Growth In Context: How Businesses Can Take Advantage Of Key Trends For Subscription Success.

When people think of subscription-based businesses, their thoughts tend to be drawn to the media outlets. From famous newspapers like the New York Times and the Washington Post to streaming video services such as Netflix or Disney+, the average consumer has a monthly budget to make sure they’re educated and entertained.

But, the last few years have seen subscriptions grow rapidly across all sectors and sectors. Subscriptions don’t only serve as products anymore. Customers can now sign up for pet-related products, luxurious automobiles, and sock-of-the-month clubs. Amazon Prime provides an even more extensive example of how subscriptions have impacted our daily lives. Amazon Prime allows customers to set up regular subscriptions to a wide selection of beauty, health, and household products. According to a report by UBS, the business model of subscriptions could expand from a market worth $650 billion to the size of a $1.5 trillion market in the years 2020 to 2025.

But, for companies that decide to go with a subscription-based model, the long-term viability isn’t guaranteed. New companies that offer subscriptions in more traditional sectors are likely to face the same challenges as Netflix and the New York Times: finding ways to provide sufficient value to ensure customer satisfaction and reduce the chance of losing customers. In addition, the continual introduction of new competitors based on subscriptions has quickly turned the market into a zero-sum game. Businesses that succeed will need to make quick, intelligent choices within the context of wider business developments.

Three ways that forward-looking companies can advance at the moment:

1. Find possibilities for hyper-customization.

Customer satisfaction is the game’s main goal, and customers’ expectations have changed significantly over the past two-year period of fast digital evolution. Today’s consumers expect a premium experience when they commit to an online subscription–regardless of whether the service provider has been digitally native for ten years or ten weeks. One of the most important tools to provide value to a new subscription company is to provide the user with a customized experience. According to research conducted by McKinsey, 71% of consumers want individualization from brands, and 76% of them expressed displeasure when they didn’t receive this kind of service.

In 2024, customization is not only about altering the email’s subject line to address the recipient’s name. Effective customization starts with knowing the customer journey and using customer data to provide an unfiltered experience. The most important thing to do is to create a strategy that is in line with your brand’s personality and your business’s model. Every customer interaction should build loyalty to your brand and reduce the possibility of them canceling their subscription. A great example of providing individual value while keeping the branding: Chewy’s complimentary oil drawings of pets of subscribers.

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2. Find the most benefit from the supply chain that is not working.

The primary benefit of subscriptions is their dependability. You’ll get regular access to a content library or a monthly supply of essential items that you need, and you should be able to trust the service to honor their side to the contract. But, the current issues with supply chains have created the possibility of a new degree that is a source of concern for the subscription service providers. What can they do to provide the same quality of service when they might not be able to guarantee that their products will be delivered on the agreed date?

Supply chain disruptions are less of a problem for online-only subscription companies like SaaS companies or cloud gaming platforms, which can seamlessly launch new services or experiences. Businesses that depend on delivery via physical means and logistics could benefit from this dilemma by experimenting with innovative ways to offer quality. At the same time, customers wait for their product to arrive on the truck. When there is uncertainty in the supply chain, businesses must be transparent about the availability of their products and delivery and provide regular updates. The primary goal is to build trust with the customer by maintaining regular contact with them and reminding customers of the value you’re offering.

3. Join forces to withstand the crush of consolidation.

Alongside the impressive growth of subscription services, Market analysts have also observed a similar increase within “subscription fatigue.” When customers review their budgets for the month and decide to reduce their subscriptions, and even remove those that don’t provide sufficient value. To prepare for this change, many companies are joining forces with other players in the subscription market and utilizing the opportunity to grow their customer base through acquisitions of smaller competitors to reach size or keep their market dominance position.

The consolidation in the short and long term could provide customers with more value from their subscriptions, allowing them to stay with their subscriptions for longer. A good example of this can be observed in the recent acquisition of Discovery Inc. with AT&T’s WarnerMedia. In a market dominated by Netflix, Amazon, and Disney+, the combination of streaming platforms such as Discovery Plus and HBO Max will give the newly merged company a chance to compete. In a highly competitive M&A market, smaller subscription providers must look for partners that can help them keep from being left out of the market completely. After the dust has settled, consolidation will allow those companies who remain to decide the conditions of their subscription services and new opportunities to sell or cross-sell their broader subscriber base to additional services.