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September 26, 2024
Guest Writer, Bizrate Insights
The U.S. has been riding the highs and lows of an economic rollercoaster for a while now. Concerns about prolonged inflation, high interest rates, and geopolitical conflicts have all posed challenges for businesses and customers.
But there’s good news on the horizon — we have managed to avoid a recession, and a recent report by Deloitte forecasts slow but steady U.S. economic growth in the near term.
Even though things are looking up, it’s wise to brace for a storm before it arrives. Taking steps to recession-proof your business now will give you a leg up when times get tough. In this article, we’ll dive into subscription models specifically and discuss ways to adapt your subscription offerings to maintain stability and growth, no matter what the economy throws your way.
In a recent survey, Bizrate Insights asked 1,026 consumers how they felt about their subscription services. Their answers provide valuable insight into making subscription services more resilient to economic downturns.
Here’s what customers had to say.
The first step to recession-proofing your subscription service is understanding how customers perceive the value of their subscriptions. When asked how they evaluated the cost vs. benefits of a subscription service, here’s what stood out to consumers:
Most customers are keenly aware of what they’re getting in return for their money. Businesses must continuously highlight and enhance their value to help consumers justify the cost.
Our survey also revealed that the vast majority of customers feel they get sufficient value from all (48%) or most (42%) of their subscriptions. Few thought they weren’t getting enough value from only some (6%) or any (3%) of their subscriptions.
Knowing how subscriptions fit into personal budgets can also help you shape your business strategy to better match what your customers can afford.
Interestingly, most consumers do not see subscriptions as hurting their monthly budgets:
Younger customers ages 18-39 are more likely to report slight or significant savings from subscriptions, which suggests they may be more open to reasonably priced subscription services that offer good value.
Perhaps the best economic safeguard for subscription services is shifting customer perception. Customers who see your service as a necessity rather than a luxury will be more likely to prioritize it in their budget and cut back on spending in other areas.
To successfully market your subscription service in this way, it’s crucial to emphasize how it enhances someone’s daily life. Here are the top ways in which customers report that subscriptions improve their lives:
Conventional subscription models such as Netflix aren’t the only companies that can benefit here — ecommerce subscriptions are also gaining popularity. Our survey revealed a notable demand for non-traditional subscription services:
No matter your business type, highlighting unique benefits in your retail marketing can help create a change in mindset. If you can get customers to see your service as a need rather than a want, you just might earn yourself steady customer retention, even during economic downturns.
Looking for some actionable back-pocket strategies to recession-proof your subscription model? Here are some tactics to consider.
One way to fortify your business is to build solid long-term customer relationships. Loyalty programs can be a powerful way to do this. Enticing perks like loyalty discounts, exclusive content, or early access to new features can all add value to your subscription model and encourage customer loyalty.
Timing is everything when it comes to upselling. Consider using transactional emails to offer additional services or products that complement the customer’s current subscription. To make these offers really appealing, you could throw in a discount for bundling services or a limited-time offer on a premium feature. All these approaches can help boost the perceived value of your subscription.
Economic uncertainty calls for flexibility. Tiered subscription plans or pay-as-you-go options can help your business cater to a broader audience. This allows customers to choose a plan that fits their budget, making your service accessible to more people while reducing the likelihood of cancellations.
Understanding why customers cancel is key to preventing churn. Our survey data shows the top reasons for cancellation are:
Addressing these issues proactively and staying ahead of economic trends affecting cancellations is always a good retention strategy.
Ever wondered if your non-traditional ecommerce business can successfully pivot to a subscription model? It’s been done before. Some inspiration for you:
Positioning subscriptions as cost-effective, practical gifts can give you another market niche to lean on when money is tight.
We asked customers why they would choose to gift a subscription and found:
Marketing strategies for gift subscriptions should emphasize any personalization aspects, as well as their variety, cost-effectiveness, and convenience. As an alternative to gifting regular subscriptions, you can also offer gift cards for your subscription service.
In a nutshell, getting your business ready to face anything the economy throws at it isn’t just smart; it’s essential. Fortifying your business during the good times requires understanding customer needs, providing consistent value, and remaining adaptable and open to feedback as the economy and those needs change. The idea is to stay customer-centric, adding value to their subscription by offering loyalty programs, flexible pricing, and giving them the best value for their money.
A recession-proof business model anticipates potential economic pitfalls and plans accordingly. By implementing strategies like tiered pricing options, focusing on customer retention, and continuously innovating to meet changing needs, you can build a resilient subscription service capable of weathering economic storms. Remember, the goal isn’t just to survive a recession, but to position your business to thrive when the economy recovers.
This hope-for-the-best-but-plan-for-the-worst approach can help you build a resilient subscription service that thrives in both good times and bad.
For a deeper dive into these strategies, download our related white paper, Unlocking the Power of Subscriptions. It’s packed with more insights and practical tips to help you create and sustain a strong subscription service model.
And if you want to gather customer feedback and develop a winning customer experience strategy, look no further than Bizrate Insights.
Interested in seeing how it works? Book a demo with us at Bizrate Insights today and take the first step toward enhancing your customer engagement.
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