With an explosion of subscription services, customers are struggling to keep track of all their services and subscription fatigue is setting in. So, how can businesses ensure that they do not lose out in an increasingly crowded market? Shashank Venkat offers six ways
Subscription business models have taken over many industries, and more people are turning from customers into subscribers. While subscription services offer convenience, ease of use and a better customer experience, the influx of subscription products and services means that people are subscribing to and spending a lot more on such services than before.
reveals that Americans vastly underestimate the amount they spend on subscription services. When people made an educated guess about their subscription spending, they converged on an average of around $111 per month. It turns out that they are actually spending more than double the amount, $237, on subscription services alone.
This statistic may easily be true about the rest of the world as well. A quick audit of my non-essential (excluding mobile, internet, utility) services revealed that I am loosening my purse strings for nine other subscription products and services. This says a lot about the kind of passive relationship customers have with subscription businesses today. As the aforementioned article suggests, people perceive some of these services as necessities but fail to understand their magnitude in totality. (Fun experiment: Check the number of products and services you subscribe to and let us know if you think it is overkill?)
Enter Subscription Fatigue
With all these subscriptions adding up, ‘subscription fatigue’ is the fallout of this growth. Obviously, the end result of thisis subscriber churn
, as customers prune the number of products and services they subscribe to. While the likes of Netflix and Spotify may be more resilient to subscription fatigue as they are leaders in their niches, newer subscription businesses may have a tough time combating subscription fatigue.
Moreover, subscription businesses are already struggling with the 1% problem
- only a small subset of power users are subscribing to products and services while the remaining 99% look at different ‘free’ ways to gain access to these services. Combine this reality with subscription fatigue and ever-increasing subscription prices, and the subscription industry may not live up to its media hype.
That being said, this is not a critique of the subscription model itself. If anything, subscription fatigue proves that the business model is extremely popular among users. But, as users become more discerning with their subscriptions, businesses will have to work harder to foster ‘subscription delight’ instead of ‘subscription fatigue.’
Bundle your offerings
Six ways to tackle ‘subscription fatigue’
– Subscription businesses would do well to take a leaf out of Amazon’s book. Amazon Prime is perhaps the world’s most unique subscription bundle, combining free and fast deliveries, music, movies and agrowing list of other benefits. The value proposition is so strong that Amazon has 100 million Prime subscribers
around the globe. Even Apple is said to be working on a subscription bundle for music, TV and news
. While bundling may not be possible for all subscription businesses, many can look at bundling disparate products and services for a better user experience.
– Sometimes a subscription may be perceived as too expensive for a user which prompts them to cancel the service. It is important to have tiered pricing plans going right from low-cost entry-level packages up to premium plans and optional add-ons offering additional value for power users. This ensures that customers have the option to upgrade / downgrade their subscription as needed, instead of unsubscribing from the service. A good example of this is the recent change made by Strava
, the popular running and cycling app, who have ditched their one-size-fits-all premium version in favour of 3 modular ‘packs’.
Play. Pause. Repeat.
– Whenever you think of subscriptions, you always think of a recurring billing plan, something that goes on continuously. But to combat subscription fatigue, you can look at ideas like fixed term subscriptions that stop after a predefined period, or even the ability to pause subscriptions for a limited time to help users reduce subscription fatigue while not losing them forever.Good examples of this are Video sharing website Vimeo and meal-kit delivery service HelloFresh
. It is also important to engage with these dormant subscribers to lure them back to a regular recurring billing plan.
Loyalty discounts and offers
– Discounts and offers are a good way to reduce subscription fatigue since you are offering something extra to subscribers. For instance, Netflix and many other subscription services offer a one-month free trial for their subscription program. Some businesses also provide the ability to lock-in subscription prices at a special rate before the actual price (or price increase) kicks in. You can also consider tying up with partners to offer special promotions. For instance, Hotstar is running a cashback offer for first-time subscribers and Citibank card holders where it is returning the subscription fees for the first six months as cashback. A user is more likely to sign up to your service if he/she sees an immediate benefit. Also, make sure that you have a robust subscription billing
platform in place which is flexible enough to take care of your different pricing needs.
Continue adding value
– A lot of subscription businesses start off as one-dimensional services but then add more value over time – just look at how Amazon Prime has evolved. If you keep your offerings exciting enough, users will think twice before hitting the unsubscribe button. For example, many subscription box businesses delight their customers by throwing in the odd surprise extra as a thank you to their loyal customers. Think of ways you can continue to add value to your subscribers.
Build relationships with customers
– Subscription is a customer-first industry, but a lot of businesses do not engage enough with their customers once they subscribe to their service. Make sure that you do not repeat that mistake. Keep the communication going with your customers and build compelling relationships. If you do that, you will ensure that the ‘fatigue’ doesn’t set in with your subscription business at least!