Is the rise of the Subscription Economy leaving customers feeling oversubscribed?

Millions of people around the world tuned into the latest Apple event in the hope of seeing the latest iPhone. But rather than a new handset, fans were offered a range of subscription services aimed at securing recurring revenue in a world of smartphone fatigue. The Amazon Prime-style membership for a flat monthly fee was further proof that the subscriptions rather than ownership are changing the digital landscape.

Traditionally, businesses have solely focussed on securing one-time sales. Existing customers quickly found themselves being neglected while new customers got all the best deals. Companies were seldom interested in who their consumers were. Targets and KPI’s were all focused on selling more products or services.

Many of these brands repeatedly hid behind do-not-reply email addresses and lengthy hold times, making it difficult for users to communicate with them. The lucky long-term users who were able to open a dialogue were often treated like it was the first interaction they had with the brand. 

Thankfully, things are changing.

The rise of data-driven decisions makes it impossible to hide from the fact that acquiring a new customer is five times as expensive as retaining existing clients. By contrast, the success rate of selling to an existing customer is 60-70% compared to 5-20% for new customers. Digital natives now expect a paperless, frictionless society in a digital world where they choose to subscribe rather than own physical products.

The rise of the subscription economy

There is a subscription for just about anything as new models appear in just about every industry you can imagine, from print cartridges to a new car. Netflix replaced DVD collections with it's all that you can eat package. Elsewhere, the Adobe Experience Cloud replaced expensive individual licenses for its growing number of applications.
Faced with falling iPhone sales and a stale smartphone market, even Apple entered the subscription business. Subscription models for Cloud storage, Apple TV, Games, and music. Amazon Prime subscribers also pay a premium subscription to unlock access to free delivery on must-have items. Even start-up founders have reported that it is getting difficult to obtain funding without a recurring revenue model.

Unsurprisingly, Gartner predicted that by 2023, 75% of B2C companies would offer subscription services. 

Bubble speech with cut out word "SUBSCRIBE" in the paper.
Bubble speech with cut out word "SUBSCRIBE" in the paper.

The allure of repeated revenue will be incredibly attractive during an economic downturn where a resilient subscription economy seems to be thriving as customers turn their back on the companies that have taken them for granted. Businesses need to get used to serving rather than selling to their audience.

Businesses that embraced the subscription model from the beginning quickly learned that if a subscription was under $10 a month, customers seldom worried about the price. Over 2,000 different subscription boxes quickly flooded that market, such as Dollar Shave Club and Ipsy. 

Discover, try, buy, use and renew

According to Adobe, the new customer experience lifecycle consists of four simple steps: 'Discover, try, buy, use and renew.' IBM has also adopted a similar method focused on creating opportunities to solve the unmet needs of its customers and creating an emotional bond between users and products. 

Every organization is swimming in customer data.

But it's those that can unite every data point across the entire customer journey that can send the perfect personalized message at precisely the right time. Customer expectations will continue to evolve, adding further pressure on brands to scale faster across multiple digital channels to meet these new expectations and create superior digital experiences.

We have now come full circle. Technology is the great enabler that has made Customers the new starting point. Companies that learn as much as possible about their customers' needs without being creepy and create a valuable long-term relationship where both parties win.

As consumers, many of us have chosen the advantages of access over the unwanted hassles of ownership.

For businesses, its customers' evolving needs are transforming the traditional linear transactional channel into a circular one. According to Zuora, data from its Subscription Economy Index shows that subscription businesses are growing revenues 5-9 times faster than other business models over the past six years.

Oversubscribed customers demand more value

However, just as brands attempt to reinvent themselves as solutions providers, their audience is beginning to feel oversubscribed. Netflix, Amazon Prime, Hulu, HBO, Disney+, , Spotify, PS Plus, Audible or even a new Xbox console are just a handful of subscriptions that can quickly accumulate into an expensive monthly bill.


Cord cutters that replaced their $100 cable packages for the more attractive NETFLIX model are now noticing that their long list of subscriptions is beginning to get out of hand. Cost-cutting consumers will be expecting more than two good shows a year from Apple TV to justify its monthly subscription. Just like the neglected gym membership, services that don't look after their subscribers will be lost forever. 

Traditional sales targets are looking outdated too. The only way to secure the attention and recurring revenue that a subscriber offers is to nurture an ongoing relationship with customers and ensure they feel more than just a number on its mailing list. 

Once again, rather than jumping on the subscription bandwagon, businesses need to understand the continuously moving target of its customer's wants and needs. 

A great example of this evolution is Ford, who has now been rebranded as a mobility company that offers electric scooter sharing rental options and cars.

For Apple, digital subscriptions might breathe new life into its devices. Subscription bundles could lock customers into its walled garden and encourage automatic upgrades and navigate around the volatility of these uncertain times. For consumers, it means your future relationship with Apple could involve you paying an additional amount on top of your phone contract every month.

The rise of the subscription economy is ushering in a new digital era where the long-term relationship between a brand and customer is paramount to sustained growth and profitability. The days of taking customers or subscribers for granted should finally come to an end, which can only be a good thing. But how will you avoid being oversubscribed?


prefix 3 years ago
Just like magazine and email newsletter subscriptions, consumers must see consistency and value in their digital subscriptions, or will disconnect.

I’ve found the most difficult or time consuming changes come in the form of banking and customer communication services. Once you set everything up, it takes hours or days to switch services.

Excellent article.
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