Getting subscription bundles right for minimum churn
Dec 21, 2020 | By PYMNTS.com
Subscription bundles come in many forms, from cable TV tiers to Software-as-a-Service (SaaS) providers assembling suites of digital collaboration tools. The problem is that some people don’t want to pay for the Lawn Mowing Channel, no matter how much fun the other channels in the bundle are – and those SaaS subscriptions often go half-used. It’s a recurring revenue conundrum.
PYMNTS’ December 2020 Subscription Bundling Report, a Vindicia collaboration, jumps straight in, surveying a Census-balanced panel of nearly 3,000 consumers about their perceptions and interests in accessing subscription service bundles. Simply put, people like bundles.
“Our research shows that 51 percent of consumers rank saving money among the top three reasons for considering buying subscription bundles. Nearly one-third of consumers consider it to be the most important reason,” per the new report.
But it’s not all smiles – the report also notes that consumers’ lack of interest in subscription bundles ties back to not wanting to pay for services they don’t use, “a gripe that 34 percent of disinterested consumers cited. Consumers today want to be able to hand-pick their streaming services, with more than two-thirds of consumers saying they would prefer to bundle their subscriptions if they could choose which ones to include.”
Preferences forming fast
No one can argue the popularity of subscription commerce today. It’s so prevalent, in fact, that very clear preferences have formed around what people expect from subscription providers.
“80 percent of consumers subscribe to at least one type of subscription service. Membership services, such as those offered by Amazon Prime and Walmart+, are the most popular types of subscriptions that consumers can access today, with 77 percent subscribing to these offerings,” per the new Subscription Bundling Report. “Streaming services came in second at 71 percent as of November — a 6 percent increase since February. This shows that streaming subscription services, as well as membership plans, are part of most consumers' monthly expenses, and are services for which they have become accustomed to paying.”
Moreover, the study found that 31 percent of consumers currently enjoy subscription bundles, with an additional 21 percent desiring them. It’s the wrong time to blow it with subscription tech.
“It is [the] providers' jobs to keep these consumers satisfied, retain them and get them to upgrade to even more subscription bundles,” the report states, adding that “these options could mean adding another subscription service to the bundle or upgrading service features such as livestreaming, and enabling access to more applications.”
Delivering personalized experiences
A major takeaway from the study is that subscription brands must gear up quickly to track the subtleties of bundle preferences and not get churned when the January bills arrive.
According to the new Subscription Bundling Report, “subscription service providers that are bundling their products and services would benefit from focusing on delivering more satisfactory subscription experiences to retain existing customers and engaging those who are interested in bundled options.”
Pointing to one example, the report notes that “this could mean adding another streaming service or other products to the service bundle. Apple has sought to do just that with the recent launch of its Apple One subscription service. The service bundle provides access to a variety of apps and services, including Apple Music, Apple TV+, Apple Fitness+ and Apple Arcade.”