Subscription commerce growth continues to soar. While the average industry sees a combined annual growth rate (CAGR) of 10–12%, the subscription industry has seen a CAGR of more than 60% in the past few years, with predictions for a 65% growth rate through 2027.
And with growth comes diversification. The simple monthly subscription model is now just one option of many for shoppers, and merchants must diversify their offerings to stand out in a marketplace that’s grown increasingly competitive.
Our September 2023 report, The Impact of Subscription Models on Consumer Choice, a collaboration with PYMNTS.com, dives into popular retail subscription types and the subscribers they attract. Read on to discover the three subscriber personas, the six subscription models and how you can combine these insights to secure long-term subscribers.
Before we dive into our September report findings, we’ll need to revisit the three subscriber personas — loyalists, persuadables and short-timers — discussed in our June 2023 Subscription Commerce Readiness Report, a collaboration with PYMNTS.com.
Although comprising only 30% of subscribers, loyalists account for the lion’s share of revenue (79%) with a lifetime value of more than $2,500 spent over an average of 30 months. The typical loyalist earns more than $100,00 annually and is most likely a millennial or bridge millennial. They strongly prefer beauty subscriptions (71%), followed by food and beverages (54%) and clothing (51%).
This segment, which accounts for 22% of subscribers and 14% of total subscription revenue, holds promise for retail subscription merchants. Their average subscription lifespan is approximately 25 months, while their lifetime value sits between $1,000 and $2,500. Although this group doesn’t offer merchants the same certainty as loyalists, they have the capacity to bring in just as much revenue if nurtured correctly.
Despite being the largest consumer cohort at 48% of subscribers, short-timers contribute a mere 7% of total revenue across the retail subscription landscape. They average about 14 months and have a lifetime value of less than $1,000. They’re evenly spread across all income groups and are most attracted to beauty subscriptions (53%) and Amazon Subscribe & Save (35%).
Retail subscriptions fall into six main subscription types depending on the variety of products sold, benefits offered, services provided and more.
Held by 48% of subscribers.
Held by 24% of subscribers.
Held by 27% of subscribers.
Held by 40% of subscribers.
Held by 40% of subscribers.
Held by 6.7% of subscribers.
While most consumers subscribe to just one of the six subscription types above, a subset of shoppers, called multi-model subscribers, hold several subscriptions of different types at the same time. Multi-model subscribers comprise 50% of the loyalist category with an average lifetime value of $3,021 — higher than any single subscriber type.
Although only 38% of subscribers are multi-model subscribers, their positive effects are felt by all six types of subscription businesses. Here’s how to attract this lucrative group:
Of the top five acquisition features — safety, benefits, cost, enjoyment and convenience — multi-model subscribers place enjoyment as paramount (32.2%), followed closely by convenience (28.1%).
Although only about 10% of multi-model subscribers place the most value on benefits, this is a much higher percentage than that of other groups, such as access subscribers (0%) and standard subscribers (4.1%).
Forty-five percent of millennials, 44% of bridge millennials and 42% of Gen Z consumers prefer the multi-model approach, compared to just 34% of Gen X consumers and 24% of baby boomers and seniors.
From discount refills to VIP memberships, there’s a subscription for every subscriber persona. With that being said, there’s also a unique set of must-have features for each consumer cohort. Our September 2023 report reveals the features most valued by each persona and actionable insights to keep them coming back for more.