Inflation Prompts 10x Increase in Consumers Reevaluating Subscription Value

For many subscribers, convenience alone is no longer enough to retain their loyalty: Personalization is now a must-have feature that drives engagement for discerning consumers. Many subscribers see the availability of options, ranging from choosing payment methods to setting subscription start and stop dates without penalty, as essential to their loyalty.

In the Subscription Commerce Conversion Index, a PYMNTS and sticky.io collaboration, we examine how consumers’ subscription preferences are changing as economic forces impact pricing and how customer experience can make or break subscriber loyalty.

Inflation is impacting how consumers look at their spending. PYMNTS data reveals that consumers are factoring in the added costs of inflation when evaluating enrollment with a new subscription service. Consumers are looking for value that justifies the new expense, and when it does not, they are choosing to save money. The share of nonsubscribers citing cost as the most important reason why they did not enroll with a retail subscription service was just 2% in October 2021, but 22% in March 2022. Cost was therefore the most important reason for not adding a subscription service.

Younger consumers are not only hesitating to add new subscriptions, but are shedding them faster than other demographics. Younger consumers were the most engaged with subscriptions over the last year, but many are now decluttering their subscription holdings. Generation Z consumers exhibited the highest rates of subscription cancellations in the past year of all age groups at 17%, followed by millennials at 16%, bridge millennials at 14% and Gen X consumers at 11%.

Consumers are redefining convenience. Consumers’ new definition of saving time includes saving the “value” of their time. As personalization becomes a key driver of consumer choice, it may act as the new differentiator for subscription commerce companies. This does not mean that consumers prioritize affordability above overall customer experience, according to our research.

Despite inflationary pressures, most consumers are still prioritizing experience over pricing when choosing a subscription: Far more shoppers cited convenience (81%) as an important reason to enroll with a subscription service than pricing (46%), for example. PYMNTS’ research shows that consumers see saving time as a benefit that is worth paying for, but consumers are well aware when subscription services fail to deliver on convenience and time saving consistently.

Overall subscription rates are down — and it is not just due to costs. For many consumers, user experience issues and a lack of subscription personalization features have caused them to abandon their subscriptions. Our data shows that 17% of consumers canceled their subscriptions because they were receiving more of the product than they were able to use, highlighting either a lack of order customization features or consumers’ limited access to them. Another customer experience issue — erratic delivery service — was cited by 15% of consumers as relevant to their decisions to cancel.

Subscription services may be able to regain consumer engagement by improving order personalization tools and user experience issues, such as better delivery management. Consumers want more than better user experiences, however: They also are demanding more customization capabilities over how they pay for their subscriptions. Eighty-two percent of subscribers stated that the ability to pay using their preferred payment methods was one of the features that they wanted most from merchants, up from 69% in October 2021. We also found that 81% of subscribers identified “the ability to immediately cancel a subscription without penalty” as important, up from 70% in October 2021.

PYMNTS data shows that convenience and reliability are highly important for both younger consumers and the affluent. These factors consistently rank above pricing in importance.

To learn more about the impact of inflation and user experience on subscriber loyalty, download the report.