To say the subscription economy has been booming would be an understatement. New subscription brands keep appearing all around us, and the global subscription eCommerce market size is expected to reach a whopping $904.2 billion by 2026 — due in part to the fact that consumers are leaning further into convenience and digitally-forward solutions.
With 75% of DTC brands planning to offer subscriptions this year, it’s clear that having a strong subscription offering is becoming a requirement to remain competitive in the eCommerce landscape. But what does a “strong” subscription offering really look like?
In addition to partnering with a robust Shopify subscription app, there are a variety of subscription economy trends that are essential for merchants to understand — and to help keep you informed, we’re covering everything your brand needs to know.
“The Subscription Economy” is a concept originally coined by Zuora’s CEO, Tien Tzuo, that describes the massive shift from the pay-per-product model to the subscription business model. The subscription model provides a host of benefits — including allowing businesses to generate a reliable stream of recurring subscription revenue (which leads to meaningful revenue growth) and predictability when it comes to sales forecasting.
In the past decade, subscription services have been popping up everywhere. You have your Netflix, Hulu, Max, and other streaming services; Amazon Prime; Spotify and other forms of music streaming; software as a service (SaaS); and, of course, countless DTC subscription companies selling things like beauty items, build-your-own subscription boxes, wellness supplements, and more. And with the pandemic driving even more consumers to shop online and prioritize convenience, existing subscription businesses saw an even greater uptick in competition.
We’ve already talked about important subscription eCommerce statistics to know, but it’s also vital to understand overarching trends that are driving the subscription economy so your Shopify brand can stay ahead of the curve and lock in customer loyalty.
Let’s dive in.
One of the most common trends across subscription-based businesses is the practice of infiltrating personalization and customization into every part of the customer experience.
As the subscription economy gets more and more crowded, consumers are starting to choose and prioritize brands that make them feel special — in fact, 75% reported that they’re specifically loyal to brands that understand their individual needs. Additionally, 71% said they actually expect brands to deliver personal interactions.
Because of this shifting sentiment, more and more brands have been emphasizing personalization and tailored offerings to help boost customer retention and engagement for new customers and existing subscribers alike.
For example, product bundling is a great way to lean into customization — and Herbaland does exactly that by allowing subscribers to customize their own bundles to ensure that they’re getting the exact products that they want.
In general, it’s a good idea to lean into your subscription analytics to provide personalized product recommendations, create effective segmentation for email flows, provide birthday promos, and more. Your goal should be to treat every subscriber as a VIP and ensure you’re meeting each individual customer’s preferences.
Just as you can use your data to tailor personalized messaging, the best subscription businesses also lean into their analytics to strengthen their offering overall. While you can make educated guesses about what your subscribers want to see, nothing beats studying actual subscriber analytics and making subsequent optimizations based on the story the data is telling.
There are many ways to use your data to make stronger subscription decisions — starting with ensuring that each touchpoint is strategically set up to match your audience’s needs. For example, if you notice nearly all of your subscribers are opting for a 3-month subscription over a 1-month subscription, you can switch your default settings on your product detail page (PDP) to the 3-month cadence.
Additionally, using your data can also help reduce your churn rate. If you notice that your subscribers tend to churn after 6 months, this is a great opportunity to offer a discount to all subscribers as an incentive to stick around.
Plus, implementing pause and cancel reasons can help you gain even more insight into why your subscribers are choosing to stop their subscriptions. One of our brands, Unbloat, implemented cancel reasons and noticed that their cancellations dropped by over 40% as a result. Most of the time, subscribers cancel not because they don’t like your product, but because there’s some other underlying issue that you can personally help address.
In conjunction with addressing individual reasons for leaving, you can also search for overarching patterns in your churn data — like complaints about pricing — to then make changes to your brand (like your subscription pricing model). Closely tracking your churn rate and actively attempting to improve it will only help strengthen your subscription overall.
As for Shopify subscription analytics tools, Smartrr’s Advanced Analytics gives you everything you need to know to keep your subscription offering healthy and thriving. If you’re looking for an analytics app that does a little more than just subscription data, Littledata, Triple Whale, and Peel are all great options in the Shopify ecosystem.
As Gen Z begins to represent a significant portion of online consumers, we start to see their values prominently driving business decisions — and one such value is social impact.
Gen Z cares deeply about sustainability and ethics, and they collectively put their money where their mouths are. With 70% of Gen Z reporting that they purchase products from what they view to be “ethical” companies, more and more DTC brands have felt the pressure to make social impact a priority.
One of Smartrr’s brands, Asuvi, has sustainability at the forefront of their messaging. Leading with the tagline “For Nature & Nurture,” the team clearly displays their sustainable packaging and promotes their 1% For the Planet initiative. These efforts highlight the brand’s eco-friendless and help make subscribers feel committed to and part of a positive mission.
Some brands — like For Days — have seen success by building their entire brand concept on sustainability. For Days is a sustainable clothing brand that offers a “Take Back Bag” subscription in order to help reduce fashion waste. With this subscription, consumers pay a small fee to get sent a bag that they can fill up with any used textiles, which will then be properly recycled, upcycled, or downcycled. After filling and returning the bag, subscribers get $20 in closet cash to browse through and shop for sustainable clothing.
Remarkably, despite having a whole site full of great outfits, it’s the Take Back Bag that has become For Days’ best-selling product. Because the brand is built on eco-friendliness, the product that best exemplifies this mission is the one making the biggest splash.
Whether social impact is a pillar of your brand or just a component, it’s a good idea to consider that many modern subscribers will lead with their morals as they’re evaluating your brand.
With customer acquisition costs (CAC) skyrocketing, many subscription brands are cleverly turning to their current customers to drive growth and cut costs. After all, per the oft-cited 80/20 Pareto Principle, 80% of a business’ profits will typically come from only 20% of its customers. And with repeat customers having a value that’s 22X greater than average customers, there’s a significant opportunity to be found with current consumers — and the best way to reap the full benefits of your repeat customers is by leaning into your post-purchase experience.
As discussed, a big part of the post-purchase journey is playing up personalization — but in addition to that, you should have an engaging customer account portal full of different touchpoints to create an engaging digital subscription experience and help drive your customer lifetime value (LTV).
🧠 Here are some examples of ways subscription brands have used Smartrr to bulk up their account portals and improve their customers’ post-purchase experience:
Referral rewards in particular are popular in the subscription economy because they’re a powerful tool to help target a lookalike audience and bring in more of your ideal subscribers. Not only do these rewards deeply engage your current subscribers, but they also bring in highly valuable new subscribers — as these consumers end up having a 37% higher retention rate and a 16% higher customer lifetime value.
Treating your subscribers like royalty after they’ve subscribed is a necessary way to stay competitive in the crowded subscription eCommerce landscape.
A highly-prominent subscription economy trend that has become a near essential for merchants is offering a flexible subscription.
As it is, the subscription model itself is built to foster convenience and an easier lifestyle — but a rigid subscription that doesn’t mold to each individual subscriber’s needs can quickly turn into the antithesis of the model’s intention.
Yet again, we return to the statistic that most subscribers prefer when brands understand their individual needs — so subscriptions that don’t allow for individual flexibility will quickly get left behind.
Empower consumers to control their subscription experience with the option to pause, skip, gift, or modify their subscription frequency.
You can also use this data to improve your consumers’ experience overall. For example, if someone has a monthly subscription but has skipped the last 3 months, send them a suggestion to decrease their delivery cadence to every 3 months.
There’s one little caveat, though. Simply having flexible offerings isn’t enough. The best subscription brands also consistently promote to their subscribers the many options they have to alter their subscriptions. Subscribers need to be aware of their perks in order to take full advantage of them, so be sure your subscription marketing strategy includes a clear promotion of your flexible offerings.
These days, social media and subscriptions go together like peanut butter and jelly.
Because strong subscriptions are primarily built on customer relationships, it probably doesn’t come as a surprise that social media plays an enormous part in cultivating these relationships. This applies to both brand awareness and establishing a brand community with your current followers.
Even though trust in sponsored ads directly from brands has been dropping drastically over the years, 82% of consumers still trust social networks to guide their purchasing decisions — and that’s because creators, influencers, and brands with strong organic content can wield impressive results.
When you look at the subscription economy overall, a major trend is the shift toward social commerce. There are many ways that brands have leveraged social media to help grow their subscription offering.
For brand awareness and marketing, partnering with the right creator or influencer can have a substantial impact. Because younger consumers tend to form strong parasocial relationships with the people they follow online, they’re more likely to take their recommendations seriously — which means a shoutout from a creator carries with it significant social proof.
For engaging your own brand, we’ve seen some highly creative and unique methods. Pot Gang, a gardening subscription brand, has a support hotline (called the Potline) to foster a strong community among their subscribers. To bring engagement to the next level, they often screenshot some of the best text interactions to then share with their followers as a way to encourage more of them to use the Potline. And, let’s face it, it’s also hilarious.
You can also use social media to promote your loyalty program, referral rewards, or even use it to once again highlight just how flexible your subscriptions are. Think of your social presence as an additional way to make subscribers feel like part of a family.
Many subscription brands will take this a step further by leveraging the community that they build via creators and on their own organic feeds to then create a VIP membership experience to keep the exclusive momentum going.
For example, Xendurance offers an annual membership where participants receive site-wide discounts, exclusive partner perks, free shipping, and instant product rewards. They use their social media to share stories of people’s fitness journeys, recipes with their products, fitness tips, and more — all in the name of creating a community feel that is only further emphasized with the membership.
The more you lean into social media (and get creative with it as well), the more you’ll see your subscription offering flourish.
As the subscription economy continues to grow, brands are leaning into certain trends to help remain competitive. From leveraging subscription analytics to improving the post-purchase journey, eCommerce businesses would be wise to stay informed and consider these best practices to help scale their subscription brand.
🧠 And if you’re in need of an advanced Shopify subscription app to help you stay ahead of the curve, Smartrr equips you with everything you need to grow. Send us a note below to learn more.