For CPG brands and retailers, the subscription model offers tremendous opportunities for recurring revenue and consumer connection. But what is fuelling consumer choice in the subscription economy, specifically for FMCG products, and how can brands capitalise on it?
It’s tempting to assume that consumers choose product subscriptions primarily to save money. However, recent subscription lifestyle research has revealed otherwise: in almost every category, consumers, especially those with multiple subscriptions, valued other subscription benefits more than a lower price. The results have revealed some surprising factors driving consumer decisions in these categories.
Product subscriptions: What do consumers value most?
The first reason consumers sign up for subscriptions, from replenishment to curated options, is for the value they offer. How do consumers measure that value? Well, in addition to cost, consumers say they want you to:
- “Make my life easier” In many categories, value starts with convenience. Subscriptions make it easy for consumers to get what they want and need.
- “Surprise me” Many consumers enjoy having a mystery box of curated goodies show up at their door every month. It’s a fun way to brighten their day.
- “Show me something new” In some categories, consumers choose subscriptions because they love trying new products without the hassle of shopping for them. And they might prefer trying sample sizes
Three factors impacting choice for product subscriptions
Beyond the primary value to the consumer, the research revealed three factors that challenge assumptions about consumer product subscription decisions.
1. Consumer value differs across categories for product subscriptions
In recent SKIM research conducted across four key categories (personal care, household products, beauty, and food & beverage), important differences were revealed in the reasons consumers signed up for subscriptions, depending on the subscription type.
In the beauty category, for example, consumers chose subscriptions to try something new or exclusive, to get better quality products, to treat themselves, or to try sample sizes. Cost savings ranked much lower.
In other categories, however, convenience and cost were more important reasons for signing up. That’s especially true for subscriptions based on replenishment of stock (like Perrobox or Supawbox for pet supplies) as opposed to curation-type subscriptions (as in beauty boxes like Bomibox [shipped from South Korea], or LOOKFANTASTIC [shipped from the UK]).
2. The rise of the subscription lifestyle
Heavy subscription users want more. Here’s a finding we didn’t expect: heavy subscription users (people with seven or more subscriptions) are more likely to sign up for additional subscriptions than light users (with only one subscription). This holds true across every tangible goods category.
In fact, two-thirds, or more, of heavy users signed up for additional subscriptions within the past year.
However, heavy subscription users are eager to try new things, which can lead to subscription-hopping and churn.
Lifestyle vs economic benefits. Heavy users value the lifestyle benefits of subscriptions, while light users are more focused on price and economic benefits.
These attitudes and preferences define the subscription lifestyle. Heavy subscription users who embrace the subscription lifestyle are very `bought in` to the benefits they gain from subscriptions. While light users clearly see the value, they are more measured in their enthusiasm and may have more reservations.
3. Generational differences
Almost half of Millennials have four or more subscriptions–far more than any other generation. They value convenience more than saving money and are quickly becoming the subscription-lifestyle
generation. Millennials are comfortable with shopping online and believe in the safety, security, and convenience of having products delivered to their door.
No other generation, older or younger, has embraced the subscription channel to the same extent. By contrast, only 18% of consumers aged 55+ have four or more subscriptions.
Do you know what drives consumer choice for product subscriptions in your category? Is it convenience, cost, quality, or surprise? Getting it right is critical for your go-to-market strategy.
Consumer behaviour and the subscription economy: Implications for CPG marketers
Based on the information and insights we uncovered in our research, here are some key takeaways and advice for FMCG brands entering the subscription channel.
Understand the value proposition in your category. Using category-specific insights to develop your brand messaging and subscription pricing strategies is essential for success in this channel.
Target prospects with the greatest potential. Millennials are embracing the subscription lifestyle, but which generation is the best match for your category and your products? For instance, consumers aged 55+ are much more likely to have a pet food subscription or a vitamins subscription than other age groups. Consider how you will attract and retain heavy subscription users and optimise customer lifetime value (CLV) for your most valuable subscribers.
Plan for switching behaviour and churn. While consumers embracing the subscription lifestyle are happy to try new things and sign up for new subscriptions, you might find your subscribers `hopping` to your competitors. That means you need subscriber-centric retention strategies to keep consumers engaged.