In today’s age of the streaming wars, subscription-based media services like Netflix are booming in popularity, with new entrants like Disney+ competing to win the attention of viewers. In fact, the subscription model has become so popular that by 2020, 50 percent of adults will have access to four digital subscriptions, a 50 percent increase from 2018, according to FIS’s 2019 Subscriptions: Always On Report.
Further evidence shows that subscriptions are evolving significantly and expanding beyond entertainment to include diverse sectors such as retail, manufacturing, healthcare and even online dating. A 2019 PwC Global Consumer Insights Survey shows that almost 75 percent of those surveyed had up to three healthcare, wellness or fitness apps they subscribe to.
But this trend isn’t limited to video streaming platforms. After Apple announced its Apple News+ subscription service earlier this year, CNN emerged to launch its own digital news subscription service, NewsCo, competing with the likes of tech giants Apple and Facebook.
So, what makes the subscription model so appealing to today’s consumer?
Well for one, many subscription models provide a low cost to entry for a service, enticing consumers with a low price point to access their favorite shows or activities. At the click of a button, a consumer can choose a service and make a purchase.
Once consumers are bought into a subscription, companies offer continued low-cost monthly payments which proves valuable to consumers with depleting attention spans. From as little as $10 to $15 a month (e.g. premium streaming service Spotify for $9.99 a month), they can access extensive, curated content instantly.
Looking beyond the pricing, though—the key to a successful subscription model is the evolution of the overall proposition. Companies’ subscription services must evolve over time with customers’ needs to stay relevant.
The most successful companies will recognize and adapt to these needs and ensure the subscription has continued perceived value to the consumer over time. One part of meeting consumer’s needs is delivering a superior all-round experience. According to FIS’s report, 68 percent of customers who cancel their subscriptions do so because of poor customer service—implying that when it comes to maintaining long-term relationships, ensuring there is a strong strategy in place for customer experience is critical.
Customer experience and personalization
Data shows that companies are investing heavily in customer experience: A recent Gartner study shows that over 50 percent of companies are redirecting investments towards customer experience innovations, signifying its growing importance in the overall business strategy.
One way for companies who are looking to bring a positive customer experience to consumers is to ensure their card held on file is up to date. If cards have been replaced due to expiration, fraud or loss, then it’s on the consumer to remember to update it with all brands with whom they have stored payment information. If they fail to do so, their subscription renewals will fail, which negatively impacts both retention and customer experience.
Through well timed communication and more importantly, by utilizing the Card Account Updater service that’s available to merchants processing card payments, brands can ensure payment information is correct and that they have maximized renewal opportunity.
Once companies nail down a path to providing a seamless and positive experience, personalization is key. Consumers tend to enjoy the ‘are you still watching?’ style that video streaming services like Netflix, Amazon Prime or Hulu prompt to check viewers are still engaged with the service.
According to the FIS report, nearly 42 percent of users say they stay subscribed beyond the first month because they appreciate the ‘personalized or tailored’ nature of these services. A further 19 percent do so because of the ‘convenience’ that a subscription service provides. Clearly, both personalization and convenience are key factors in ensuring that subscribers are pleased with the service and less likely to turn to competitors.
Innovate to keep up with customer needs
No matter which service a consumer picks, time has shown that the best way to stay relevant is to innovate, and the same goes for companies trying to adopt or sustain a subscription model. Subscription-based services are all about evolution, so it’s essential that a business is always looking ahead for new ways to make their customer experience as streamlined as possible. This will result in a smoother, more secure customer journey, which means happier, more loyal users. From gaming to video, subscription services should enable consumers to focus on enjoying the experience at hand, with the friction of payments fading away.
Whether it’s Netflix, Amazon Prime, Disney+ or a new burgeoning player in the space, subscriptions will continue to stay top of mind in the eyes of consumers and gain traction as time goes on. Companies must keep the customers’ interests in sight in order to keep them coming back for more.
Fidelity National Information Services, or FIS, is a provider of payment technology and services. FIS acquired global ecommerce payments processor WorldPay in 2019.Favorite