Two of the most compelling and fastest-growing sectors in the business landscape in recent years are the subscription model and the sharing economy. Similar consumer and demographic trends fuel the growth in both areas. They tap into consumers’ need for convenience, flexibility and affordability in buying or renting products or services, securely and in real time.
In this month’s Subscription Commerce Tracker, PYMNTS examines how subscriptions and the sharing economy have room to grow. There are also many daunting challenges — legal, regulatory and financial — that they must confront and overcome to ensure continued customer loyalty and revenue gains. Also, PYMNTS looks at fraud’s continuing impact on both sectors and what companies and legal authorities are doing to unplug cybercriminals.
One subscription company skilled at forging customer loyalty is Netflix. The streaming service recently revealed two diverging trends in the space: domestic business is weakening while international business remains ripe for expansion. Netflix said it added fewer subscribers than expected in Q4 2019, citing competition from new, lower-priced rivals for the shortfall, such as Disney+. Netflix also said it would not add advertising to its platform to boost revenue, despite seeing continued weakness in the United States market. On the other hand, Netflix performed better internationally, ending Q4 with 167 million worldwide subscribers.
Magazine and newspaper subscriptions are popular services that have been around for decades, making them a favorite for bad actors as well. New York officials, however, recently delivered good news to victims of a magazine scam that Orbital Publishing Group oversaw. Attorney General Letitia James said her office won more than $16 million in restitution and penalties for 68,000 victims and shuttered the scammers’ New York and Oregon operations.
Developing deep relationships with loyal fans and new customers is key to success in the subscription business. Many companies such as quick-service restaurants (QSRs) like Arby’s and Dairy Queen unveiled subscription boxes for their customers last year, and beverage giant Coca-Cola is jumping on that bandwagon with its Insiders Club offering. The service provides fans with swag, surprises and three sample beverages for $10 a month. Coca-Cola hopes the move will increase brand awareness and enhance customer loyalty.
For more on these and other subscription news items, download this month’s Tracker.
Patreon’s Quick Response To Subscription Stumble Gains Customer Trust
Identifying and filling a market need are the first steps toward successful business strategies, but sustaining growth in the subscription business means offering plans that both attract new users and deepen trust with existing ones. This is especially true for artists and other creators who may struggle financially.
For this month’s Feature Story, Wyatt Jenkins, senior vice president of product at content membership platform Patreon explains how the firm identified a subscription model that made financial success easier for artists and creators, why it stumbled in its first attempt to revamp its offerings and what management learned from its mistake.
Deep Dive: How Subscription Success Helps Drive Sharing Economy
Both the subscription and the sharing economy markets have been growing sharply over the past few years, thanks to the explosive growth in mobile technology and social media. The key factors that drive customers to the sharing economy, such as the need for flexibility, convenience and affordability, also draw them to pay for products and services with an automatic monthly or annual subscription plan. This month’s Deep Dive highlights the sharing economy’s growth as well as the challenges subscription providers must address to boost its progress.
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