News & Blog
UK Moves To Subscription Economy
By Francis West on 4th October 2017
A recent YouGov survey of more than 2,000 people in the UK, sponsored by subscription software firm Zuora has revealed that the average monthly spend by UK adults on subscription services of all kinds has tripled in the past year.
Why?
A challenging global economy, fierce competition, disruption and changes across many industry sectors, the need to reduce costs and combat piracy (e.g. of software), and the effect of consumers getting used to using their mobile devices to sign up for what they want, when they want (and switch just as easily), plus a shift towards apps and the ease on online payment systems are some of the contributors to what has become a challenge to customer loyalty and retention.
This has meant that businesses have been forced to move away from a product-centric mentality, and to try and create long-term brand affinity based around flexible subscription-based services. This, in turn, has meant that the ‘subscription economy’ has become a reality for many of us.
What Kinds of Subscriptions?
Businesses are now offering a vast range of subscription-based services including:
- Software - Software as a Service (SaaS) models are now commonplace (no more sending out CDs).
- Magazines, newspapers and journals - subscription-based services offer huge cost savings, convenience, and environmental benefits in this sector.
- Cars - car makers are now providing services where customers pay to use cars rather than buying them outright.
- Healthcare - medical and dental services.
- Online data storage services - e.g. Google Drive and Dropbox.
- Telecoms - for example, Norway’s state-owned operator Telenor offers a subscription-based service for businesses trying to use IoT access to technology.
- Airlines - Surf Air, for example, is offering a subscription-based service in Europe whereby, for a monthly charge (and an initial membership fee), customers can subscribe and receive unlimited flights.
- Grocery shopping services - now have nearly 2 million UK subscribers.
- In-car apps - now have 650,000 subscribers in the UK.
- Beauty and grooming - this includes subscriptions for men’s shaving service, Harry’s, which now has more than 1.3 million UK monthly subscribers.
The Figures
The report shows that a staggering 58 million UK shoppers now subscribe to services, and UK consumers now spend 12% of their monthly disposable income on subscription services. This means that the UK adult population is now spending an average £56 per month on subscription services. 35–54 year-olds are spending the most at £62 every month on their subscriptions, although spending has risen across all age groups and isn’t confined to just millennials.
What Does This Mean For Your Business?
Consumers in the UK now have a clear preference for on-demand, personalised, and subscription-based access to services. The subscription-business model has officially gone mainstream, and in order to compete effectively, retain as well as gain customers, and to protect customer and brand loyalty, businesses need to look seriously at how they can take advantage of this opportunity by shifting and transforming their business models so that they are in-line with the subscription economy that consumers are buying so heavily into.
One other interesting finding in the report is that a quarter of the UK population predict that they will be subscribing to even more services over the next five years. This should flag-up the importance for UK businesses to look now at how they can best position themselves to get a piece of the subscription pie in what appears to be a trend that is set to continue.
UK Moves To Subscription Economy
A recent YouGov survey of more than 2,000 people in the UK, sponsored by subscription software firm Zuora has revealed that the average monthly spend by UK adults on subscription services of all kinds has tripled in the past year.
Why?
A challenging global economy, fierce competition, disruption and changes across many industry sectors, the need to reduce costs and combat piracy (e.g. of software), and the effect of consumers getting used to using their mobile devices to sign up for what they want, when they want (and switch just as easily), plus a shift towards apps and the ease on online payment systems are some of the contributors to what has become a challenge to customer loyalty and retention.
This has meant that businesses have been forced to move away from a product-centric mentality, and to try and create long-term brand affinity based around flexible subscription-based services. This, in turn, has meant that the ‘subscription economy’ has become a reality for many of us.
What Kinds of Subscriptions?
Businesses are now offering a vast range of subscription-based services including:
- Software - Software as a Service (SaaS) models are now commonplace (no more sending out CDs).
- Magazines, newspapers and journals - subscription-based services offer huge cost savings, convenience, and environmental benefits in this sector.
- Cars - car makers are now providing services where customers pay to use cars rather than buying them outright.
- Healthcare - medical and dental services.
- Online data storage services - e.g. Google Drive and Dropbox.
- Telecoms - for example, Norway’s state-owned operator Telenor offers a subscription-based service for businesses trying to use IoT access to technology.
- Airlines - Surf Air, for example, is offering a subscription-based service in Europe whereby, for a monthly charge (and an initial membership fee), customers can subscribe and receive unlimited flights.
- Grocery shopping services - now have nearly 2 million UK subscribers.
- In-car apps - now have 650,000 subscribers in the UK.
- Beauty and grooming - this includes subscriptions for men’s shaving service, Harry’s, which now has more than 1.3 million UK monthly subscribers.
The Figures
The report shows that a staggering 58 million UK shoppers now subscribe to services, and UK consumers now spend 12% of their monthly disposable income on subscription services. This means that the UK adult population is now spending an average £56 per month on subscription services. 35–54 year-olds are spending the most at £62 every month on their subscriptions, although spending has risen across all age groups and isn’t confined to just millennials.
What Does This Mean For Your Business?
Consumers in the UK now have a clear preference for on-demand, personalised, and subscription-based access to services. The subscription-business model has officially gone mainstream, and in order to compete effectively, retain as well as gain customers, and to protect customer and brand loyalty, businesses need to look seriously at how they can take advantage of this opportunity by shifting and transforming their business models so that they are in-line with the subscription economy that consumers are buying so heavily into.
One other interesting finding in the report is that a quarter of the UK population predict that they will be subscribing to even more services over the next five years. This should flag-up the importance for UK businesses to look now at how they can best position themselves to get a piece of the subscription pie in what appears to be a trend that is set to continue.
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