The retail subscriptions industry is losing momentum as economic pressures cause subscribers to shift behaviors and reevaluate their subscriptions.
PYMNTS’ research identifies “loyalists” as a crucial subscriber group responsible for 79% of total revenue for retail subscription firms. These customers are discerning, expecting feature-rich and painless experiences. When merchants fail to meet these expectations, the threat of a loyalist exodus looms.
The “Subscription Commerce Readiness Report: The Loyalty Factor,” a collaboration with sticky.io, explores how providers can meet these expectations. We examine the features offered by retail subscription merchants and the impact these features have on overall subscriber experiences. This report is based on a census-balanced survey of 2,094 Unites States consumers conducted between Jan. 24 and Feb. 10 and a study of 200 subscription commerce providers conducted between Jan. 27 and Feb. 10.
Key findings from the report include the following:
The Subscription Commerce Readiness Index reveals a cautious atmosphere as the retail subscription industry faces economic headwinds. The Index increased from 55.5 in February 2023 to 55.7 in April 2023 as consumers tightened their purse strings. Subscriptions among high-income consumers dropped by 3 percentage points, and millennial-owned subscriptions dropped 3.8 points. Dovetailing with this economic uncertainty, subscriptions per subscriber have fallen to 2.6, the lowest since February 2021.
Not all subscribers are equally profitable, but loyalists stand out. This top 30% of subscribers generate 79% of total revenue for retail subscription providers. These subscribers boast a lifetime value exceeding $2,500 and, on average, spend more and stay subscribed longer than other subscriber groups. However, loyalty has limits, as even 2 in 10 loyalists weigh whether to keep their subscriptions.
Top-performing merchants are carving out a moat in the subscription commerce space by tuning in to consumer demands. They lead the subscription merchant pack by 53 percentage points in offering convenience-related features. This group also outstrips the bottom-performing merchants by 67 points in offering flexible subscription experiences.
Retail subscription providers must recognize the outsized value of loyal subscribers and leverage features that foster their retention. Download the report to learn more about what consumers want and what providers can do to keep retail subscriptions alive.