Why Marketers with Recurring Monthly Payment Models Need a New Metric: Share of Subs

Joe Regular has always kept a mental inventory of his monthly expenses. Lately, however, it seems to be getting harder than ever as even more recurring/subscription-based charges show up on his credit card.

He’s got a $9.99/month Spotify subscription, $15/month cloud storage plan, $25/month gym membership, an extra $25 on his monthly cell phone bill so he can upgrade his phone every year, $9/month Dollar Shave Club subscription, $9.99/month New York Times sub, $16.95 Loot Crate subscription, $13.99 Netflix sub, and $12/month recurring shipment of Energy Plus, his favorite supplement, from Amazon Subscribe & Save –  to go on top of his mortgage, utilities, car payments, insurance, etc. 

It’s no wonder then that every couple of months, as the subs surge, or if he wants to entertain something new – say a home security plan – Joe pauses to take stock of what he’s paying for and litigates which he should keep, and which he can do without. His rational thoughts are judge, his emotions are jury.

To help him decide, he’ll compartmentalize these fees into one of many buckets, such as “must have” and “nice to have.” Or, “I want it” vs. “I deserve it.” Or, “entertainment,” “technology,” “utilities,” and “health/wellness.” And, as he is apt to do, he’ll assess not just what it is he’s paying for, but also whether he thinks he got a good deal – which may bias his outcome. Both of these are a form of mental accounting. 

He may even go to an app like Clarity Moneyto guide him.

For this reason, it’s helpful for marketers who have recurring payment models to be reminded that their value proposition and customer loyalty are constantly being challenged beyond the boundaries of their own category. They must help their customers rationalize and compartmentalize their monthly fees in a way that straddles stickier buckets.

Which is why I believe a new metric – let’s call it share of subs– needs to be a strategic consideration. With analytics as guidance, it would create a correlation between a brand customer’s dollar threshold for recurring payments notconsidered essential (e.g. car insurance, health insurance, heat/electricity, etc.) and the price/value cohorts that are both emotional and rational. Knowing how your brand fares in this model can be invaluable in developing key elements of your go-to-market strategy such as product/service innovation, value-adds, offer, messaging, CRM cadence, and the like.

According to Forbes, “15% of online shoppers have signed up for one or more subscriptions to receive products on a recurring basis” … a trend that has grown more than 100% a year over the past five years.

This is sure to only exacerbate the competition for monthly sub survival. Consumers, seeking to feel less committed and in greater control, with heightening expectations for lower prices or increased personalization as a quid pro quo for their loyalty, and empowered to flip the “off” switch at any given moment, can’t be taken for granted – ever.