Subscriptions are getting a going-over by consumers at a time of high inflation, but cost isn’t always the main consideration for keeping or cancelling, especially for the millennial and Gen Z consumers who continue to be prime drivers of growth in retail subscriptions.
For the Q2 2022 “Subscription Commerce Conversion Index,” a PYMNTS and sticky.io collaboration, we surveyed more than 2,140 U.S. consumers and found that “three factors influenced purchasing decisions and emergent personas: enjoyment, which includes quality, access, novelty or fun; convenience, which includes ease of use or time-saving efficiency; and cost,” as 60% of consumers cite cost-related elements as one important driver of engagement, but just 20% stated that they pursue subscriptions mainly to save money.
Millennials and Gen Zers still lead the pack, but some changes were observed in the second quarter as subscribers did some trimming here and some adding there, as these demographics do.
“Retail subscriptions inched up to 25% in May, representing a 0.7 percentage point increase, with millennials and Generation X consumers driving growth in Q2 2022,” according to the latest report. “Middle-income consumers led growth in subscriptions among all income groups, with an increase of 2.3 percentage points, while higher-income consumers showed a small decline and Gen Z consumers showed the steepest reduction in the number of subscriptions held.”
Overall, we found that most categories showed a slight increase in subscription levels going into Q2, “with the notable exception of streaming.”
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Favoring Experiences Over Expenses
Continued solid performance from middle-income millennials and adjacent cohorts drove the gains made in the second quarter, and it’s important that merchants keep value out in front.
“For these consumers, the availability of subscription services that make it simple for them to access a variety of quality products and services that are fun to use or offer some type of novel value is key,” the latest Index states.
Additionally, research shows that “consumers are joining for enjoyment and leaving when the services fail to deliver consistently on aspects of enjoyment that matter in the long term. Although more than 10% of consumers indicated they had canceled a subscription, merchants that can tap into these consumers’ passion for convenient enjoyment that is worth its cost are more likely to avoid subscriber loss. Case in point: Just one-third of cancellations in May occurred because of budget constraints, down from 55% in March.”
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