Recently, Netflix have been making headlines for losing subscribers as the cost-of-living crisis hits consumers in the pocket, forcing them to take action. But beyond Netflix, what impact is the cost-of-living crisis having on consumer willingness to stick with subscriptions of all stripes? Our latest series explores the types of subscription services that UK consumers value the most, and how brands that rely on subscriptions can ensure they keep hold of their customers.
So, how likely is it UK consumers are going to cancel Netflix and other streaming content providers en-masse? Well, despite the fact that we’re seeing some cancellations, we do not think that the overall picture will be as bad as some have predicted—you can breathe a little more easily Netflix, AmazonPrime, Disney+ and others.
To understand which brands are vulnerable, we need to know more about how we use different types of subscription services in the UK. Our research explored patterns of use amongst the following subscription services:
An average UK household has 7 subscriptions —yes, go and count them—most likely to include Netflix, Amazon Prime, Disney +, Spotify, Hello Fresh, Gousto and Amazon Music. In terms of making choices facing inflation and rising costs, UK consumers are most likely to ditch Clothing, Food and Health & Beauty subscriptions. Digital subscriptions such as Music and TV are in fact the least likely to be dropped.
Price is not the only reason Food and Health & Beauty are most at risk; consumers have sated their initial curiosity and are now getting a little bored. This is likely an effect of consumers binging on subscriptions during the peaks of the pandemic.
So what should subscription brands at risk focus on?
Innovation – Keep consumers engaged by continually looking for ways to keep things fresh:
Pasta Evangelists are keeping it fresh through a collaboration with #Kocktail, offering cocktails paired with their pasta, creating a full dining experience. They’re also diversifying their offering through events and cooking experiences!
Bloom & Wild may offer beautiful flowers, speedy delivery and great customer service, but how do they keep the spark on the umpteenth delivery? To keep it new and varied, consider collaborations with services in other categories e.g. food, drink etc.
Customisation – Yes, we know it is considered to be hard to do at scale and expensive, but investment in retaining customers now is typically more cost effective than trying to win back lapsed customers in the future.
Excitement – Drinks subscriptions are currently leading the way here. By comparison, Food and Clothing subscriptions need to find new ways to add some excitement to their offerings.
Emotional value – Our research shows that a key reason that consumers are more likely to hold on to Gaming, Music or TV subscriptions is that these services fulfil particular emotional needs. Currently the emotional value delivered by other types of subscriptions is less clear—work needs to be done in how consumers end up feeling using your service.