This is the year of transformation for the subscription business, putting question marks over 2023.
By 2022, it will become commonplace to call the “great unsubscribe” as inflation-stricken consumers have to choose between the subscriptions they got during two years of COVID restrictions.
These are tough choices, and some are better than others. Looking at some of the clear winners, consumers decided on two types of subscriptions they were willing to keep despite the high cost, streaming entertainment and… wait for it… pet supplies.
In a December interview with PYMNTS’s Karen Webster, Jenny Wolski, Petco’s senior vice president of omnichannel experience, said the 25 million pet parents in the U.S. have shown no signs of quitting their Vital Care membership, which costs $19.99 a month. Veterinary services, pet grooming, and more are available for them for large pets and $9.99 per month for small animals.
Wolski said Vital Care “pays for itself,” adding that “depending on the type of pet you own, you can save hundreds of dollars a year through the program, even if you pay a monthly fee.” Petco plans to expand the product and service in 2023 To other products and services, its data shows no slowdown in membership catering to our beloved pet companions.
Even so, the latest Subscription Commerce Conversion Index, a partnership between PYMMTS and sticky.io: Subscribers Seek Affordability and Convenience, found that “merchant performance, as measured by the Subscription Commerce Conversion Index, stagnated in September as merchants reduced discounts and free Shipping Offer”
Our data shows free shipping down 4.1 percentage points and subscription discounts down 3.1 percentage points, though buy button adoption “rose to 53% of surveyed sites and 7% for BNPL, which is relative to The final edition of our most actively developed index.”
These numbers are part of the subscription companies’ roadmaps for 2023, and given their strong year-end results, it’s a clear indication of just how much subscribers value these experiences.
File it under “A Word to the Wise”. Sticky.io CEO Brian Bogosian told PYMNTS that the recipe for subscription success in 2023 will revolve around “simplicity and streamlining the process of getting people involved.”
“If you have lungs [process], multiple website pages, logins, passwords, you make it a hassle and people drop stuff. Keeping it simple, taking advantage of the impulsive decisions consumers might make about what they like, making it simple is important,” he said.
Vindicia CEO Roy Barak spoke of the battle the seemingly immune streaming service will face, telling PYMNTS, “Instead of cutting content or service, look at how you can reduce payment failures that lead to passive churn. Consider how you can offer personalized subscription packages to increase customer lifetime value and grow recurring revenue streams.”
This is reinforced by the latest Subscription Commerce Tracker®, a partnership between PYMNTS and Vindicia. Reducing involuntary churn and simplifying the billing process will help many subscription brands retain subscribers in 2023. Doing nothing will surely cost them.
“A significant number of consumers dislike the current billing process for various services and providers so much that they are willing to pay a premium for an improved payment experience,” Tracker said. “Nearly a quarter of consumers surveyed said they were very or very willing to pay extra for it, including 47 percent of Millennials and 46 percent of Gen Zers.”
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