Apr 19, 2023

The Subscription Shakedown


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In the early days, subscriptions were readily associated with gym memberships, media, and streaming platforms. But in recent years, subscription models have been cropping up in even the most unlikely of industries (subscription to Taco Bell, anyone?) with companies pushing subscription plans for everything from the rental of luxury items to oddities like fancy sprinkles, toilet paper, and pickles. In fact, according to The Subscription Economy Index, the subscription economy has grown more than 435% over the last nine years. The ubiquity of subscription models has spurred more and more companies to want in on the subscription revenue game. The issue? Many are jumping in head first, finding ways to generate new forms of revenue without taking the time to consider the impact on their customers (not just their bottom line). 

While the entire basis of the subscription model is to achieve and retain loyalty, companies are finding ways to integrate subscriptions to the point of exhaustion. Their revenue-seeking efforts, disguised as a promise of increased ease and access, are transparent and customers are taking note—meaning loyalty is becoming not only difficult for brands to attain, but even harder to retain. As customer fatigue becomes the primary response to subscription models, brands must ensure that the introduction of any new revenue stream considers core customer needs first, in order to deliver true value well worth the
added expense. 

Many colorful mailboxes in the back of a yellow mail delivery van.


Subscriptions Everywhere, All at Once

For better or worse, subscriptions are everywhere. Social media companies like Twitter and Meta are
now charging monthly fees for the blue verification checkmark, in addition to enhanced customer support and security—things that have historically been the responsibility of the brand to deliver rather than the responsibility of the customer to pay extra for. As a result, this new service can more likely be characterized as a ploy to combat declining ad revenue rather than an authentic attempt to enhance the user experience. 

But social media companies aren’t the only offenders; quality media sources are now safe-guarding all content behind paywalls, making it easier for free media sources to spread less credible information and more difficult for less affluent audiences to access reliable news. Even restaurants are getting in on the subscription action, charging customers extra for perks like dining credits, delivery discounts, and free drinks. And while this is all in an effort for companies to ensure steady revenue and repeat purchase amidst an unpredictable economic climate, it remains tone deaf to their audiences, who are also
feeling the effects of strained budgets, by opting to privilege higher-paying customers who can afford
the premiums. 


The Unsubscribe Effect

Which leads us to the larger issue facing brands in the subscription economy: value delivery. According to a Deloitte report, the average person holds nine subscriptions. So for customers, paying a nominal fee for a product or service can feel like a great one-off deal, but when that bank statement becomes a laundry list of monthly recurring expenses, the collective costs become much harder to swallow. Which is why, as subscription-based products and services continue to flood the market, people are becoming increasingly selective, and often cutthroat, about which ones are really worth the added expense. We’re already seeing the effects of this: Netflix has been losing subscribers at a rapid rate, once popular meal-kit services like Blue Apron have been struggling to retain customers and turn a profit, while Freshly was forced to cease its operations entirely. More than ever, customers are quick to cut ties with brand purchases they deem non-critical. 

 The key to brand survival is in focusing less on rapid growth, and more on delivering the type of value that builds lasting loyalty. In this climate, that means considering unique ways to make the customer dollar stretch farther. For example, Early Majority is an outdoor subscription clothing company that practices de-growth, or the act of maximizing a customer’s purchase by making high quality products that last longer, by running a membership model whereby the company makes products specifically for, and builds lasting relationships with, its members to avoid excessive production and consumption. Early Majority delivers members the benefits standard with most subscriptions, like discounted pricing and increased access, but also goes further to deliver higher-value benefits, such as opportunities for co-creation, lifetime product warranties, plus 70% resale value given to members for their old or
unwanted items. 


Metal spinning top toy balancing on top of a wood surface.


Balancing Customer and Capital

When it comes to subscriptions, the fatigue is real. Customers’ budgets are being squeezed on all sides, meaning the antidote to the subscription-everything economy lies with brands that display empathy to this, and work to relieve customer tensions—rather than adding to the financial pressures and stress. Brands like Early Majority, that take the time to not only understand who their customer is, but how to authentically relate to them, will be able to give them what they truly need (and what they will willingly pay for). In other words, brands that place long-term customer loyalty over short-term capital gain will experience growth that is more resilient to shifting behaviors and customer fatigue, and more sustainable—and profitable—over time.

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