Brightback’s third annual State of Industry Report is officially here, and we’re excited to share it with you.
In the most exhaustive retention study of its kind, this new research reveals a host of compelling insights about the preferences and habits of 1,088 U.S.-based subscription customers – all of which reveal clear implications for the subscription industry. In fact, two overarching takeaways emerged from this diverse set of findings.
First, subscriptions are on the rise. 65% of US consumers who participated in this study now subscribe to an online service. 36% purchased a subscription they wouldn't have otherwise, as a result of the pandemic.
Second, being able to easily cancel online is of paramount importance to today's digital subscriber. Customers are more likely to purchase and refer services that make it easy to cancel online, and we reveal those services rated as having the best and worst (below) experiences.
While some minor differences exist in industry penetration, the following four statistics illustrate these two findings with great clarity:
1. An overwhelming 86% of U.S.-based consumers say they anticipate having the same number of subscriptions or more over the next 12 months.
From exotic boxes to home food delivery to small business productivity software, the Coronavirus pandemic and global events of 2020 reshuffled the global subscription landscape in a true tipping point for the industry.
While it would be reasonable to question whether 2020’s pandemic-driven growth will only be temporary, the fear of “here today, gone tomorrow” appears to be purely unfounded. Next year will almost undoubtedly be one of continued growth for subscription businesses as consumers continue to stretch their budgets in the name of convenience.
2. 98% of U.S. subscription consumers now subscribe to streaming media services.
It will likely come as little surprise to many of you, but technology-first subscriptions are still outpacing physical goods by a significant margin. However, this explosion in streaming media subscriptions cannot be overstated. We are rapidly approaching a point where every single American consumer will be subscribed to at least one streaming media service.
3. 80% are more likely to purchase a new subscription from a company that lets them cancel online.
Somewhat surprisingly, consumers are indicating that they are already considering ease of cancellation when deciding whether or not to subscribe to a new service. What was once a preference for online cancellation options is rapidly becoming a demand. Now that consumers have experienced this type of flow, anything less convenient may begin to feel like too much of a commitment or one that is needlessly complicated.
These metrics make it clear that a focus on retention is necessary not just to prevent churn, but also to manage customer acquisition costs.
4. 32% of respondents had changed their minds about cancellation after being offered an incentive within the last 12 months.
This finding should be very encouraging for subscription-based businesses concerned about churn. Nearly one third of subscribers can be dissuaded from cancellation when presented with the right incentive(s). Cancellation is not a finality for today’s subscribers, but an opportunity to extend an existing customer relationship. We expect that more companies will start testing rescue tactics in the next 12 months, which will only add more fuel to the industry’s already blazing-fast growth.
Get all the new data points and industry-specific analysis by downloading Brightback's free 2021 State of Industry report here.