Peak Subscription: Navigating the Turbulence Ahead

In recent years, it’s felt like nearly every brand in the known universe was attempting to build a subscription offering. The promise of predictable, stable revenue and an always-on relationship with one’s customer base, not to mention the possibility of cutting out retailers and other middlemen for product-focused firms, defined the business model of the future.

As the evolution of the subscription marketplace encounters disruption due to the lingering impact of the pandemic and other global events, are we witnessing a shift in the inevitability of that vision? Inflation is driving prices higher everywhere, forcing customers to make choices between products and services that represent an ever-growing monthly drain on their wallet:

  • The traditional stuff: wine clubs, gym memberships
  • Connectivity & tech: internet, cell phone/wireless, cloud storage
  • Streaming: TV/film, music, premium podcasts, gaming… even to watch additional programming from networks you already pay a cable subscription to watch!
  • Daily necessities: food & grocery delivery, meal kits, household items (see: Amazon, Target)
  • Creature comforts: beauty products, specialty coffee & tea, apparel, flowers, amongst others

One way of identifying a trend is when you observe a countertrend: witness South Park’s satiric take on current business trends in its recent Pandemic Special, which takes place in the year 2040 amidst such brand monstrosities as Denny’s Applebee’s Max and Super 12 Motel Plus (which only takes Bitcoin, by the way). Or for a real-world example, the response to BMW testing a subscription model to unlock preexisting car functionality like heated seats (customers were not enthused).

If things are shifting, that leaves a series of strategic questions for brands facing heightened competition and a challenging market dynamic. If customers increasingly feel they need to make a choice about which subscriptions they keep and which they ditch, what can you do to retain them? If you’re going to lose them, what strategies can you employ to make it easy for them to come back down the road? Perhaps most importantly: how can you determine if you’re in danger?

The Value Engineers is developing a study to find out exactly that: which brands are in danger of being cut loose, and what’s behind that decision for customers? Knowing more about your brand’s position with respect to its competitors – if not competitive industries altogether – can inform the strategies you pursue to mitigate this new marketplace. After all, if the only constant is change, the central question is: what are you going to do about it?

If you would be interested to hear more about the study or how TVE can provide actionable insights for your organization, please contact Zac.bloom@thevalueengineers.com

By: Zac Bloom

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