Subscriptions in 2020: What Global Shoppers Want
Today’s consumers love subscriptions, as long as they cater to their preferences, needs and budgets. Despite the COVID-19 pandemic and current market uncertainties, 2020 is shaping up to be a good year for the subscription model.
A recent survey of over 400 respondents in 50 countries, conducted by 2Checkout, revealed insights into what shoppers want. Any company that relies on subscription sales will benefit from analyzing these findings and trend insights to help them curb churn and improve customer retention going forward.
Most Popular Subscriptions
Streaming entertainment subscriptions such as Netflix and Spotify were in the highest demand in 2020, by 64 percent of respondents. Users also favored subscription-based software and cloud-based SaaS, with 49 percent having bought at least one SaaS subscription in the last year.
Coming in third were cloud storage services, which were purchased by 21 percent of respondents. Next was online education at 19 percent. Bringing up the rear were online publications and blog subscriptions, which were purchased by only 14 percent of respondents.
Number of Subscription Signups
With more and more shoppers embracing the subscription model and new merchants entering the category, the subscription market still has plenty of room to grow. Currently, 45 percent of shoppers have an adoption rate of one subscription per year, with 2 percent purchasing two to five new subscriptions annually, while 15 percent, on average, sign up for at least one new recurring service each month.
Shoppers Want Flexibility
Flexibility is undeniably important to subscription shoppers. A whopping 79 percent want to be able to cancel at any time, 73 percent want to use their preferred method of payment, and 70 percent would like a free trial before they commit. Sixty percent of respondents said they rely on reviews and seek out recommendations to inform their decision to subscribe. In total, a majority of more than 50 percent of respondents considered all of the above factors critical when evaluating a new subscription.
Payment Options Are Key
Providing a range of payment options is still paramount to subscription success. Almost 69 percent of the respondents in this survey favored paying by debit or credit card. Mobile wallets were next in line of preference, with 46 percent of subscribers preferring to "reach for" their PayPal or ApplePay for subscription purchases. Only 17 percent said they prefer direct debits or other local payment methods, and less than 3 percent favor cryptocurrencies.
Shoppers Want Renewal to Be Easy
Another interesting trend revealed by this survey is the increased appetite for automatic renewals. A little more than half of the respondents (54 percent) indicated a preference for automatic renewals, which may indicate a trend towards convenience over “control.”
Annual Payments Are the First Choice
While a near majority of 46 percent preferred annual payments, the rest were split, preferring monthly billing at 34 percent, quarterly billing cycle at 9 percent, weekly billing at 6 percent, and only 5 percent requiring even more flexibility.
Shoppers Still Complete Orders Mostly From Their Desktops
Subscription purchases are typically completed on a range of devices, with 66 percent of this survey’s respondents preferring to purchase on their desktops. The next most popular device was the mobile phone, used by 48 percent of customers who responded. The remaining 8 percent chose to place subscription orders on their tablets.
Saving Money is Paramount
The cost effectiveness of a subscription — be it software or service — appeared to be the greatest driver of subscription purchases, with 46 percent of consumers choosing a subscription to save money. Efficiency in time, usage and convenience were also popular factors with 28 percent of respondents.
On the other hand, 23 percent of respondents reported being captive subscribers, with no nonsubscription options available. Despite this negative aspect, on the plus side, a larger percentage of respondents (38 percent) reported receiving a superior experience due to new features, perks and content the subscription afforded them.
Keep the Pricing Simple
The great majority of subscribers were in favor of a flat-rate pricing model, supporting the notion that subscribers favor predictability and control. Sixty-five percent preferred a flat rate, 17 percent preferred to pay-per-use, and 14 percent wanted to be billed for only the features they use. Eighteen percent preferred a combination of models, depending on the subscription.
Reasons to Cancel
As expected, additional or "surprise" charges were identified by 72 percent of respondents as the No. 1 reason for cancellation. A large number (63 percent) said they cancelled because they didn’t use the subscription as much as they thought they would. Half of the respondents reported that their cancellation was due to a poor customer service experience; 60 percent just felt they couldn’t afford it any more. Interestingly, 6 percent of subscribers reported they canceled due to the coronavirus outbreak, a finding revealed from 2Checkout platform data.
Despite the COVID-19 pandemic, 2020 looks to be a good year for subscription commerce, with shoppers considering all manner of available categories. Bottom line: Consumers continue to gravitate to subscriptions, especially when they're in line with what they want, need and can afford.
Erich Litch is president and chief operating officer of 2Checkout, an all-in-one monetization platform for global businesses.
Erich Litch is president and chief operating officer of 2Checkout, an all-in-one monetization platform for global businesses.
