Challenging times b The tech and consumer industries have made a lot of noise around “subscription fatigue.” The model in which business and consumer platforms rely on growth and predictable revenue appears to be under threat in a changing economy.
However, there is a problem with that idea: it is not true. Subscriptions are not dying; They are improving.
Modern companies are iterating on the subscription model with variations on usage-based billing. Here’s what we’ve learned from supporting over 4,500 subscription businesses with subscription payments and revenue management as they respond to changing times.
A brief history of subscriptions
Salesforce’s development of today’s subscription models had a strong run in the mid-2000s, and large companies like Adobe and Microsoft made them standard in B2B.
If you already offer a subscription-based model and you’re seeing subscribers drop off, wondering why you’re doing that is a recipe for failure.
Company after company in B2C sought to replicate Netflix’s success. A time-tested model that seems like a relic of newspapers and “book of the month” clubs dating back to the 1600s has become the hottest trend in tech and e-commerce. And, digital infrastructure has provided ample opportunities for innovation.
But in 2022, the conversation has changed. With Netflix expecting to lose 200,000 subscribers in Q1 2022 and 2 million more in the coming months, a new narrative is born in both B2B and B2C. Many industry analysts saw it as a sign of a deeper shift in which customers are cutting back on spending and abandoning subscriptions as a category.
What is really going on.
But the reality tells a very different story. Netflix’s Q2 report included a loss of 1 million subscribers. The results show that “subscription fatigue” is not what it seems. Additionally, new businesses are still building themselves entirely around subscriptions and traditional businesses are still adopting subscriptions at an alarming rate.