Changing consumer demands pose the biggest challenge to profitability for two-thirds of subscription businesses over the next decade, according to a new report by Minna Technologies.
New research from the embedded subscription management company – Subscription Economy: Evolution Not Revolution – suggests consumers increasingly seek greater flexibility in their subscriptions, such as the ability to pause services and manage multiple subscriptions in one place.
Minna’s study, in partnership with management consultancy FT Strategies and global market research firm Savanta, highlights a growing gap between what consumers expect from their subscriptions and what businesses offer.
Savanta surveyed 103 enterprise subscription business decision-makers across the US, including board members, C-Suite executives, managing directors, directors and owners, from businesses which sell products and services to consumers using subscriptions.
Subscription insights
Sixty-seven per cent of subscription businesses name changing customer demand as the top impact factor on profitability in the next 10 years, followed by tech disruption (52 per cent).
Subscribers increasingly expect greater flexibility, with 73 per cent wanting to manage multiple subscriptions in one place and 39 per cent seeking pause functionality, though only 50 per cent of US businesses currently offer it.
While 46 per cent of consumers would rather adjust their plan than cancel, reducing potential cancellations by half, 80 per cent of Gen Z and millennials desire consolidated management, and 45 per cent would switch banks for this feature.
Despite these challenges, businesses have opportunities to adapt through technology, with 93 per cent recognising AI’s critical role in customer service and retention, and 83 per cent planning to invest in AI to enhance user experience and personalisation.
“This is no longer a static, one-size-fits-all proposition but an ongoing value exchange,” said Amanda Mesler, chair and CEO of Minna Technologies. “Businesses need to focus on enhancing flexibility, convenience and control for customers. Customer demand for consolidation has led to the emergence of new channels to manage subscriptions, such as banking apps and aggregators.”
Ben Catterall, VP solution consulting, Aptitude Software, also added: “Continuous experimentation and flexibility, exploring product diversification, hybrid paid content models and alternative formats is becoming increasingly important. Flexibility is crucial; refining subscription models to offer subscribers more choice and control is essential for developing sustainable recurring revenue strategies.”
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