• September 8, 2021
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Consumer Spending on Subscriptions Rises, Posing Challenges for Businesses

When West Monroe conducted its last survey of consumer spending on subscription services in 2018, it found that consumers were spending a lot on subscription services but didn't truly grasp how much. That disconnect has only intensified three years later.

In its 2021 survey, the research firm found that not only are Americans spending more each month on subscription services, their estimates for how much they spend substantially decreased, and many of these services, such as internet, cable, and mobile phone, seem to have been relegated to a background utility role in people's minds.</p />

As it turns out, the research found that the average monthly spend on subscription services is $273, up from $237 in 2018. This 15 percent increase is the equivalent of an additional $430 per year.

Other findings included the following:

  • Positive sentiment toward subscription services has increased in the past three years. The average percentage of consumers who were "hooked and happy" across all categories was 51 percent in 2018. Today, that average increased to 61 percent.
  • Among the subscriptions themselves, consumers are more satisfied with and spending more time and money on paid dating apps, which increased 10 percent; meal subscriptions, which increased 7 percent; and pet subscription services, which increased 9 percent.
  • While some services experience boosts in customer satisfaction, consumers are being more critical of the value provided by some services, like paid diet and fitness apps. These areas saw one of the biggest increases in dissatisfied users.

For businesses, the move toward more subscription offerings is driven by a desire for predictable and recurring revenue streams. This leads to customer-centric strategies to keep consumers engaged and renewing.

The challenge, though, is finding the right balance around consumer awareness: Being too top of mind can be a problem, as it means a service's worth is more likely to be questioned.

On the other hand, consumers rarely think about some services, like cable TV, home internet, and cell phone, and consider them as just another monthly expense, like rent or utilities.

In the end, West Monroe researchers concluded that companies need to hone in on customer experience strategies as consumers become increasingly critical of some everyday services.

And for businesses that are not already thinking about how to leverage subscription revenue, now is the time, the researchers said. Consumers are primed to adopt service-based subscriptions across a host of industries and channels. The most successful subscription offerings are supported by consumer experience strategies that create the stickiness necessary to keep customers hooked, happy, and renewing.

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