3 in 10 Subscription Services Are Losing Customers to Competitors

As subscriptions feel the churn, PYMNTS data shows that many are losing ground to competitors.

The Context

With subscription commerce taking over many of consumers’ daily routines, from how they get their food each day to how they get from place to place, companies in the space are challenged to contend with a difficult competitive landscape, forced to keep prices low, offer deals and constantly prove their worth or risk losing their customers to comparable alternatives.

Take, for instance, content streaming, where consumers have dozens of providers they can subscribe to, opting for as many as or as few as they deem appropriate. Given the abundance of players, streaming services cannot limit themselves to simply competing on price.

Netflix, for one, is looking to drive retention with the quality and variety of its content.

“We don’t really think about the pricing question from a competitive perspective. [We] think of ourselves as a non-substitute good,” Chief Operating Officer Greg Peters told analysts on an earnings call Thursday (Jan. 19). “When you think about ‘Wednesday’ or you think about ‘Glass Onion,’ these are titles you can only see on Netflix. That’s extremely powerful.”

Indeed, many subscriptions across industries are looking to set themselves apart by putting their unique stamp on their offerings. Sharath Dorbala, CEO of Vindicia, told PYMNTS in an interview that, in the face of commoditization, this level of individuality can be key.

“Curation becomes very important,” he said.

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. Of these, 30% reported facing churn from losing customers to competitors’ services or products.

Conversely, about half of those cited reported that they view competitive and promotional pricing as an important factor that consumers value as part of their subscription experience.