Half of All Subscription Providers Are Struggling to Attract Customers

Amid inflation, about half of subscription businesses expect a difficult year ahead for customer acquisition.

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. We found that 48% of them expect to face challenges related to attracting new customers in the next 12 months.

A third of subscription providers cite this issue as the most important challenge they are facing, while an additional 15% view this concern as important, but not the most important one they are dealing with.

The Data in Context

Indeed, research from the latest edition of PYMNTS’ Subscription Commerce Conversion Index study, “The Subscription Commerce Conversion Index: Subscribers Seek Affordability and Convenience,” created in collaboration with sticky.io, finds that, rather than subscribing to new services, consumers are paring back.

The report, which drew from a survey of more than 2,100 U.S. consumers, found that the average consumer dropped at least one retail subscription, holding an average of 2.9 in September, down from 4.1 in July. The September figure represents a 42% decline from the peak of 5.0 in October 2021.

Amid this belt tightening, subscription services are being challenged to step up their offerings.

“We’re seeing more and more membership rewards. We’re seeing soft rebates, credits towards other products, or discounts to other offers,” Brian Bogosian, president and CEO of subscription commerce platform sticky.io told PYMNTS in a round-table discussion.

Some providers are even finding that, to weather the current economic climate, they cannot rely on subscription commerce alone.

“I think in 2023, you’re going to find that direct-to-consumer companies that do not also sell under other modes — say a la carte or gift-based — are going to have a hard time maintaining subscription revenue,” Matthew Berk, CEO and co-founder of direct-to-consumer (D2C) coffee company Bean Box, which offers both subscriptions and products available for one-time purchase, said in an interview with PYMNTS.