Talking about a COVID-era subscription boom in the abstract is one thing, but there’s nothing like a real-life use case to illustrate the recurring digital dollars being generated today.
“The New York Times recently made headlines by announcing that it reached a record seven million subscribers in Q3. It added almost 400,000 digital subscribers during the quarter, likely due to its extensive coverage of the contentious presidential election in the United States as well as the ongoing pandemic. The company began charging for online content in 2011, betting that digital news was the key to its future growth. It aims to reach 10 million subscribers by 2025.”
That’s from PYMNTS’ December Subscription Commerce Tracker® done in collaboration with Recurly, which also notes that “the number of Americans who subscribe to pay television … continues to decline as more U.S. consumers sign up for streaming services. One recent survey revealed that cable and satellite TV is now in less than 66 percent of the nation’s homes,” with streaming services siphoning away subscribers from premium cable.
Despite the popularity of subscriptions at the moment, the sector is bracing for a possible earthquake of churn in 2021. Companies are focusing on features and value creation that will make consumers think twice before canceling, particularly in the software-as-a-service (SaaS) space, which has seen immense growth that also must be managed for longevity and profit.
Engagement And Value Seal The Deal
Not that long ago, SaaS subscriptions meant a big fee paid at the outset to unlock the software. That’s very pre-pandemic thinking, per the new Subscription Commerce Tracker®.
“SaaS providers are seeing significant sales boosts as customers turn to subscription-based services rather than making large upfront purchases during the pandemic,” the new Tracker states. A PYMNTS and Recurly report found that “nearly 75 percent of U.S. consumers joined at least one subscription service in July, representing an increase of 9 percent since February — one month prior to the pandemic taking hold.” What’s more, 15 million consumers signed up for 96 million subscriptions between February and July, researchers found, “and it appears that these new customers could hang on for the long term. More than 70 percent say they are ‘not at all’ or ‘slightly’ likely to cancel their subscriptions after the pandemic recedes.”
Getting subscribers to stick around, however, requires engagement and genuine value.
Danielle Gotkis, senior vice president at Recurly, told PYMNTS that “SaaS subscription brands must examine every touchpoint in the subscriber life cycle to ensure it is optimized to obtain and keep customers. The subscriber life cycle typically begins with a free trial. It’s important for companies to offer try-before-you-buy and extend it as needed. Some consumers are reluctant to provide their credit card numbers before they try a service. Offering a trial without that requirement can remove some sign-up resistance.”
She added that this helps subscription brands “acquire more paid members after the consumer has experienced the value the service provides.”
From SaaS To Class To Music, Subscriptions Keep Booming
SaaS firms have had a good go of it through the pandemic, and their use of platform tech that enables deep personalization of features and terms — free trial periods being a prime example — is laying the groundwork for sustainable relationships with a variety of creative approaches.
“PYMNTS’ recent Subscription Commerce Conversion Index found that the share of SaaS firms that offered free trials increased six percentage points between Q4 2019 and Q4 2020. Many school districts across the U.S. pivoted to home learning during the pandemic, prompting communications technology services provider Zoom to offer its services for free to classrooms,” per the new Subscription Commerce Tracker®.
Zoom — the video collaboration platform that’s gotten famous on widespread adoption during the pandemic — was offered free to classrooms, which “allowed it to boost its number of daily users 20-fold in just a few months,” per the Tracker.
The new Subscription Commerce Tracker® also points to guitar maker Fender Musical Instruments, which extended its two-week free trial subscription to three months to musicians on lockdown. “The offering was so well-received that Fender increased its original limit of 100,000 new registrations to one million. Adobe, Salesforce and Dropbox have also extended their free trial periods and offered more discounts,” the Tracker states.
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