Subscription merchants remain well-positioned for pandemic lockdown living, and 2020 subscription rates are a testament to that fact. As we head into 2021, subscription businesses now face the task of retaining COVID-era subscribers as people separate needs from wants in the aftermath.
In PYMNTS’ Subscription Commerce Tracker®, done in collaboration with Recurly, the focus is squarely on the growth experienced this year, and how companies can leverage technology to keep subscribers engaged in 2021 and beyond.
Citing the Consumer Subscription Retail Services Report, another PYMNTS and Recurly collaboration, the new tracker states that “roughly 13.4 percent of subscribers — or 24.4 million consumers — intend to cancel their services once the pandemic ends, and the share of digital media subscribers who plan to do so is even higher at 17.5 percent.” Measures that can help digital subscription providers stop cancellations include the familiar list of tactics including free trials and pause options.
Free Trials Sizzle In A Red-Hot Sector
Despite the economic pain caused by the pandemic, subscriptions continue to boom. The Subscription Commerce Tracker finds that subscription ecommerce as an industry sector is expected to be worth nearly a half-trillion dollars by 2025, a compound annual growth rate (CAGR) of 68% over the next five years.
In case you had any lingering questions about whether subscriptions are here to stay, that should settle things.
Additionally, consumers who sign up for free trials of subscription services are converting at a healthy rate. Thirty-one percent of customers who are currently on free trials have indicated that they’re likely to become paying subscribers when their trial periods end.
When the pandemic shutdowns began, free trial conversions spiked quickly across all industries, jumping from 42% to 53% in the last few weeks of March. From there, the conversion rate remained mostly above 49% through June. These conversion rates are quite impressive, given the massive number of free trials that began in late March/early April and ended in May.
Digital Media Is Subscription Gold
Along with monthly boxes of physical goods like wine, snacks, and apparel, digital media is one of the breakout COVID success stories. The journey of venerable brands across the news industry shows the power of subscriptions.
For instance, Gannett, the largest newspaper publisher in the U.S., saw a 31% increase in digital subscriptions in Q2 2020 compared to the same quarter last year. Additionally, Tribune Publishing, which operates about 10 news outlets including the Chicago Tribune, reported a 293% spike in digital subscriptions between February and March. The New York Times reported that revenues for digital subscriptions increased by nearly 30% during Q2 to $146 million compared to the same period in 2019.
The subscription economy overall stands to see continued growth, but subscription companies—especially those offering digital media and publishing services—must determine how best to provide value with new offerings. For more detailed stats around the performance of the subscription economy in 2020, as well as projections and recommendations for 2021, check out the tracker.