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The Subscription Economy And How It’s Changing Customer Experience As We Know It

Featuring Insights From Dow Jones And Recurly

Matt Wujciak


As consumers, it’s not an unrealistic idea to say that in the near future, the vast majority of our daily customer experiences and interactions with brands will revolve around the surging subscription economy.

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Whether it’s gated content by media conglomerates like the WSJ or ESPN, streaming services like Amazon or Netflix, or subscription boxes like BlueApron and HelloFresh, subscription service models are beginning to dominate the way brands and customers interact.

"How do we inform what you’re going to read next, rather than making it a ‘one size fits all’ experience."

The subscription based economy is about personalization, actionable customer data and consumer retention. Brands deliver better customer experiences (i.e. individualizing services for each customer, delivering product discounts, bundling packages, etc.) in exchange for long term customer loyalty.

As Alison Lichtenstein, Head of Customer Experience Design At Dow Jones (responsible for leading end-to-end experiences for The Wall Street Journal and Factiva) recently told me at a CCW Digital online event:

“By really listening [or tracking] what method our customers want to consume our content, making it easy, [building] distinct experiences to let you do that… How do we make it easy when you come to our site based on articles you have read or ways you’ve interacted with us in the past. How do we inform what you’re going to read next, rather than making it a ‘one size fits all’ experience.”

The Wall Street Journal markets not only their media (or product), but their personalized bundle packages for specific consumer demographics. (i.e. affordable student digital packages for college students, 6-day home delivery discounts for traditional print readers, and many more). They don’t sell the product. They sell the experience… an experience generated by subscription models and personalized services.

That’s the customer value proposition of the subscription economy, better services and personalized content based on actionable consumer analytics - in exchange for the fee of a subscription. And that’s why more and more brands across a wide array of industries are designing their CX model around the customer loyalty-reaping concept.

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But the emerging popularity of the subscription economy extends way beyond merely the media or streaming industry, encompassing all aspects of service-oriented brands.

As PYMNTS described:

“It’s not just streaming media, or food, or cosmetics that will drive this. Subscription commerce also encompasses or will grow to encompass such areas as [as miniscule and specific as] gaming designer socks, [to] high-end and luxury apparel, and even cars, trucks and boats. All that will not only bring further changes to consumer attitudes and behavior, but challenges and massive opportunities to payment services providers and other participants involved, directly or indirectly, in subscriptions.”

The shift in consumer behavior, including growth in e-commerce and social media engagement rates, as well as a growing consumer comfort with long-term payments has ultimately led to the industry’s explosion in popularity.

According to a study by cloud-based subscription management platform, Zuora, the subscription service industry surged 300% between 2014 and 2018, continuing exponentially through 2019 and 2020.

A few months ago, PYMNT’s Karen Webster caught up with Dan Burkhart, CEO and co-founder of Recurly, to get a more granular sense of what’s happening now with subscription commerce and payments, what’s on the horizon, and most importantly, how to capitalize on it.

"Feel free to think of the subscription economy as an 'everything-as-a-service model,'"

Recurly has a front-row seat into subscriptions, given its role in providing recurring payment services for that sector. As Burkhart encouraged, feel free to think of the subscription economy as an “everything-as-a-service model,” given the trends and consumer preferences involved (preferences that in general are shifting from notions of ownership to the desire to rent or share products that range from clothing to automobiles).

Here are a couple of prime examples from a recent Recurly analysis:

“ln 2017, Volvo launched Care by Volvo, a two-year subscription service. The bundle includes the use of a vehicle, insurance (via Liberty Mutual), and maintenance costs all in one monthly payment. And, after a year, subscribers can swap for a different vehicle. Porsche jumped in with their own competing subscription — Porsche Passport. Both are examples of essential bundles, which combine products and services to provide a better customer experience. In this case, the consumer doesn’t have to think about getting separate insurance or worry about where to go for maintenance. One subscription offers multiple solutions.”

“Another example is Spotify, a streaming music company. In order to provide more value to its subscribers, the company offered an add-on subscription to Hulu, which provides on-demand TV and movies. Hulu is a perfect complementary product for Spotify to offer since they know their subscriber base already enjoys streaming music.”

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“The Spotify bundle is an example of an ‘adjacent bundle’ of an unrelated, but complementary, service. One of the benefits of this type of bundle is that it provides more value to the subscriber while also providing the businesses, in this case, Spotify and Hulu, an efficient new subscriber acquisition source. Each business is introduced to a new audience through the other's subscriber base.”

There are a number of ways you can offer successful bundles like these to create win-win scenarios for brands and customers alike. As a quickly growing CX market, working with a subscription management platform is becoming one of the most popular ways to capitalize on these cross-functional retention-driving concepts. 

Through these platforms, you can test which bundles work best so you can generate more revenue per subscriber, fueling your growth.

As Recurly stated, “Your subscription management provider should offer an item catalog that enables you to separate the things that you sell from the way you sell them. An easy way to think about it is the catalog is [in fact] what you sell. The subscriptions you offer is how you sell it.” 

The surging subscription economy is redefining how consumers and brands interact.

No matter what kind of bundle you offer, it’s important to remember that the goal is to provide more value for your subscribers, driving more revenue for your business.