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Subscription is everywhere

Streaming, rental, home delivery: everyone wants subscription services

It engages new industries, attracts more and more users, and grows rapidly. We’re talking about the subscription economy. Netflix, Spotify, Tinder, Office 365, Dropbox: companies that offer subscription services go on and on.

The subscription industry advances invincibly and also extends to unthinkable sectors: health, beauty, fashion, transport, food, finance, DIY, etc.

The numbers confirm the growth. From 2012 to 2020, the revenues of companies that rely on subscriptions grew by 403%. In the same period, the sales of the companies listed in the S&P 50 index, instead, increased by 130%.

What about the future? The GP Bullhound business bank expects the subscription economy to grow by 10-15% per year in the next 15 years.

The reasons for the boom

The main reasons for this incredible success are two: the technological development that allows any company to access this model and the change in consumers’ purchasing habits from ownership to use, from ownership to subscription service.

Consumers want to feel at the centre of companies’ choices. Satisfaction and fidelity are the watchwords of this evolution. Companies that continue to focus only on products, without paying attention to customer preferences, run the risk of falling behind and failing. The time to evolve is now.

What changed with the pandemic?

One of the strongest drives towards this evolution has been the pandemic. In the midst of lock down, demand for subscriptions has grown dramatically. According to Zuora, subscriber growth rates increased by 12% in the second quarter of 2020, surpassing the data of the second half of 2019.

Another effect of the pandemic was to convince even the most sceptical sectors. Volaris, a Mexican airline, has decided to focus on subscriptions to counteract the loss of revenue. In March 2020, the company reached more than 30,000 subscribers who receive a flight a month for 399 pesos (16 Euro) or a return flight for 639 pesos (25 Euro).

Unlike the transactional model based on individual purchases, the subscription has allowed Volaris to have guaranteed revenues every month.

Freedom and flexibility with Zuora

Sidea Group and Zuora help companies take advantage of digital transformation and subscription. Thanks to the technological solutions offered by the Zuora platform, companies can offer simple, transparent and flexible subscription services, with the possibility, every month, to suspend, resume or cancel the subscription.

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