Subscription businesses have taken the eCommerce industry by storm.
And with so much happening, there’s been consistent research and studies around subscriptions.
Packed with numbers and insights, these studies can help you make informed strategic decisions to take your subscription business to the next level.
But it’s often not easy for retailers or marketers to turn these research findings into actionable strategies for their subscription businesses.
That’s why we put together this article, including some of the latest research and studies from the industry, to help you gain insights to guide your subscription business strategy in 2023.
Read on!
Subscription industry statistics, research, and studies to guide your strategies in 2023
#1 The subscription market is soaring
The online subscription industry has grown tremendously in the last couple of years. And it isn’t slowing down—it’s growing.
According to research by UnivDatos, the global eCommerce subscription market, valued at $73 billion in 2021, is expected to grow to $2.64 trillion by 2028. That’s a massive CAGR of 72.9% increase.
The trend that first began with magazine and newspaper subscriptions has evolved into a strategy for eCommerce brands across industries. From software to beauty to food to medicine—all types of industries are following the subscription trend.
Consider these numbers:
- In 2021, brands with existing subscription models grew their customer base by 31%
- In 2022, 79% of consumers showed interest in auto-replenishment subscriptions
The key takeaway: If your Shopify store doesn’t have a subscription model yet, it’s time to set up one right away!
If you’re treating your subscription business as an add-on, it’s time to shun that attitude and bring subscriptions to the forefront.
Every industry is adopting the subscription trend. Regardless of your products or services, you can provide convenience and price benefits to customers via subscriptions.
To get started, install a Shopify subscriptions app on your website.
#2 Subscription is a strong retention strategy
65% of a business’s revenue comes from repeat customers. And a subscription model is one of the best retention strategies—it brings recurring revenue from repeat customers.
But how do subscriptions help improve retention? Let’s understand that with these points:
- The eCommerce industry is competitive, and so is the subscription sector. Retailers think price benefits are the best retention strategy, but other techniques work better when you take the customers’ perspectives. For example, flexibility and the ability to pause subscriptions can help retain customers more than the cheapest-price tactics.
- Another common assumption about subscriptions is that it helps build relationships with customers. While it’s true to some extent, the best advantage of subscriptions is that it turns your existing customers into loyal customers—those who like your brand, product, and services, would easily sign up for subscriptions. Subscription is an excellent strategy to boost your existing customers’ loyalty.
A study by Fuel by McKinsey shows the main reasons customers sign up for subscriptions, the category/industry most suitable, and examples of brands:
The key takeaway: Customer retention is the best strategy to maximize revenue from recurring customers.
Remember, as competition in the subscriptions market increases, the best way to hook your existing customers is to offer them subscriptions.
#3 Subscription businesses leverage data
Data is the most useful resource for online businesses. And subscription-based businesses can leverage data like no other business model.
That’s because subscription-based businesses have more opportunities to collect data as customers get into long-term associations with the brands.
Regular and recurring transactions and touch points lead to more interactions between the subscription service and customers.
Subscription marketers can use the data to create better customer profiles and segments, targeted marketing campaigns, improve personalization and customer experience.
In addition, data can help retailers develop products and services that meet customer expectations—a key marker for scaling business and optimizing customer journey.
Data from subscription-based businesses can be used for various business goals, as seen in this image:
The key takeaway: Leverage data from your subscription business to measure unique performance metrics relevant to your business.
Data is the best currency and resource for contemporary brands. To make data collection and analysis easy for you, set up automations for your subscriptions so that your data gets collected automatically.
#4 Subscription businesses grow revenue 5x faster
According to the Subscription Economy Index, subscription businesses grew revenues five times faster than S&P 500 companies from 2012 to 2019.
Consider these figures. These different customer behavior patterns lead to increased revenue:
- A study by Deloitte found 57% of customers spend more money on a particular product category after getting a subscription
- 40% of customers start using less of other alternative products, brands, and online stores after they join a subscription
- Once customers join a subscription, it triggers their curiosity about other subscription providers or builds habits of similar types of services
The key takeaway: Harness the power of recurring revenue to grow your profits.
One way to scale a subscriptions business to boost revenue is to offer customized and personalized subscription options. Tailor your subscription plans to your customers’ requirements.
#5 Free trials a key strategy for subscription conversion
As the number of subscriptions increase and cancellations rise, eCommerce retailers are trying different tactics to retain subscribers.
One of the most effective strategies is free trials—leads to 61.7% conversions.
When products and services are good, customers will subscribe. So, instead of spending resources on marketing products and services, subscription businesses have been offering free trials of subscriptions and boosting conversions.
The idea is to offer free trials to curious potential customers to experience the product/service themselves.
The key takeaway: It’s important to experiment with offers and test what works best for your product/service and industry.
#6 Customers like to be in charge and have control
With almost everything available at fingertips, today’s savvy customers like to have control while they shop and transact with brands.
This is a capability that subscription models can fulfill, provided they set up a customer-centric subscription plan.
What does a customer-centric subscription plan have?
- Allow customers flexibility—choose from different subscription plans
- Enable easy pause, swap, cancelation of deliveries
- Make it easy for customers to swap, remove or add products/services in deliveries
- Automated billing and payments
Customers don’t like to contact customer support for these regular requirements. They prefer the ease and convenience to make these changes on their own.
The key takeaway: Not only should you allow flexibility, you should also give the reins in the hands of your customers so they can perform these tasks on their own.
For this, you will need a smart subscription tool that allows these features.
Also, to ensure effective communication with your customers, implement a UCAAS System in your eCommerce business. You can pick up details in all conversation across various channels, and use the data to know your customer’s preference, thus leading to a higher sales and retention.
#7 Only the best subscription models keep customers’ stickiness
A study revealed more than seven out of 10 customers feel there are too many subscriptions. And there’s a limit to the number of subscriptions every consumer will sign up to.
Hence, the rise in the number of subscriptions has seen subscription churn rate increase.
Look at this industry-based subscription churn rate chart:
Only subscription businesses that provide the best experiences can keep customers long-term.
Here are the reasons that lead to cancellations for those who have multiple subscriptions:
- Managing and updating personal details—48% of consumers
- Accessing accounts across multiple devices—78% of subscribers would be happy to have a single platform for all their subscriptions
- Flexibility to pause subscriptions on and off—56% of subscription users
Indicators useful for companies to improve subscription management:
The key takeaway: In 2023, it’s critical to address subscription fatigue and churn. It’s essential to provide value to customers. There are a couple of ways to improve value.
For instance, bundle products and services as additional offerings.
Bring in personalization—it’s no longer about addressing customers with their first names in an email. Effective personalization is about understanding your customers’ journeys in detail, high-level segmentation, and using data to deliver the best experiences in the industry.
At every touch point in the subscription journey, you must ensure you strengthen loyalty and decrease any experience that may lead to customers wanting to cancel the subscriptions.
#8 Businesses across industries are offering subscriptions
From a B2B2C (business to business to consumer) approach to a D2C (direct to consumer) ecosystem, the subscription model is evolving and being reinvented across industries.
While the subscription concept might have started with newspapers and magazines, today, the subscription industry is evolving. Subscriptions in newer sectors are flooding the market.
From fashion to home catering to toys to pet food to accessories—every industry is trying out the subscription model.
Look at this illustration that shows subscription business market share by industry:
The key takeaway: No matter your industry, you can try out a subscription model.
How to apply these research findings to boost your subscription business?
With such a boom in the subscriptions industry, which opportunities should you seize to boost your business?
You must choose the strategy that aligns with your industry, products/services, and customer segments.
However, whatever strategy you choose, you’ll need to first set up an efficient automated subscription model on your online store. For that you’ll need an intelligent automation tool.
Explore Appstle Subscription and Loyalty app for your Shopify store.
