Despite current market uncertainties, shoppers continue to exhibit an appetite for subscriptions in 2020
2Checkout, the leading all-in-one monetization platform for global businesses, released the key findings from its recent consumer subscription usage survey, conducted on a global audience during the months of March and April 2020. The survey results provide valuable insights into consumer sentiment across multiple dimensions, including popular subscription categories, adoption rates, preferred b****** cycles and payment methods used for purchasing plans, amongst others.
“With subscriptions on the rise, and undeterred even by the COVID-19 pandemic, the survey results show a strong and unrelenting interest in the subscription model across many categories of services, and specific buyer preferences. Any company that relies on subscription sales will surely benefit from learning these findings and trend insights in order to curb churn and improve client retention going forward,” said Erich Litch, 2Checkout’s President and Chief Operating Officer.
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Here are the key findings from the survey.
Most purchased subscription categories
The latest survey from 2Checkout on subscription usage patterns reveals the clear dominance of the entertainment category, with streaming service subscriptions, such as Netflix and Spotify, being purchased by 64% of respondents.
Subscription-based software and cloud-based SaaS were also in high demand, with 49% of respondents having bought at least one SaaS subscription in the last 12 months. Coming in third were cloud storage services, which were purchased by 21% of respondents. Next was online education at 19%. Bringing up the rear were online publications and blog subscriptions, which were purchased by only 14% of the respondents.
Subscription adoption rate
With more and more shoppers embracing the subscription model and new merchants entering the category, the subscription market still has plenty of room to grow. Currently, 45% of shoppers have an adoption rate of one subscription per year, with 28% purchasing two to five new subscriptions annually, while 15%, on average, sign up for at least one new recurring service each month.
Important factors when choosing a subscription
Flexibility was one of the most important evaluation factors, with shoppers preferring subscription contracts with multiple options. In particular, 79% stated that they look for the ability to cancel any time when purchasing a new subscription. Payment features were consumers’ second most important criteria, with 73% checking to see if their favorite payment option was available. The option of a f********* was also important, with 70% seeking to try before purchase. 60% of respondents wanted to read reviews and seek out recommendations. In total, a majority of more than 50% of respondents considered all of the above factors critical when evaluating a new subscription. The importance of these findings cannot be overstated and is something all subscription-based businesses should take into account and make sure to deliver on, to ensure a successful acquisition strategy.
Preferred payment methods
As mentioned above, the availability of the shopper’s preferred payment method is essential to the subscription purchase process. Almost 69% of the respondents favored paying by debit or credit card. Electronic wallets, mobile, or eWallets, were next in line of preference – with 46% of subscribers preferring to “reach for” their PayPal or ApplePay for subscription purchases. Direct debits were employed by almost 10% of users, while other local payment methods were a top choice for seven percent of subscribers. Coming in last were cryptocurrencies, with a bit less than three percent.
Preferred renewal type
Another interesting trend is the increased appetite for automatic renewals, especially in comparison to previous subscription studies. In this latest survey, a little more than half of the respondents (54%) indicated a preference for automatic renewals, which seems to indicate that convenience is beginning to take precedence over “control.”
Preferred b****** cycle
The data also showed some variance in b****** cycle preferences. While a near majority of 46% preferred annual payments, the rest were split between a number of different methods. Monthly b****** was the second most popular at 34%. Nine percent favored a quarterly b****** cycle. Six percent selected weekly b******, while five percent opted for other intervals, requiring more flexibility.
Where the actual purchase is made
Subscription purchases are typically completed on a range of devices. Our findings identified that 66% of respondents prefer purchasing on their desktops. The next most popular device was the mobile phone, used by 48% of customers. The remaining eight percent chose to place subscription orders on their tablets.
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What drives preference for subscriptions
The cost-effectiveness of the software or service appeared to be the greatest driver of subscription purchases, with 46% of shoppers choosing a subscription to save money. Efficiency in time, usage and convenience were also popular factors, with 28% of respondents choosing subscriptions for these reasons.
On the other side of the spectrum, a considerable number of shoppers, 23%, were captive subscribers, which meant there were no non-subscription options for that respective service. At the same time, 38% of respondents enjoyed the exclusive access to new features, perks and content the subscription afforded them and reported receiving a superior experience through their purchase.
Preferred pricing model
Pricing model preference revealed that the great majority of subscribers were in favor of a flat-rate model, which supports the notion that subscribers favor predictability. 65% preferred a flat rate, 17% preferred to pay per use, and 14% wanted to be billed for only the features they use. 18% preferred a combination of models, depending on the subscription.
Reasons to cancel a subscription
Unexpected monetary costs – additional or “surprise” charges – were identified by 72% of respondents as the biggest deal-breaker and number one reason for cancellation. The right eCommerce tool, which provides b****** transparency, can go a long way here. 63% blamed their cancellation on having a change of heart – their usage of the product/service wasn’t as much as they had hoped, forcing them to rethink their purchase and cancel. Situations where they could not afford the recurring costs and, thus, had to cancel was a factor for 60%. A negative support experience led to subscription cancellation in half of the cases. In addition to these insights, 2Checkout platform data revealed that six percent of users canceled a subscription due to the COVID-19 outbreak, a considerably low percentage in comparison with the others mentioned in the questionnaire.
Despite the COVID-19 pandemic, 2020 is shaping up to be a good year for the subscription model, with shoppers considering all manner of available categories. Bottom line: Consumers are eager to take on subscriptions, as long as they cater to their preferences, needs and budgets.
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