Subscription commerce gives merchants and consumers next-level convenience, but our September 2022 Subscription Commerce Conversion Index highlights how consumers may be taking advantage of the perks provided by subscription merchants.
Updated:
August 16, 2023
Subscriptions have quickly become prevalent in the ecommerce world, and many consumers are picking up on the various perks they provide. Not only does subscription commerce give merchants increased brand loyalty and recurring revenue, it also allows consumers the convenience of automatic orders and a personalized shopping experience.
But, while merchants promote free trials, signup discounts and other offers to attract subscribers, many consumers admit to taking advantage of these subscription business perks. Nearly half of surveyed consumers intend to exploit subscription benefit programs in the next year, according to our September 2022 Subscription Commerce Conversion Index, a collaboration with PYMNTS.com.
The survey includes data on over 2,000 U.S. consumers and 202 retail merchants to highlight changing expectations and trends in subscription commerce.
Retail product subscriptions are a staple in consumers’ lives — and that’s not changing any time soon. 78% of consumers currently use at least one subscription service. As competition grows tighter, merchants need to diversify their brands by offering an unrivaled user experience with transparent communication and convenient digital shopping features.
As expected, the index found convenience features to be a common demand from consumers and a top offering by merchants. This includes digital features that save consumers time, money and stress when making purchases.
Consumers demand a user experience that includes clear checkout buttons, billing frequency options and a quick buying experience. And merchants are listening: the average time to purchase a subscription is now 2 minutes and 47 seconds, down 32 seconds from March 2022.
When it comes to subscription convenience, customers want simple management. 80% of consumers want the ability to cancel at no cost, and 78% of consumers want to self-manage their subscriptions and be able to pause or skip their service.
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Consumers expect product and price transparency more than ever before as rising costs accompany inflation. 80% of consumers want clear information about charges, and more than 60% want transparency from merchants in the form of inventory status and a progress tracking bar.
67% of merchants are still utilizing discounts to attract new customers despite potential revenue loss from discount abuse. In fact, a whopping 93% of top-tier merchants continue to offer signup discounts, signifying that the benefits outweigh the costs of potential abuse.
In addition to pricing transparency, merchants are also offering key trust-building features such as product ratings (80%), free shipping (71%) and refund policies (53%).
Despite subscription popularity, inflation and fears of a recession are prompting consumers to become more cost-conscious, using several strategies to save money on subscriptions. One strategy consumers use is simply cheating subscription merchants by exploiting offers and benefits. And it’s more common than you’d think — 60% of subscribers say they occasionally cheat their subscription providers by lying to avoid paying or to receive extra benefits.
The study found referral schemes to be the most common target of abuse, with 31% of subscribers saying they’ll refer themselves to access these benefits. Other popular cheat strategies include:
While the number of cheaters differs by income, it doesn’t directly correlate. High- and middle-income earners admitted to cheating subscriptions significantly more often than low-income earners. In fact, 66% of low-income consumers have never cheated providers, while less than 35% of high- and middle-income consumers say they’ve never cheated.
The average subscription experience will continue to get better and better as more players enter the field. Many merchants will offer more creative deals and benefits to attract and retain subscribers, but subscriptin providers should be fully aware of potential abuse and friendly fraud — especially as the economy worsens.
As merchants navigate an increasingly competitive environment with more prevalent subscription abuse, they should factor the cost of cheating into their decision-making for a more accurate picture of revenue gains.
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