Subscription Commerce

Subscriptions Are On The Rise, But Features Lag Behind

Subscription

It’s hard to imagine typing a document or planning a budget without using a Microsoft Office product. The nearly ubiquitous software used to only be sold off the shelf at brick-and-mortar stores like Staples or CompUSA — or come preloaded on new computers.

But in 2011, Microsoft took an alternate approach: It released a monthly cloud-based subscription of its Office suite for companies, which morphed into the home and student subscriptions that exist today.

Companies that are not blue chip bellwethers need to come up with unique ways to promote a new subscription to consumers — whether it’s via a free trial, a reward, product reviews, easy sign-up or plan options — to turn browsers into subscribers.

While a whopping 37 million websites offered subscription services in 2014 — that figure grew by more than 800 percent in 2017 — not all subscriptions are feature-packed, according to PYMNTS Subscription Commerce Conversion Index. Here are five things to keep in mind when trying to convert online users to subscribers.

—Subscription companies want consumers to add passwords before checking out, but this practice can cause friction. Companies love to add this step to the sign-up process — 79 percent of B2C services to be exact. Of those that didn’t, several emailed passwords to customers or required them to call customer service. But this causes friction: Typing in a password takes the user’s attention away from the sign-up process — especially if their password has to meet certain standards. And, when they create a password, they might have to switch windows to consult apps that handle passwords too. To solve this problem, Chargebee only asks users to create a password the second time they log in with their email address.

—33 percent of B2C companies provide a free trial. By allowing customers to try out a subscription service, companies can hook in new subscribers. This strategy works best for companies that don’t accrue high costs for providing goods — such as a media-streaming service. Free trials might be a more costly feature for companies whose products are more expensive, such as those that sell physical items, for example. And with some subscription services — like the “box-of-the-month club” — customers typically know the product in the first place, so a free trial isn’t as important to their business.

—A little less than a quarter — 21 percent — of B2C merchants offer rewards to subscribers. Companies such as Recharge and Smile.io have capitalized on this trend, providing technology for brands to reward customers for their purchases with points that customers can redeem for discounts or in-store offers. Subscription services such as Knitcrate, which is targeted to the knitting community, are making use of Recharge and Smile.io’s software, for example.

—49 percent of B2C merchants offer product ratings or reviews. Services like Netflix offer ratings for users to help them decide which of the company’s content they’d like to consume. Popular movie-streaming services takes this idea a step further, however, with personalized movie ratings. The ratings shown to users are not an average of all reviews: They only represent reviews from users with similar tastes in entertainment, according to BGR.

—65 percent of B2C merchants provide plan options. Consumers have different tastes. While some consumers like to pay for everything up front, others would prefer to pay monthly. By offering different plan options, B2C retailers can serve different customer wants and needs.

As for Microsoft, the subscription service has paid off handsomely. The Office 365 service now has a user base of 30 million people.

With the success of Office 365, perhaps even more companies  particularly those in the software industry  may jump on the subscription bandwagon by offering monthly or yearly versions of their products as well.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

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