‘Great Unsubscribe’ Gains Momentum as Inflation Forces Consumers to Scale Back

The great disengagement from the connected economy may be just getting started, spurred by the pressures of living paycheck to paycheck.

And as a result subscription platforms may see increased churn, with a reduction in their top lines. Unless they recalibrate how they interact with consumers, embracing a proactive approach that keeps those end users in place.

As detailed this week in the latest edition of the  ConnectedEconomy™ Monthly Report: Paycheck-To-Paycheck Consumers Digitally Disengage we found that inflation has the U.S. pushed consumers to cut back on costs. And as they do so, they’ve been cutting back on their interactive, online experiences and by extension, how much they are spending (of their income) on those experiences.

Cash-strapped consumers used digital travel and commuting apps like Uber and Lyft, micro-mobility apps and home sharing sites — platforms, in other words —13% less in July than in April.  Overall, digital engagement is 8% lower than had been seen before.

With less engagement, the services and platforms that charge by the transaction will see less top-line torque.  And overall, those companies that rely on recurring revenues garnered monthly through subscriptions may see some top-line pressures too. Individuals and families would, understandably, narrow their gaze to ponder just how much of a given provider’s goods or services are being consumed with regularity. Especially if, as we’ve found, that the paycheck-to-paycheck consumer has been shopping 10% less.

The Paycheck to Paycheck Struggle Continues 

The struggle to pay the monthly bills might trump the convenience and the “fun factor” that have, as other PYMNTS studies show, make those subscriptions so valuable in the first place.

Indeed, as has been reported in these digital pages in recent weeks, subscription companies are under pressure to keep customers. Given the fact that as many as 16% of millennials have canceled subscriptions, for example, the impact can be sizable. Allowing a consumer to pause a subscription, we contend, can do much to keep revenue streams in place, albeit deferred for a bit.

Justin Shoolery, head of data science and analytics at sticky.io, told PYMNTS that churn is proving to be a significant challenge. But advanced technologies added into the mix can help keep customer relationships sticky.

Among those tools: Using credit card updaters to keep current card details on file, which helps limit declines due to expired cards.

“Targeted solutions are what’s needed — and you don’t have to apply these efforts to everyone in the subscription chain,” Shoolery said.

A proactive, personalized approach can help companies attract younger consumers, who are of course essential for any digital business model to thrive. He noted that the successful merchants would be the ones that use machine learning and artificial intelligence (AI) to personalize and contextualize subscriptions and payments, bundling products and services on a bespoke basis.

Read Also: Retailers Test New Strategies to Avoid the ‘Great Unsubscribe’