Retail product subscriptions have become increasingly popular among consumers, offering convenience and personalized experiences. And as the subscription industry continues to grow, providers are expanding their offerings and subscription models to cater to consumer preferences.
According to PYMNTS Intelligence in the report “The Impact of Subscription Models on Consumer Choice,” consumers prioritize subscription experiences and view cost as a secondary concern. In fact, only 18% of subscribers cite cost as their top concern, while 61% prioritize enjoyment or convenience. This shift in consumer mindset highlights the importance of delivering a seamless and enjoyable subscription experience.
The most common and valuable subscribers, accounting for 38% of subscribers, are multi-model subscribers. These subscribers have multiple subscriptions of different types, with no single model accounting for more than half of their portfolio.
On average, multi-model subscribers have the highest total lifetime value (LTV) across retail subscriptions, amounting to $3,021. This indicates that catering to the preferences of multi-model subscribers can significantly impact a provider’s revenue.
As noted in the PYMNTS study, “multi-model subscribers comprise 50% of loyalists, the highest LTV [lifetime value] consumers, who average more than $2,500 in LTV and keep their subscriptions the longest.”
Demographics also a role in the preference for multi-model subscriptions, with millennials and Generation Z consumers dominating the lucrative multi-model subscriber personas. In fact, 45% of millennials, 44% of bridge millennials, and 42% of Gen Z consumers opt for multiple subscriptions of different types, compared to older consumers who tend to gravitate more towards standard subscriptions, discount refills, and same-price refills.
Familiarity Boosts Retail Subscription Growth
According to the study, subscribers show a strong preference for sticking with familiar subscription models.
Among VIP subscribers — the second highest lucrative subscriber group, per the study — 61% are highly likely to add another VIP subscription, while 48% of box subscribers and 37% of mystery box subscribers lean towards more of the same subscriptions types they already prefer.
Take for example, the recent surge Apple’s MLS Season Pass — a streaming service launched in partnership with Major League Soccer — saw in subscriptions. As PYMNTS reported, the service gained over 100,000 subscribers this summer following soccer legend Lionel Messi’s debut with Inter Miami CF, attracting both existing Apple TV+ subscribers and new users to the streaming service.
Out of the total sign-ups recorded, nearly 50% were already Apple TV+ subscribers at the time of signing up, suggesting that subscription providers can leverage the tendency of subscribers to stick to familiar models when marketing and retaining customers.
Overall, the rise of multi-model subscribers highlights the evolving preferences of consumers in the retail subscription market and shows that those who enjoy multiple subscriptions of different types have the highest total lifetime value.
Moreover, understanding the demographics and preferences of different subscriber personas can help providers target the most valuable customers and increase revenue in an increasingly competitive retail subscription market.