A new study from UK government market research company YouGov has revealed that 40 million Brits (78% of the adult population) are now subscribers to at least one product or service, spending 12% of their monthly income on subscriptions like Netflix, Spotify or Graze.
The on-demand business model disrupts by taking a product or service that is traditionally purcahsed on an ad hoc basis, and locking in repeat custom on a continual basis for a recurring charge.
‘We are witnessing a once-in-a-century shift from a product era to the dawn of a global subscription economy. The way consumers like to consume goods and services has changed dramatically. Today, consumers are looking for personalised outcomes and experiences,’ said Tien Tzuo, CEO of subscription billing company Zuora.
‘As consumers, we want immediate, convenient and flexible access to personalised services, which we only get through entering into ongoing, mutually beneficial relationships with brands.’
‘This has led to the rise of a new generation of businesses catering to this trend – the automatic and recurring delivery of razors before you run out, software updates for your connected car or countless albums or films at your fingertips whenever you want them. This transformation will ultimately affect every aspect of our personal and professional lives.’
As Tzuo adds, the need for relationship management is creating a multi-million dollar software category. While reliable statistics are not yet available to measure this new and rapidly growing market, companies such as GM, News Corp, and Schneider, are predicting that anywhere from 40% to 100% of their revenues will eventually be subscriptions.
If just 10% of the companies in the world shift 50% of their revenues to subscriptions, that easily represents a $10?-?$20 billion market in the next few years.
‘The shift to the subscription economy is accelerating,’ says Tzuo. ‘Companies that want to become or remain leaders in their industries and enjoy the financial, market, technology, and customer loyalty benefits of deep, long-term subscriber relationships need to begin planning their transformation today.’