Why D2C Wine Subscriptions Fall Flat

As artificial intelligence (AI) transforms the direct-to-consumer (D2C) subscription industry’s customer service, SommSelect maintains that the personal feeling is necessary to keeping members engaged.

In an interview with PYMNTS, David Lynch (no, not that one), editorial director of the wine curation company, which has several monthly subscriptions, said that as the space grows more crowded and consumers decide which subscriptions to keep and which to cancel, the personal touch becomes all the more essential to maintaining their loyalty.

“For all of the tech optimization that we’re seeking, and for all of the efficiencies that creates, there still needs to be a personal signature on it,” Lynch said. “We’re still creating content for people by humans and doing it in a thoughtful way. That, to me, is a point of differentiation for us that we can’t lose, … because without some soul, why would you join a club? I think that’s probably how people end up shaking out what clubs they belong to.”

Lynch added that, for the company’s wine clubs to maintain their subscribers, it is more important to create a sense of membership, with thoughtful curation, nice presentation and other personal touches, than to focus solely on prices, even amid macroeconomic pressures.

PYMNTS research finds that price is far from the top factor that would cause a consumer to unsubscribe, according to data from the study “Subscription Commerce Readiness Report: The Loyalty Factor,” created in collaboration with sticky.io, for which we surveyed more than 2,000 U.S. consumers with retail product subscriptions. The results reveal that consumers are far more likely to unsubscribe because of bad customer service experiences or discontinued loyalty perks than because the subscription does not save them any money relative to buying products individually.

That said, cost certainly remains a factor. Lynch noted that, following the subscriptions’ explosive growth in 2020, as inflation ramped up, subscriber acquisition slowed.

“In recent years — ‘21, ‘22 — there’s been growth, but it’s been much more modest,” Lynch said.

Certainly, consumers are being conservative with their subscription spending. Research from the same report revealed that the average number of retail subscriptions per subscriber is down to 2.6, the lowest number on record since February 2021.

Still, Lynch argued that by focusing on value rather than on low prices — making sure members are getting a meaningful experience for their spending — the company maintains positive growth.

Indeed, an earlier edition of PYMNTS and sticky.io’s study, “Subscription Commerce Readiness Report: Bridging the Gap Between Subscription Conversion and Retention,” reveals that cost is far from retail subscribers’ top motivator. In fact, only 14% of consumers cited cost as their top reason for subscribing — less than half the 36% share, representing a plurality of those surveyed, stating that enjoyment is their main driver.

Lynch noted that one of his biggest learning curves with the company’s subscription programs has been the realization that the sense of membership is essential to consumers feeling connected and therefore remaining engaged.

“We’re really looking to turn up the gas on member benefits and such,” Lynch said. “The learning curve for me is that it’s not just about providing this really cool product but providing the support around it and the sense of membership around it. People are invested.”