Retail Subscription Features Help Woo Consumer Engagement

Consumer use of retail subscriptions started rebounding across most demographic groups in the first quarter of 2023, rising 11% since September 2022 and showing the resilient appeal of these services, even though people are getting pickier about what they keep or cut.

According to The Subscription Commerce Readiness Report: Bridging the Gap Between Subscription Conversion and Retention, a PYMNTS and collaboration, the improved performance is largely a combination of convenience and enjoyment, but it takes the right feature set to keep subscribers engaged as costs rise and shopping options expand.

The survey of over 2,240 consumers revealed that “millennials and bridge millennials drove the uptick in retail subscriptions in February 2023, exhibiting 6.6 and 5.6 percentage point increases, respectively, since September 2022. The share of Generation X consumers with retail subscriptions rose from 24% to 27% over that same period. Retail subscriptions among Generation Z consumers remained largely stable at 22%.”

Baby boomers and seniors had a retail product subscription in February moderated their use of retail subscriptions slightly, down to 9.4% in February from the 10% held late last year.

While encouraging, consumers pick and choose what retail subscriptions to hold and which to drop based partly on cost, which remains an issue, but also due to perceptions of value that attend retail subscriptions, with features offered by merchants driving decisions.

Per the report, “While cost is rarely the primary driver for subscribing, it is the top reason consumers cite for canceling retail subscriptions,” with 56% of consumers who canceled a subscription in the prior 12 months citing cost-related reasons. Other reasons for cancellation include finding the service unnecessary (18%) or the subscription failing to meet consumers’ expectations (12%).

The Feature-Satisfaction Equation

Features that were once seen as novel are now expectations, with the presence or absence of things like free shipping and loyalty rewards deciding factors in subscription decisions.

In addition to free shipping, the study notes that “Loyalty benefits and the ability to pause subscriptions or skip billing periods are also widely considered must-haves. We found that 27% of subscribers say discontinuing loyalty benefits or the ability to pause or skip would push them away. Strict refund policies that do not permit returning disliked products would also lead to cancellation, particularly among younger consumers. Among Gen Z subscribers, 37% would cancel a subscription if they were unable to process a refund.”

Subscription merchants are getting the message as more have improved checkout experiences and are focusing on bolstering more sensitive areas where churn often happens.

For example, 97% of top-performing subscription merchants offer flexible subscription experiences like pausing subscriptions or modifying the products included in their plans. “By contrast, just 10% of the 30 bottom performers allow their subscribers to pause their subscriptions and none provide the option to modify the products included in their plans.”

Payments choice continues to yield its well-known influence over subscribers. The report finds that “The rising adoption of BNPL payment options has become a notable conversion-driving strategy, despite being offered by only a small percentage of providers. Indeed, for the first time since the inception of the Subscription Readiness Index, more than 1 in 10 subscription merchants now offer BNPL for subscription plans, representing an increase of 4.9 percentage points relative to September 2022.”

Get Your Copy: The Subscription Commerce Readiness Report: Bridging the Gap Between Subscription Conversion and Retention