2023: Digital Platforms Need To Adapt To Avoid Falling Victim To Subscription Fatigue

Demed L’Her, CTO at DigitalRoute, explores…


The subscription market has experienced significant changes in the past few years. Since the pandemic when worldwide streaming subscriptions surpassed one billion, there has been a significant drop in retention. Insider’s latest research shows that as of August, nearly a third (30%) of people reported cancelling an online subscription service in the past six months.

This is largely due to the rising cost-of-living experienced globally that is leaving households with reduced budgets for luxuries like digital subscriptions. Despite this, the subscription market is far from dead, with most people retaining the ones they feel add value, despite tightened budgets. In fact, the average UK household spends around £620 on subscriptions a year.


Adapting is key

However, considering the ongoing economic challenges, businesses need to consider adapting if they are to be retained by customers in the long term. The key to this is ensuring that the product adds value to the life of the customer.

From a business perspective, subscriber loss is not the only issue that digital platforms face. Revenue leakage is also proving problematic. Due to the nature of subscription models, there is a constant risk that users will share accounts beyond the limits of their agreement.



Use data to your advantage


To cope with both subscriber loss and revenue leakage, businesses should be trying to better understand what customers really value by looking at their actual usage of the service. Ultimately every digital company creates usage data which can be collected, monitored, and monetised. Tools exist to capture and categorise usage in real-time to allow companies to greater understand how the platform is being used and how it could adapt accordingly.

This may allow the business to implement a usage-based pricing model that means customers only pay for what they really use and value on a platform. This creates a fairer and for some users, a cheaper subscription model. Which is likely to be welcomed by most customers as the cost-of-living crisis continues and might make the difference between retaining them or seeing them churn.

The potential reduction in revenue from reducing fees for some customers could even be recouped by adjustments to other customers. It may seem daunting to increase prices for the most valued customers, from a retention standpoint. However, due to their regular engagement, it is safe to say that those regular customers are unlikely to churn because of a small increase in their subscription fee. Afterall, if we enjoy a service, and feel it is adding genuine value to our lives, and can control our usage and therefore cost, we are unlikely to abandon it hastily.

If digital platforms are to maximise business revenue, adopting usage-based pricing is a great place to start. It not only improves the business model, but the customer can also benefit from fairer and more flexible pricing.