Last week we began our series showing what categories of subscriptions are most at risk given the cost-of-living crisis. This week, we look into these categories a little deeper to understand which brands are most likely to weather the storm, and which could be headed for troubled waters.

With increasing pressure on finances due to the current economic climate, consumer perceptions of value are changing, with many having to re-evaluate what they can now afford. This is not a particularly conscious process; rather, it’s about how we feel about a particular brand, product, or service. At a fundamental level, these feelings are driven by how well a brand meets a combination of emotional and functional needs.

In our research, we drew on findings from contemporary neuroscience of emotion to assess how well brands performed in currently meeting two different types of fundamental needs: the emotional drive to seek rewards, and the functional drive to avoid scarcity.

Starting with the food and drink category, we found that:

·       Degusta Box and Naked Wines are doing a great job at Ticking All Boxes

·       Graze and Simply Cook are most At Risk

We dig into the reasons below:

For the price point, Degusta Box delivers both high emotional and functional value: consumers love the surprise and excitement of not knowing exactly what they are going to get, and at the same time it is praised for saving money and time in the long run.

On the other hand, Graze is doing poorly on both emotional and functional measures; what started off as exciting and new has now become repetitive, and there’s no deeper ongoing need to warrant keeping the subscription.

Looking into the household space:

·       Look Fantastic and Feel Unique are doing better at Ticking All Boxes than competitors Glossybox andBirchbox

·       Smol, Fabletics and Cleancult subscriptions are all At Risk

Digging into the deeper reasons behind brand performance in this sector, Look Fantastic does a great job of meeting both emotional and functional needs of subscribers by enabling them to custom tailor their box contents each month. The ability to choose new products alongside ones that they use regularly means that subscribers perceive this subscription as delivering real value for money. Competitors Glossybox and Birchbox are doing well at delivering excitement and variety; however, less so on delivering products that customers use regularly, making the price point harder to justify. 

On the other hand, for Smol subscribers, the initial excitement they felt is wearing off, and they’re not using the products as much as they thought that they would. 

Key Take-Outs

The current economic headwinds mean that customer perceptions of the value that brands deliver is changing, putting many subscriptions at risk. If subs brands are to retain their subscribers, it is critically important that they understand how their current value proposition is impacted by changing customer perceptions and adapt accordingly. Overall, in difficult times functional needs tend to trump emotional ones in the longer run; however, the picture is nuanced, with different offerings requiring different strategies to optimise retention. The first step here is developing a crystal-clear understanding of which needs your brand is/is not meeting and why. 

At Netfluential, our needs analysis is based on the latest affective neuroscience to help brands understand their customers better and adapt their marketing strategy accordingly. If you want to know more about how we can help you, please contact carly@netfluential.com