Digital Payments

Subscription Commerce’s 'Fear Of Commitment' Moment

It’s one of the blessings and curses of subscription eCommerce: As easy as it can be to sign up consumers for one such service or another, it can be just as easy for that consumer to leave that service after a month or two. Indeed, some 71 percent of digital media consumers planned to cancel their subscriptions within one year after just one month of service, according to PYMNTS research.

In a new PYMNTS interview, Dan Burkhart, CEO and co-founder of subscription management service Recurly, discussed with Karen Webster how to get past such hurdles as that form of commerce becomes a bigger part of mainstream consumer — and even B2B — life. “We live in a fear-of-commitment moment,” he said, “yet subscriptions are proliferating.”

Part of that success comes from getting consumers inside the subscription gate — a vital task that the likes of Netflix and other streaming service providers are doing pretty well, at least according to data from the PYMNTS Subscription Commerce Tracker. It found that 90.7 percent of streaming subscribers said they were “very” or “extremely” satisfied with their initial onboarding experiences.

High Stakes

Those numbers reflect the high stakes involved for streaming subscription providers, who operate in an increasingly fierce competitive space, and deal with customers not afraid to drop a service after particular content is consumed in favor of a rival with other appealing shows or movies. Indeed, as Burkhart told it, onboarding by streaming services has improved significantly over time.

“If you fail in that initial moment of delivery to a consumer, your service is dead in the water,” he told Webster. “Getting it right out of the gate is a high requirement.”

But keeping customers engaged and loyal can be a much more difficult job, as demonstrated by that percentage of customers who plan to cancel subscriptions. The problem of churn applies to more than just streaming services, of course. According to Burkhart, one of the main challenges for subscription operations is that customers might sign up to access a particular piece of relatively unique content — say, a high-quality newspaper or magazine article, or an original miniseries — and then lose interest and eventually leave.

Live events, especially sports, stand as another combination of that blessing and curse. Consumers might sign up for a subscription service to follow a particular championship game or series and then leave once it ends, Burkhart said. The remedy? Find a way to offer other intriguing content that serves a further hook for those on-the-fence consumers. Sure, that’s probably easier said than done, but it is an important task. “The subscription services that are able to think about the subscription lifecycle from day one are the ones that succeed,” he said.

There are other opportunities available for subscription providers in such moments — specifically, the upsell, which can result in a customer upgrading from a simple plan to a premium plan, Burkhart noted.

B2B View

Other challenges can bedevil B2B subscription service providers — an area that includes software-as-a-service (SaaS). The upsell process is more than a bit different than in the B2C subscription world. Premium software services are typically sold via modules, and upgrading to those features might require formal budgetary approval from higher up in the business. “A higher cognitive load is required,” Burkhart noted. That said, free trials can be of positive use when it comes to selling and upgrading such B2B subscriptions.

Among the other main issues going forward for subscription commerce — at least on the B2C side — are payments. “At this point, pretty much everyone had a credit card on file with Amazon,” Burkhart said, and that points to further developments in the subscription eCommerce ecosystem. Who wouldn’t want to run subscription payment through one trusted authority — be it Amazon or another company — instead of giving over payment card data to a variety of players? That would seem to indicate a bigger opportunity for carrier billing. “It’s still fairly clunky,” Burkhart said. But from the consumer perspective, it makes sense, at least in theory.

Digital payments and commerce are enabling more people to move away from traditional modes of ownership and consume certain products — or access certain services — via subscription or other forms. There seems little doubt that subscription eCommerce will continue to grow — just consider the area of streaming, and the changes to come soon in that sector as big companies increase their power. But challenges remain in getting customers to stick with service providers.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.