The Future of Subscriptions Looks Brighter Than Ever
Before we relegate 2020 to the past, I’d be remiss if I didn’t highlight one of the major economic trends we saw this year: an explosion in subscription commerce.
This time last year, we accurately predicted that subscription commerce would continue to grow and evolve, but certainly none of us had any idea to what degree this growth would occur. With COVID-19 forcing millions of people to stay at home, consumers responded by adopting new subscriptions in droves.
Even though we expected that the pullback in consumer spending we observed in March and April would continue through the rest of the year, we saw consumers’ discretionary spending in the form of subscriptions increase.
Our data shows that between early March, when COVID-19 lockdowns hit the US, and late November, the number of new subscriptions started shot up by 82%. What’s even more fascinating is the variety in the kinds of subscriptions that have done well: not only digital media and entertainment, but also educational offerings, fitness-related subscriptions, and subscriptions related to home automation & security.
Customer-Centricity and Customization Leading the Way
The bigger story here, I think, is on the business side of the house. The real test will be whether companies can retain their subscribers for the long term, even after we return to a “new normal.”
Building a subscription offering that consumers find relevant over the long term is not an easy proposition, even for established brands. It gives a company an opportunity to update its mindset, not just its revenue model. Companies can revamp their cultures to reorient their customer-focus and ensure they’re continually delivering value.
Looking forward to 2021, I see a continuation of what we’ve seen in 2020 as well as a burst of new innovation once the pandemic fades away. The decadent subscriptions many people have adopted this year, from home-delivered jewelry to fashion to wine, likely won’t go away, but companies will continue to have to innovate to keep subscribers from churning.
What will this look like? Gone are the days of “one-size-fits-all” subscription plans. It’ll be more important than ever for companies to tailor their subscription offerings and offer more dynamic, personalized plans. In order to keep customers engaged and retain them for the long term, companies will need to listen closely to what their subscribers need and keep changing up their offerings.
If consumers can’t answer the question, “Will I really get something of value every billing cycle?” they’ll be more likely to cancel a given subscription. We recently spoke with Andrei Rebrov, Founder and CTO at Scentbird, who emphasized the importance of personalization and customization in every step of the subscriber journey.
In short, companies that manage to provide subscribers with consistent value by surprising and delighting them will succeed; those that can’t may not be so lucky.
At Recurly, I’m proud of the ways we’ve equipped our merchants with the solutions they need to expand and make their customers happier. This year, we helped our merchants expand globally, with more supported payment options and features like Item Catalog. We gave merchants more flexibility in terms of charging for and varying their offerings, and in 2021 we’ll continue to invest heavily in these areas so merchants can price and package however they want.
We did this all while focusing foremost on increasing customer happiness, and you can bet there’s more of that coming in the new year. In fact, we were curious to hear what predictions our customers and partners have about the state of subscription commerce in 2021 and beyond, so we asked them to share their thoughts in this series of short, insightful videos.
We believe the future of revenue is recurring, and offering a best-in-class subscription management and billing platform is our way of helping bring that future to fruition.
Here’s to an epic year ahead!