Let’s stick together.
Exploring customer churn & digital subscription brands.
The early 2020s spurred a wave of innovation for digital-first brands. Subscriptions offered effortless doorstep deliveries, on-demand entertainment, culinary skill-building, new hobbies, comforting insurance and much more. Consumers embraced these new brands and sign-ups soared during the pandemic and in the following ‘new normal’ period.
Now, as economic and social crises pile up, costs rise and budgets are stretched, swathes of customers are abandoning and switching from these once flourishing brands. Survival hinges on reducing this churn.
To provide insight into this critical trend, in Summer 2023 we undertook a mixed-methods research project including video interviews, social media listening and a survey of 1,000 UK adults. Read on to find the headlines from this research.
Research headlines
Survival for digital subscription brands hinges on reducing churn. Keeping and making a profit from those hard-won sign-ups.
Read on to discover the key causes of churn and what brands can do to fight back.
What the research covered:
Profile of the customers who churn
Sectors most impacted by churn
Switching forces of customer churn
Role of Product-Market-Fit
Attitudes and context around churn
Which interventions are most impactful
Work for a subscription brand? Want to know more? Get in touch for access to the full results and to gain detailed insights into churn in the digital space and what brands can do to fight back.
01
Subscriptions are becoming a luxury.
Once burgeoning digital subscriptions are being dropped en mass. Consumers are refocusing their shrinking budgets on brands that deliver genuine value.
“My financial situation made it impossible to keep paying for something unnecessary.”
AGREE:
My financial situation made it impossible to keep paying for something unnecessary.
02
All subscriptions battling churn.
From media giants to once-feted digital start-ups, no brand is immune to customer churn. A relentless focus on fulfilling customer needs is vital for survival.
“Either lower the prices or entice me with new features to keep me using the subscription.”
SERVICES DROPPED BY UK CONSUMERS – TOP 5 (Past 12 mths)
Video services
Insurance providers
Telecoms
Food & drink
Paid apps
03
Good is no longer good enough.
There is little loyalty for subscription brands that fall short. Seeking out and filling the price, product, and experience gaps vs. user needs (and competitors) is crucial.
“The content wasn’t as riveting as expected. I want something that catches my attention, not bores me”
TOP 3 REASONS FOR CHURN
Service / product didn’t deliver to expectations
26%
It cost too much for what it offered
34%
There was a better alternative brand
33%
04
Subscription value fading for users.
As prices rise, often without any quality boosts, subscribers increasingly feel fees are outpacing the value delivered. Churn will increase without a better balance.
“The cost has gone up over the last few months and it’s not worth paying that much for only a few meals.”
AGREE:
The value for money offered by subscription services is decreasing
05
Once essential, now a nice to have.
Digital subscriptions that filled essential gaps during CV-19 face high churn today. Product-Market-Fit is diminished as old behaviours resurface and costs mount.
“I had grown tired of the service and no longer felt like it contributed positively to my life”
% 18-34s AGREE:
I signed up to some subscriptions during the pandemic that I don't need anymore
06
Be missed or be dropped.
Subscriptions that fail to address critical needs, or can be replaced with non-digital options, are easiest to give up. Product-Customer-Fit is crucial to limiting churn.
“They were good, I have no issues with them I just feel I don’t need them anymore.”
SUBSCRIPTIONS THAT WOULD NOT BE MISSED (TOP 5)
Baby & childcare
Clothing & fashion
Health & beauty
Fitness & exercise
H’hold cleaning
07
Young subscribers are cutting back.
They were once the driving audience behind digital subscription growth. Today, young subscribers worry about increasing costs and are looking to make cuts.
“There was no discounted option or reduced service that could have made the subscription fee more manageable”
18-34s AGREE:
I have too many subscriptions and want to cut back
18-34s AGREE:
The mounting costs of subscriptions makes me worry
08
Some are only there for the deal.
Special offers and free trials will help hook new customers, but many have no intention of sticking around to pay full price. Sell the service offer not the special offer.
“I had a free period but ‘when it ended’ I swapped to another provider who gave me 3 months free”
AGREE:
I sometimes take free or reduced-cost subscription trials with no intention of paying full price
09
Capping price will help cap churn.
At-risk subscribers are most responsive to offers that limit costs and reward loyalty. To be sustainable offers must be coupled with ongoing quality and good value.
“Don’t increase the premiums at renewal time. It seems unfair to be penalised for staying put with the company!”
WHAT WOULD KEEP SUBSCRIBERS LOYAL (TOP 5)
Fix / do not increase prices
Renewal offers / deals
Offer lower tiered options
Improve subscription quality
Offer more subscriber perks
