March 23, 2021 | Authored by: Rubi Cohen
What subscriptions mean to the post-COVID world
COVID-19 changed everything, and that really means everything. Entertainment venues and retail outlets closed, consumers moved online. 84% of consumers shopped online during the pandemic, driving eCommerce up to 16.4% of global retail sales with a predicted CAGR of 8.1% between 2021 and 2024 (Shopify).
Media consumption, shopping, and socializing shifted to the digital universe, and new consumer behavior is shaping the way that retailers define CX and consumer offerings. Subscriptions have boomed, for everything from streaming video to beauty boxes delivered to the doorstep.
It's been a silver lining for businesses in these verticals, but this seismic market shakeup has left DTC brands uncertain about what's coming next.
The subscription boom isn't fading out
2020's consumers were pushed into the subscription model by COVID-19, but a year of cocooning and living digitally changed everyone's habits for the long term. 40% of US consumers intend to spend more time online even after the pandemic, and 53% believe routines will not return to "normal" until Q2 2021 or later.
While some will be delighted to bounce back to movie theaters and shopping malls, even they will continue with more digital interactions. McKinsey reports that online streaming is strong and here to stay, while a PWC study finds that 56% of consumers are watching more television than before. In response, 75% of retailers will offer a subscription line by 2023 (SUBTA).
Businesses can't assume that everything will snap back to a pre-COVID "normal" at some hypothetical point in the near future. 2021's new type of customer will be with us for the long term, prizing immediacy and convenience and accelerating adoption of subscription business models. They want content on their screen of choice, anywhere and at any time, plus an individualized and frictionless experience. Subscriptions are instantly available, flexible, easy to turn on and off, and appear swiftly (immediately, in the case of digital goods) on your device or at your door.
The eCommerce boom is here to stay, so brands need to consider how to prioritize a seamless omnichannel experience to win new customers and meet changing consumer demands for online experiences.
Loyalty, retention, and trust can't be taken for granted
With everyone at home consuming media, the CX bar has been raised. Consumers want an easy, seamless, frictionless way to access content and services. The stress and anxiety of 12 months of living with a pandemic mean that no one has the patience to put up with poor service.
Retention is the new growth, but streaming subscription services especially struggle with it. There's plenty of competition, especially in the digital media space, so consumers will leave if they aren't satisfied. Free trials mean consumers don't think twice about signing up for a new service, but they won't convert to paid unless their expectations are met and exceeded.
Customers acquired during COVID-19 show a retention rate that's 82% lower than those from "normal" times, but our research shows that addressing passive and active churn to increase retention by 5% can grow your customer base by more than 40% in 24 months while cutting operational costs. Brands now can shape a new interaction with their customers. Here are some strategies that Vindicia can help you adopt:
1. Remove obstacles for consumers
Consumers don't want to have to worry about payment for each service or item of content they consume. They want easy and clear visibility into their subscriptions, with the flexibility to manage them anytime, anywhere.
As 2021 advances, consumers will rationalize their subscription services and spend based on usage, so make payment frictionless. Find and fix obstacles in your payment processes to make it easy for consumers. Bundle subscriptions so consumers can manage them all in a single place, and prioritize seamless omnichannel experiences to win new and retain existing customers.
2. Deep dive into consumer behavior
Apply advanced analytics to understand where consumers churn and what to do to prevent it. Tracking KPIs like device and connection type, day by day, and week by week usage changes, visits, and minutes, you can understand how users perceive your value and adjust your offering accordingly.
When you know what your consumers need, you can spot growth opportunities for targeted upsells, develop one-click conversion actions, and proactively intervene at the first signs of low engagement.
3. Deliver memorable experiences, not products
Post-COVID consumers are eager to experience life, not just buy stuff. A PWC study concluded that today's consumers "want experiences that can be great anywhere." Consumers want an exciting unboxing experience, so packaging matters more than you might realize. They crave interaction, so offer cross-channel adventures like virtual makeup lessons after the delivery of a beauty box, on-demand, online barista guidance with home cocktail kits, or one-on-one sports coaching after the delivery of new sports equipment. Subscription services can partner with complementary brands to offer enhanced experiences that are memorable and valuable.
Alongside this is the demand for individualized services. Use enhanced analytics to personalize consumer offerings at scale, with the right offers at the right time.
Increase loyalty and delight consumers with Vindicia
Consumers shifted to contact-free, digital experiences, and that's going to persist, but loyalty is low. Businesses have to commit to high CX, personalization and remove obstacles to frictionless interactions if they want to sustain loyalty and retention.
Don’t hide the cancel button: 14 strategies for better subscription retentionDownload