A Deep Dive into the Fast-Growing Subscription Economy

Show notes

The subscription economy is expected to grow from $15-billion this year to $475 billion by 2025. That's 68% year-over-year growth.

Adam Levinter operates in the eye of the hurricane as a subscription economy consultant, podcaster, and author.

In this episode of Marketing Spark, Adam and I explore why the subscription economy is growing so fast, the sectors seeing the most momentum, and how companies can embrace a subscription business.

We also take a look at how the subscription economy will impact marketing, which will focus on customer acquisition and, as important, customer nurturing.

Key takeaways

Subscription products fit three categories: replenishment (consumables like razors or diapers), curation (surprise boxes like BarkBox), and access (paywalled content, memberships, apps). Ask which one your offer fits before building anything.

Subscriptions move the burden from merchant to customer. Subscribers stay opted in unless they cancel, so you stop paying marketing dollars to win the same buyer back for each repeat purchase.

When acquiring subscribers, optimize for lifetime value to customer acquisition cost. A ratio of 3:1 or higher is the rule of thumb, and the acquisition cost is paid once, not on every purchase.

Acquirers pay about 75 cents per dollar of one-time transactional revenue but about $3 per dollar of recurring revenue, so a subscription business is worth roughly three times a transactional one.

Paid VIP programs like Amazon Prime are replacing free points programs, which suffer from high breakage. Instacart Express members order twice as often and spend $5,000 a year versus about $2,300.

A Deep Dive into the Fast-Growing Subscription Economy

Show notes

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