With consumers increasingly adopting subscription services across a range of sectors like streaming, meal kit deliveries, and fitness memberships, this industry is expected to grow significantly, potentially reaching $2.4 trillion by 2028.
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GLOIn 2022, the subscription eCommerce market had a value of $96.61 billion, as per ReportLinker’s data. With consumers increasingly adopting subscription services across a range of sectors like streaming, meal kit deliveries, and fitness memberships, this industry is expected to grow significantly, potentially reaching $2.4 trillion by 2028. These services, known for their convenience and uninterrupted access, have become a social phenomenon and are now integral to household finances. According to CR Research, households allocate approximately $219 per month on various subscriptions.
However, despite their benefits, subscriptions often carry a reputation for being easily forgotten. The same study highlights that people tend to overlook their monthly subscriptions, with 74% of consumers finding it easy to forget about them. Additionally, canceling subscriptions can sometimes be a challenging process.
Nevertheless, a notable trend is emerging among subscription brands. They are simplifying the cancellation process for customers, reflecting a broader recognition of the importance of trust and long-term relationships.
So why are subscriptions embracing transparency?
Firstly, dissatisfied customers can quickly share their grievances through social media, reviews, or word-of-mouth, potentially damaging a brand’s reputation. Subscription companies are proactively making it easier to cancel subscriptions to prevent such negative publicity.
Secondly, regulators have become more vigilant about protecting consumer rights in the subscription industry. Various countries have introduced laws and regulations to ensure customers can cancel subscriptions without unnecessary complications. Subscription companies are adapting to this regulatory environment by implementing more user-friendly cancellation processes.
By adhering to regulations and simplifying cancellations, subscription brands not only avoid legal issues but also demonstrate their commitment to ethical business practices and consumer rights.
Furthermore, subscription brands understand that retaining customers is just as important as acquiring new ones. A positive customer experience throughout the subscription journey, including the cancellation process, can significantly impact customer satisfaction and loyalty.
Why does transparency create loyalty?
In the realm of retail subscription commerce, loyal subscribers are crucial for driving revenue and ensuring the success and sustainability of retailers.
According to the “Subscription Commerce Readiness Report: The Loyalty Factor” by PYMNTS Intelligence, the most prized subscribers, referred to as loyalists, are the cornerstone of the retail subscription commerce ecosystem. They contribute significantly to overall revenue, with an average monthly expenditure of $65 per subscription and an average subscription duration of 30 months. This extended commitment translates into a projected lifetime value (LTV) exceeding $2,500.
The research also revealed that over half of these loyalists belong to the upper-income category, with annual earnings exceeding $100,000. Furthermore, a significant portion of loyalists falls within the millennial or bridge millennial demographic, highlighting the strong loyalty demonstrated by younger generations in the realm of retail subscriptions.
As transparency and ease of use continue to drive the growth of subscriptions, buy now, pay later (BNPL) platform Affirm is reportedly entering the subscription market. Affirm Plus, the new subscription service, promises a 0% annual percentage rate (APR) for installment loans of up to $2,500, further emphasizing the importance of transparency and consumer-centric approaches in this evolving industry.
Read more: Report: Affirm Explores Subscription Service to Diversify Revenue Sources
