Last editedSept 20202 min read
Are you considering a subscription business model? If so, you might be on the right side of history. The subscription economy is growing at a rapid rate, and several exciting trends are indicating that this level of growth could be the norm for the foreseeable future. Explore some of these trends with our comprehensive guide.
1. The subscription economy market size is growing
Firstly, it’s important to note that consumer attitudes to the subscription economy are positive, and as a result, we’re continuing to see subscription economy growth. Zuora has found that, on average, the revenues of subscription businesses are growing five times faster than S&P 500 revenues, while the subscription economy itself has grown by over 350% since 2012. What does this mean? Essentially, it indicates that the subscription economy market size is only getting bigger, and as such, it’s going to keep expanding into new realms.
2. Further opportunities for retail businesses
All these impressive subscription economy statistics might seem like doom and gloom for traditional brick-and-mortar stores. In fact, retail businesses may find that subscription economy growth offers many exciting opportunities if you’re smart enough to position your company effectively. Your business may be able to leverage your subscription services to drive foot traffic to your stores (for example, an aftershave subscription box that offers in-store coupons). In the future, subscription brands may also look to traditional retailers for logistics support, collaboration, or acquisitions. Bottom line: even if you aren’t running a subscription business, there will be opportunities to prosper from the subscription economy.
3. Leaving the concept of “ownership” behind
It might sound strange to older readers, but one consistent trend we see when it comes to the subscription economy is a lack of desire among people to own products. From Spotify to Netflix, Xero to Salesforce – these subscription economy examples prove one thing: there’s neither a need nor a desire to buy products. And that’s terrific news for subscription businesses because it means that the subscription model is perfectly tuned to the prevailing consumer mindset. In other words, if your company isn’t offering some form of subscription service, you might end up getting left behind as the concept of shopping evolves beyond the desire for “ownership.”
4. From SaaS to XaaS
You’ve heard of SaaS (software as a service), but what about XaaS: everything as a service. As the subscription economy market size continues to balloon, you can expect to see more and more industries embrace the concept of subscription services. We’re already seeing XaaS starting to pick up momentum, with the automobile industry embracing monthly vehicle subscriptions (for example, Volvo’s Care by Volvo is becoming increasingly popular). In the future, expect to see brands that you wouldn’t ordinarily associate with subscription or leases take advantage of this potentially lucrative business model.
5. Winning the payments game
Increasingly, payments will be one of the key battlegrounds on which the subscription wars are waged. Brands that can leverage data and analytics most effectively will see the best results. Take payment gateways. Understanding how transaction rates are affected by specific payment details, such as currency, time zone, or payment type, will help businesses to optimise their subscription service. To take advantage of subscription economy growth, your company should ensure that you’re getting the most out of your payment solution.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.