Adyen research: Subscription services prove resilient, but cost-of-living crisis piles on the pressure
Adyen has published research which shows that subscription services are proving promisingly resilient despite recent economic uncertainty.
The subscription model is by no means new, but it has gained widespread popularity in recent years.
According to Adyen’s survey of 2,000 UK consumers, four in five Brits are signed up to at least one such service.
Despite concerns on tightening household budgets, it found that subscriptions to TV and film prove most popular (68%), followed by priority services such as Amazon (40%), and then music (27%).
Gyms were slightly lower (17%) but their members are some of the most committed, with 90% deeming their membership to be important.
A separate study found the subscription business model to be particularly lucrative for industries like retail.
The research reveals that, in 2022, retail businesses with a subscription service achieved a 28 percentage point boost associated with using the sales technology, compared to those without.
Currently, 21% of UK retail businesses offer a digital or subscription service in the UK. If all UK retail businesses adopted the business model, the sector could see a £338 billion uplift in revenue, according to Adyen.
All that said, economic pressures have undoubtedly affected consumer sentiment. 51% of UK consumers say they would cut the service in order to save money.
Moreover, 23% of respondents, say their current services are too expensive and they don't feel sufficiently rewarded for their loyalty (17%). Additionally, 53% of Brits believe their custom is taken for granted by providers.
With increased demands on customers’ discretionary spend, subscription businesses will need to work harder to demonstrate value, Adyen argues.
According to the FinTech giant’s data, consumers value convenience, the time saving benefits of their subscriptions, and access to brands they love. But, businesses can take this one step further by improving their offering with tailored products and services, more efficient payment options, and reduced risk of fraud.
Adyen’s findings suggest that, by making better use of their own data, subscription businesses could unlock consumer loyalty and greater business resilience. Of subscription users who cancelled a subscription, 43% would rejoin if the service were better at understanding what they liked.
"Our research shows that the UK subscription economy has reached a phase where retention and customer lifetime value are critical success metrics," says Colin Neil, Managing Director, Adyen UK.
"Now more than ever, understanding customers' preferences and expectations is vital for building the lasting relationships subscriptions are known for. Consumer data and technology will be pivotal in ensuring a consistency of service that keeps customers engaged."
"We're bucking the trend in the industry,” says Jasvir Sanghera, Chief Financial Officer, Total Fitness.
“We're seeing competitors discounting but we’ve actually increased our prices over the past 12 months and have continued to grow our membership base. Increasing pricing needn’t be a stumbling block to achieving growth.”
“Having a great product is what’s going to keep you going at the end of the day.”
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