You may have noticed this consumer shift: it’s quickly becoming a subscription-based economy. This is basically a business model where customers pay a periodic fee for access to products and services.
So, whether folks are joining membership programs, streaming entertainment, upgrading software or restocking favorite products, businesses are providing annual or monthly subscription services to bump up profits with recurring revenue.
Some of the well-known names are Dollar Shave Club, Blue Apron and Amazon Subscribe and Save.
It’s not an exact science yet. Consumers are still reluctant to sign up for long-term services. Replenishment services are easier to convert – probably because consumers already know they want or need this product. Getting regular refills is about ease and convenience.
- 15% of consumers purchased subscriptions for recurring purchases usually delivered monthly (McKinsey)
- 55% considering a service ultimately subscribe; replenishment services are most popular (McKinsey)
- 60% are purchased by women; 44% have one subscription, 29% two (McKinsey)
- 28% said personalized experience was the most important reason for continuing a subscription (McKinsey)
- 46% of direct-to-consumer consumers (Dollar Shave Club, etc.) purchased a subscription (Forrester)