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Netflix’s Growth Looks Good for the Subscription Model, but Retention Remains an Issue for Other Brands


Netflix’s positive growth predictions and Spotify’s recent success with its IPO highlight the growing success of the subscription model. Customers now have the option to subscribe to a wide variety of products and services, ranging from music and film to razors and lingerie, and they seem more than willing to do so.

According to ING, the average European household now spends approximately €130 per month on subscriptions to durable and consumable goods - showing how subscriptions are now going far beyond the gym membership or Netflix account that people traditionally gravitate towards.

However while customers are now seeing the appeal of subscription-based purchasing, at least initially, many brands struggle to retain their custom for longer than a few months, with many users simply taking advantage of a free trial month or similar offer before cancelling. I dare say a fair amount of these companies’ revenue comes from people forgetting to cancel when they intended to, as I know a fair few people who have done so and must confess to being guilty of it myself on the odd occasion.

Pini Yakuel, CEO of relationship marketing platform Optimove, says the problem lies with these companies’ failure to get to know their customer base, their wants, and the motivating factors that ensure their continued investment. Mr Yakuel asserts, “Given the wide-spanning influence of Amazon, the subscription based model leaves place for other brands to also thrive. If brands can encourage customers to subscribe, they are guaranteed recurring revenue.”

“However, our research has found that some brands suffer as 80% of customers unsubscribe within three months of signing-up. To make the most of the subscription model, brands need to understand what motivates their customers to invest in subscription, but also what influences their decision to unsubscribe.

“For instance, Netflix gives suggestions based on what a customer has viewed previously and then offers options that align with this. The most important thing is to get to know customers as individuals - to work out what appeals to them, and what will encourage them to develop a long term relationship with the brand.”




Sam is an aspiring novelist with a passion for fantasy and crime thrillers. Currently working as Editor of Social Songbird, he hopes to one day drop that 'aspiring' prefix. Follow him @Songbird_Sam

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Netflix’s Growth Looks Good for the Subscription Model, but Retention Remains an Issue for Other Brands Reviewed by Sam Bonson on Wednesday, April 18, 2018 Rating: 5
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