Subscription Programs Delivering Revenue Growth According to New Retail Survey
77% of retail leaders report that a recurring revenue model is a prerequisite for doing business
According to a new study conducted by NAPCO Research and commissioned by Ordergroove, the leader in Relationship Commerce, retail leaders are experiencing growing return from recurring revenue programs – such as subscriptions, memberships, reordering, clubs and boxes – with the majority of respondents indicating they consider these programs a “prerequisite for doing business.” Findings from the study, “Retail 2020: Recurring Revenue Delivers Results” will be presented at National Retail Federation (NRF) 2020: Retail’s Big Show, to be held in New York City on January 12-14, 2020.
As a follow on to NAPCO’s first survey report, “Retail 2019: The Year of the Recurring Revenue Model,” this report provides insight into the perceived importance of recurring revenue programs, including their contribution to revenue in 2019 and expected growth in 2020, as well as the benefits and challenges associated with these programs.
Key findings from the study include:
– 87% of retail leaders surveyed have seen an increase in year-over-year revenue from recurring revenue programs, including 17% stating that the revenue contribution from these programs has “increased significantly” or more than 50%.
– Over 25% of retailers report that recurring revenue programs deliver the majority of their revenue, and on average, companies that offer programs report that 41% of their revenue can be attributed to these programs.
– Looking towards the future, brands and retailers are also seeing long-term benefits from their recurring revenue programs, with nearly all (93%) expecting that this trend will continue in 2020.
“Relationship commerce enables brands and retailers to form a closer connection with customers that leads to repeat purchasing,” said Greg Alvo, CEO, Ordergroove. “This year’s study affirms the business model shift we’re seeing across retailers and brands of all sizes and segments. By delivering frictionless and convenient recurring revenue experiences, today’s leading merchants reap benefits on many fronts.”
“More than half of respondents stated that their recurring revenue programs were built with the help of third-party services,” Alvo continued. “As shopping experiences grow in sophistication through personalization and omnichannel reach, we expect to see more brands and retailers reserve their own expertise for communicating brand value and turn to Ordergroove for the technology, experience and extensive APIs to implement and scale.”