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New Study: Merchants Fight Subscription Fatigue With New Features, Flexibility

As the pandemic becomes endemic — and with the last of emergency Federal unemployment benefits having expired the week of Sept. 6 — expect more consumers to be taking stock of subscriptions they’ve signed up for since lockdowns began, deciding what to keep and what to cancel. It’s a time for subscription merchants to reevaluate strategies — and quickly.

In PYMNTS’ September 2021 Subscription Commerce Conversion Index done in collaboration with sticky.io, for which researchers surveyed a census-balanced panel of over 2,120 U.S. consumers, the writing is on the wall. It notes that “the retail subscription boom may be leveling off,” finding that 19 percent of consumers with retail subscriptions intend to reduce the number of subscriptions they’re using, “chiefly because they want to tighten their belts and reduce the hassle factor of managing multiple subscriptions.”

Supplier fears about a market correction in subscription commerce began earlier this year when Netflix missed Q1 with PYMNTS reporting in April that “Netflix’s subscriber base … added a scant 4 million new users in Q1, missing the forecast 6 million by a wide berth. The bad news was compounded by Netflix’s forecast for only 1 million paid net additional users in Q2 — down 9 million from Q2 2020.” While streaming has its own issues, the deeper concern is retail.

For subscription boxes of retail products from pet food to household supplies that became ubiquitous throughout 2020 and into 2021, forces bearing down include the desire to shop in physical stores again, along with a curiosity about new direct-to-consumer (D2C) offerings.

The upshot of this, per the latest Subscription Commerce Conversion Index, is that “as many as 11 million subscribers could be on the verge of canceling their retail subscription plans.”

See also: The Subscription Commerce Conversion Index

Understanding Changing Consumer Attitudes on D2C

For merchants to effectively combat subscription fatigue, it’s crucial to understand causes.

Noting generational differences in reasons for canceling, the new study reports, “Cost-cutting is the top factor driving potential cancellations among nearly every generation, for example, yet this reasoning is especially common among Gen X subscribers.”

Researchers found that 45 percent of Gen X subscribers want to reduce the money they’re spending on subscription offerings, while 40 percent of bridge millennials and 41 percent of millennials, respectively, are likewise looking to cut their subscription expenditures.

Aside from saving money, 25 percent of millennials and 22 percent of Gen X respondents told researchers they either no longer need some subscriptions or are bored with others.

These forces are causing subscription merchants to rethink offerings in a variety of ways.

For one thing, providers offering guarantee or refund policies is up 17 percent since Q1 2021 while vendors offering discounts is up 19 percent in the same period, marking “the third consecutive quarter in which the number of providers offering these features has increased.”

Adjustments to subscription terms are having an impact, as 84 percent of top performing subscription brands offer guarantees or refund policies, “compared to only 23 percent of bottom performers. Seventy-seven percent of top performers also offer subscription discounts, while only 37 percent of bottom performers do the same.”

Additionally, 94 percent of top performers offer free shipping, and 77 percent have a subscription pause feature, compared to 50 percent of bottom performers offering free shipping and 17 percent provide subscription pause.

Per the latest Index, “This demonstrates the importance for providers to offer features that not only reduce costs but also offer their customers more control to alter their subscription plans to fit their rapidly changing circumstances.”

See also: Direct-to-Consumer: Prioritizing Personalization And User Experience

Be Like the Top Performers

With the Federal Trade Commission (FTC) looking into consumer complaints about automatic subscription recurring billing, and given the new consumer selectivity coming to bear on subscription commerce, the timing is right for brands to optimize their offerings.

The problem is that many are not doing so, or at least not with a sense of urgency.

Noting that “many are still falling short when it comes to giving their customers the flexibility they need,” the September 2021 Subscription Commerce Conversion Index finds that of providers with customizable plan options dropped from 70 percent in Q2 2021 to 60 percent, adding that “the share of providers that allow their customers to make changes to their plans after sign-up has meanwhile gone unchanged at 43 percent.”

For those employing the digital program management platforms and feature mix that keeps consumers engaged, however, the outlook is sunnier, with the latest Index stating that “Adding these cost-saving features has enhanced many subscription service providers’ user experiences and reflects in their Index scores. The average provider earned a Subscription Commerce Conversion Index (SCCI) score of 47.9 in Q3 2021 — up from 46.1 in Q2 2021 and from 44.8 in Q1 2021.”

See also: Subscription Payments Declines Are Usually Random, Often Costly, But Largely Avoidable

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