Difficult economic times are causing consumers to reassess their spending, causing them to focus on essentials rather than nice-to-haves. This holds true as consumers also analyze their spending on subscriptions. However, the situation may not be as bleak as the headlines suggest, and there are steps that companies can take that may help them to retain their subscribers.
Not All Gloom and Doom
PYMNTS, a consumer payments consulting firm, released a report highlighting trends in the subscription economy and strategies that may help companies retain customers.
Their findings indicate that over 80% of U.S. households have at least one subscription. While many consumers indicated that they are considering cutting some subscription services, more than half indicated that they were considering adding another subscription.
The main reason consumers gave for either cutting or considering cutting a subscription was expense reduction. Thus, offering consumers a compelling value proposition may be vital to retaining customers.
Give Consumers What They Consider Important
Among consumers, affordability and convenience were essential to inducing them to retain or add subscription services. These factors include:
Amazon – A Means to Consolidate Subscriptions?
Amazon’s Subscribe & Save platform allows consumers to arrange for the future delivery of groceries and other products in exchange for substantial discounts. The service may act as a consolidator, enabling consumers to subscribe to one platform for a wide variety of products rather than juggle multiple subscriptions.
Data from PYMNTS, indicates that consumers with a subscription to the Amazon service are canceling more subscriptions than those without the service. Additionally, consumers appear to prioritize the Amazon service over other subscription platforms.
Amazon’s service seems to have the two main features demanded by consumers, namely, affordability and convenience.
Add Affordability and Convenience to Retain Customers
The PYMNTS report indicates that affordability and convenience are important factors that may help companies retain subscribers during difficult economic times.
How may individuals gain exposure to companies in the subscription economy?
The Fount Subscription Economy ETF (SUBS)
The Fount Subscription Economy ETF (SUBS) seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the Fount Subscription Economy Index. The Index was designed to measure the performance of companies engaged in the business of providing subscription services, i.e., companies that sell products or services for recurring subscription revenue.
SUBS may present an attractive vehicle for individuals to gain exposure to companies offering subscription-based pricing models.
For a full list of holdings, please click here.
 All data sourced from: Subscription Commerce Conversion Index: Subscribers Seek Affordability and Convenience, PYMNTS, November 2022
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