As economic pressures continue, the majority of subscription companies are preparing for a difficult year.
By the Numbers
For PYMNTS’ recent study “The State Of Subscription Business: Best Practices And Business Performance Drivers,” created in collaboration with FlexPay, we surveyed 200 executive decision-makers at companies that offer subscription-based services and products.
Their responses revealed that 59% envisage of these businesses expect to face challenges related the downturn in the next 12 months, and 37% of those surveyed cited this as the single most pressing difficulty ahead.
The Data in Context
Indeed, with inflation putting pressure on consumers’ budgets, subscriptions are being challenged to prove that they are essential to customers’ lives. The December edition of PYMNTS’ “Subscription Commerce Tracker®,” Economic Strains Put Nonessential Subscriptions Under Fire, a collaboration with Vindicia, notes a study finding that 46% of consumers say they are making fewer nonessential purchases. Plus, a striking 11% of American adults reported having eliminated all nonessential purchases.
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Juan Palacio, CEO of BloomsyBox, spoke to the economic challenges faced on the other side, with merchants feeling this pressure as well.
“If someone tells you that they haven’t been affected by this, I don’t know if they’re living in the same reality as everybody else,” Palacio said, observing that, since the economic downturn, there has been a noticeable uptick in cancellations and customers wishing to pause their subscriptions.
Additionally, Rima Khoury, vice president of engineering at subscription billing and management platform Vindicia, told PYMNTS in an interview that, while some consumers may not be in an economic position to continue with their subscription, there is a vast group of wavering subscribers who can be retained with the right set of actions.
“Providers must get creative to survive,” she said. “Between the sales, the marketing, the ads that you have to do, acquiring a customer is costly. As a provider, you want to try to avoid that as much as possible.”
