October 07, 2020
Subscription Management in 2021 and Beyond
Subscription Management in 2021 and Beyond
Subscription Management in 2021 and Beyond

Theone word that is continuing to define societies, economies, and individuals is CHOICE. Today’s consumers have way too many choices.

With advancements in technology, ever-changing customer expectations, and the emergence of successful business models focused on recurring payments, consumers are increasingly questioning the need to OWN when they can SUBSCRIBE. This change has sparked a renewed interest in subscriptions worldwide.

Subscription Economy by the numbers

The subscription economy is booming, any service you can think of has become a subscription model. Over the past couple years there has been a 300% growth in subscriptions for digital news and media. This has created a global spike where businesses are trying to keep up with the choices that the consumers want. Due to the changes, the Global Subscription Management Platform/Software Market will grow from $4,054 million in 2021 to $7,813 million by 2025.

If these numbers don’t open your eyes, then this will, Netflix has generated $6.14 billion, in 2021! I personally can name maybe 10-15 subscriptions my family and I have, at some point these subscriptions became a part of our everyday lives and we really have not looked back to the old ways.

Subscription Economy – Some Exceptional Success Stories

Let us look at some successful and popular subscription models across industries,

1. Streaming Services - Content streaming services are probably the most well-known examples of the subscription business model. Companies like Netflix and Spotify have built incredibly successful businesses by leveraging the growth potential by subscriptions. Both are great examples of reducing the churn rate, while also promoting their own original content. The Netflix subscription strategy is especially interesting, take a look at exactly how it became successful .

2. Monthly Subscription Boxes - Subscription boxes are probably one of the most exciting and popular ways for an end-consumer to experience new products month after month and companies like Stitch Fix do it incredibly well. Subscription box strategy is a different where it separates from the rest by providing the most unique experiences for customers.

3. Food Services - Meal-kit services, like Blue Apronor HelloFresh, are examples of convenience-based subscription model.. Food service strategy is probably the trickiest model out of the three, solely because they must deal with fresh food products.

Trends in Subscription Economy 2021

The following are the top subscription trends of 2021 and beyond:

#1 User Experience above All

69% of Americans have multiple subscriptions and 27% plan to increase their number of subscriptions as soon as possible. Competition to provide a flawless user experience is becoming truly fierce. Starting with intuitive & creative interfaces, mobile optimization, and frictionless checkout, 2021 is going to be a year of impeccable subscription user experience. Here are some subscription-based user experience flows with seamless user journeys.

#2 It’s all about Data

2021 will see many innovative and well-designed subscription management platforms that include data management and visualization. Their primary aim is to help businesses understand the popular subscription plans, their overall revenue , and will provide the right actionable insights with predictive, proactive, and prescriptive analytics. Machine Learning and Artificial Intelligence on top of this data, will help businesses with real time feedback for growth.

Look at the OTT entertainment streaming platforms and the recommendations they serve customers. Their recommended content is carefully calculated with data help personalize the right way like Netflix.

#3 Focus on Retention

With subscription companies growing like mushrooms, and millennial needs/choices changing instantly, its highly critical to retain the subscribers. Note - Existing customers are up to 70% more likely to buy again. Here are some Retention strategies for the digital age.

#4 Loyalty on Priority

Consumers are demanding more, competition is fiercer than ever, and customer loyalty is decreasing. Most of the traditional programs are now being replaced by behavioural and emotion-based loyalty programs because high emotional engagement has a stronger brand affinity.

Amazon Prime is a great example – its members spend 4.6x more because of instant gratification and Amazon’s premium loyalty program gives users immediate benefits.

#5 Fraud in line with Technology

Payment fraud has always been an issue which arises as technology grows. 2021 will definitely be the year of rising fraud, whose year-on-year growth rate is almost 25% - a natural consequence of changing consumer habits. Hence, to protect businesses against payment fraud, online merchants will need to work more with anti-fraud solutions on board. Detect & Prevent Fraud

#6 Services as Subscription

By 2023, 75%of all companies that sell direct to consumers will offer some type of subscription service. Large retailers are deep diving into subscription box services as it can easily provide a lifeline for a brick-and-mortar retail business. Moreover, in response to collective confinement, there is a growing mountain of brown boxes everywhere like food deliveries, beauty boxes, new books, groceries etc. Right time to start one!

#7 Personalization continues to Evolve

Personalisation can never go out of style in any industry. It is one of the keys to increase revenue predictability and reduce subscriber churn. Subscription businesses will continue to enhance personalisation through one-to-one offers for loyal customers, engage with customers more closely by tracking their past correspondence, purchase history, and give customers more control over their communication preferences. 5 ways to personalize subscription services for every customer.

#8 Bundling for massive Growth

In 2021, there will be two types of bundling, one - Homegrown bundling created by combining their own products and services in one package - Apple News+, Apple TV+ and Apple Music . Two - cross-platform bundling where they combine their own services with other popular services - several telecom companies already offer bundles that include Spotify Premium with their traditional mobile plan. Bundling Strategy for you!

#9 Geo-Specific Subscriptions on the Rise

Global subscription companies will be increasingly sensitive to the local needs of their customers and ditch the traditional one-size-fits-all approach. Example - Washington Post and YouTube are offering specific plans tailored to their audience in different regions. Expect more companies to go down this route as they sharpen their offerings for different markets in 2021.

#10 Usage Based Billing going Popular

Another important strategy to improve subscription experiences and reduce subscription fatigue is usage-based billing. Subscription companies have started charging less, based on consumed content below a certain threshold. 2021 will see two plans going popular, a cheaper entry level plan for low use accounts, and a regular plan for consuming content above a set threshold.

Example, Spotify charges only half the regular subscription price for their Premium plan ($4.99 instead of $9.99) for up to four hours of audio per month Anything above the threshold would then be automatically charged the regular price. Similarly cloud companies such as AWS have also been practicing usage-based billing model.




The Paradigm Shift – Innovation in Subscription Management Platforms

Enterprises are now innovating beyond mere subscriptions by implementing creative & innovative subscription models powered by the breakthrough technologies like AI. Subscription platforms automate the billing cycle for subscription revenue models - various top players are SAP, Oracle, Netsuite, Computer Sciences, Zuora, Avangate and more.

For start-ups especially, lighter weight subscription billing applications (which are inexpensive and fast to implement) can allow businesses to start processing online payments quickly. Fewer legal, finance, and accounting resources are required to manage different subscription cycles for different customers/accounts.

Additionally, to enable businesses in any industry, to adapt to the changing buyer behaviour and embrace subscription business models - platforms like Oracle Subscription Management Cloud allow organizations to build predictable, recurring revenue models by providing an end-to-end subscription solution. Watch Oracle subscription management for businesses entering a new era.

Features Companies are looking for in a Subscription Management Platform

There are many subscription platforms out there, so here are some key features which will help you make the right choice:

There will be times when the customers need some time off from your product or service. In such cases, the subscription management platform should be able to allow them to pause and resume subscriptions on demand.. Such companies see <20% lower churn rate. Even if there is no churn your system should be sophisticated to provide all types of reports like, “lost opportunities,” that help brands reach out directly to understand their needs better. This will improve your conversion rate and build brand loyalty.

Platforms must also be able to use various filters to only see the data when performing actions like, custom views on new subscribers, who made payments last week, inactive subscribers etc.

The platform must have more context around customers’ needs, so that you can offer users a better customer experience. Prefilling the checkout pages and invoice reminders are always good to have as these features save customers’ time, make their lives easier, and they will appreciate you for it!

The Future of Subscription Services & Predictions

The subscription business model will become the norm for the IT industry. More businesses will continue to make the long-term investments and offer subscription plans that will provide convenience and customizability they require to grow.

Prediction 1 - The ongoing benefits of AI and ML will only grow stronger—in fact, they will soon become an absolute necessity. Media streaming companies are already leading the pack when it comes to studying the audience with the help of AI and ML.

Prediction 2 – Subscription merchants are finding that offering one-time purchases of goods or services that complement their recurring component is increasing their subscribers’ usage and enjoyment. This hybrid commerce will grow beyond our expectations.

Prediction 3 - As more and more companies embrace the subscription model a new battlefront emerges, more education-related brands will come the scene like Codeacademy. To determine who wins this battle, subscription based KPIs like frequency of interaction will become the new norm across industries and business types.

My Thoughts

Regardless of what type of subscription business you own, I want to suggest three things that will ensure your model will stand the test of time.

Put the customer at the center of absolutely everything - Subscriptions are ongoing, brands can interact with customers more regularly, and this is something they should take advantage of. More contact equals more opportunities to provide positive experiences. Brands that embrace a customer-centric mindset will be the ones that will enjoy prolonged subscription success.

Obsessively track analytics and act on them - With the kind of advanced data analytics tools available today, there is really no excuse not to use them to your benefit for measuring audience behaviour. KPIs such as repeat purchases, product returns and time between purchases, can all be helping you with your relationship with a customer. If you feel a customer churning away from your brand, it is time to implement strategies to draw them back in.

Adopt a reputable subscription management platform – A quality subscription management platform with the right features is essential for the success of any business that centres around recurring revenue. Customers in today’s shopping realm expect flexibility and control when it comes to their orders.

Adopting a customer-first mindset, tracking, acting on analytics, and investing in the right subscription management platform are three strategies that will help businesses maximize recurring revenue. If you have any creative subscription business idea, now is a good time to get started, and feel free to reach out to me for any thoughts, comments, or ideas.


This post was written by Balaji Ramachandran, Founder & CEO of SoftClouds. He has over two decades of experience in Technology, Business Development and Operations and a very strong foundation in Customer Relationship Management for SMB and Enterprise. Utilizing his profound expertise, he has spoken at conferences around CRM & Technology around the world. If you have any questions, or would like to find out more about SoftClouds and our extensive experience, you can reach us at "marketing-at-softclouds-dot-com".