Vantiv, the credit card payment and processing company, has found via new research that there are increasing disparities in subscription spending habits from one generation to the next.
In a press release announcing the results of its study, Vantiv said that while Gen Xers and baby boomers aren’t joining subscription services at a fast clip, millennials are. Vantiv found that more than 70 percent of millennials have a product subscription, while 89 percent have a service subscription.
Millennials, reported Vantiv, see subscriptions as purchasing made easier at a time when they are being inundated with choices. Meanwhile, Vantiv’s research, conducted by Socratic Technologies, shows less than half of Gen X consumers and less than 20 percent of baby boomers and retirees use subscription-based products. For service subscriptions, it is much higher, coming in at 67 percent for boomers and 78 percent for Gen Xers.
“ECommerce merchants must seriously consider subscription strategies to build loyalty,” said Bill Cohn, senior product leader, eCommerce, Vantiv, in a press release announcing the new research. “The business model provides many advantages for merchants. First, customer lifetime value to a merchant typically goes up. A consumer can click ‘buy’ once and get razors or beauty products, or coffee pods, shipped every month with no further thought or action. Second, services that would be costly if billed in one lump sum become more affordable. This is particularly important for millennials, who have the strongest appetite for online services but the tightest cash flow compared with previous generations. Third, a growing recurring revenue stream is a good way to increase the value of your company. So, for smaller businesses or startups, a subscription model provides a great opportunity to compete with larger incumbents — think, for example, of groceries and the growing online/subscription meals delivery services.”
Vantiv noted that online merchants may think they have to go after the older generations in a bigger way with subscription services, but the research shows they aren’t likely to change their opinion on the matter. According to Vantiv, 77 percent of consumers who don’t currently subscribe to any products are unlikely to do so in the future.
