Subscriptions demonstrate momentum — but also pitfalls
The average American consumer household has nearly four subscriptions, and a quarter of them have more subscriptions than they did six months ago, according to a report from research consultancy Magid. Renewal rates stand at a whopping 85%, Magid found.
Rounding out the most-popular subscriptions are warehouse/club (57%), fitness (31%) and food (19%), according to the report. Other popular categories include beauty/ grooming (17%), pet products (16%), clothing (14%) and meal kits (13%).
Growth appears to be found at warehouse/clubs (where 38% plan a subscription over the next six months), followed by fitness (31%), food (31%), clothing (28%), beverages (27%) and meal kits (26%).
Consumers have their reasons for signing up for subscriptions and memberships, namely that they offer convenience, cost-saving, ease of access and the ability to try something new, Magid said.
But not all subscriptions are created equal. Consumers do get turned off when subscriptions offer little value, especially when they don't need the products offered or don't need them often enough to justify the purchase, according to the report. And a surprising number have quite a negative feeling — guilt — about signing up, which keeps the pressure on these services to ensure they're worth it to their subscribers.
That's complicated by Magid's finding that there are different types of subscribers, some stickier than others. A fifth or so (21% in beauty, 19% in both clothing and meal kits) simply love them — their subscriptions make them feel rewarded, they're loyal to the brands involved and see them as a treat, Magid found. "Above all else, they love that subscriptions save them money," according to the report.
Nearly a quarter are "guilty followers," who are enticed by trials but struggle to find value in them, so are likely to cancel after a promotion period ends. Many more (40% in beauty and meal kits, 39% in beauty) are "triers" or researchers, but they also feel somewhat guilty about the consistent expense. "This group is more likely to be interested in what celebrities are promoting," Magid said. "Subscriptions make them feel important and unique, but they feel guilty about how many subscriptions they have."
Then there's the smallest slice — interested bystanders (17% in beauty and meal kits, 18% in clothing) — who seem to be the most difficult to market to. They appreciate "that subscriptions can save them money, but … aren't influenced to sign up by coupons and discounts," according to the report. "They are more interested in subscriptions that cover a wide range of categories rather than focused on one category."
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