertainment, and fashion during the pandemic.
Furthermore, consumers are facing seemingly incessant out-of-stock notifications, and only 13% of them are willing to wait for the item to come back in stock. 71% of consumers surveyed by McKinsey & Company would rather switch brands or retailers than wait for an out-of-stock item to return. When the option is to wait or look for alternatives, the reimagined consumer would rather satisfy their needs now.
The DTC shift brings subscription businesses and consumers closer. With a focus on community and convenience, the main goal is for businesses to align their offerings to consumer priorities. Subscription companies have the opportunity to redefine loyalty by considering new values, new consumption models, and new consumer preferences for content and experiences. Businesses should continue to learn about and tailor the consumer experience from platform management to payments strategy to unlock what matters to consumers and ignite loyalty.