I have a love-hate relationship with the subscription economy. On the one hand, their affordable services make my life a lot easier. But on the other, trying to cancel a subscription to a terrible service is a nightmare.
More and more traditional companies are beginning to incorporate aspects of the subscription-based business model. Nowadays, you get a subscription for anything, from razors to home cooked meals to phone cases. Even when it comes to running a company, a lot of software and services that make the process smoother come via subscription.
Yet many people are hesitant to even sign up for a free trial because they're worried about forgetting to cancel it later.
There's definitely a complex relationship going on with subscription-based companies. Here's why we love -- and hate -- them:
Why we love the subscription economy
As with many big trends, subscription-based businesses are a product of the times. In a post-recession, tech-driven world, most of these companies find a way to play into our need to save time and money while catering to our egos. In many cases, a subscription is cheaper than buying a product outright and more customizable to our wants and needs.
Take Netflix, the king of subscriptions, for example. A monthly membership costs less than buying a DVD, doesn't require you to leave the house, and creates watch lists designed specifically for you. Since many subscriptions also come with a free trial, customers can try new things that are still relevant to their interests with a smaller financial risk.
"Subscription services eliminate large upfront costs and enable consumers to try, experiment, and dabble in a wide array of products and services," says Haroon Mokhtarzada, co-founder and Chairman of Truebill, a subscription management company that alerts users to changes in their bills. "Look at Adobe Photoshop, for instance. If you're someone with no design experience simply wanting to explore a new hobby, the cost of purchasing Photoshop may be too high a barrier of entry. A subscription at $10 a month, however, opens up a much broader set of consumers who would otherwise not want to pay hundreds of dollars upfront."
Subscriptions also save us time. There's research that goes into every purchase we make. You check reviews, pricing differences, etc. to determine the right product or service for you. But it's impossible for you to really know all of your options.
"Nobody has time to sift through all of the products coming out in their given passion category," says John Tabis, the founder and CEO of The Bouqs Company, which offers memberships that automatically send out floral arrangements on special occasions. "But brands that have experts combing the landscape for the newest and greatest thing for you to try is a huge reason for the growth of these businesses. It would be impossible for clients to do that kind of research and to get those products for the same prices."
That curation aspect of subscriptions is something traditional businesses can't provide. It allows a company to create a unique experience for each customer. And thanks to learning technology, the longer a person holds a subscription, the better and more specified the experience gets.
For a company in the subscription economy, maintaining the quality of the customer experience keeps the money rolling in each month.
"When someone is purchasing your product, they encounter a friction point every time they want to do business with you," says Mokhtarzada. "That friction reduces the likelihood of repeat business. For subscription businesses, it's the opposite; the customer is recurring by default and actually has to take action to not do business with you anymore."
But that doesn't mean a customer can't be pushed to unsubscribe.
Why we hate the subscription economy
The problem with free trials or cheap memberships is that it's so easy to sign up for so many different subscriptions that you lose track of them. As an entrepreneur, the automatic monthly payments means large chunks of your budgets could be going toward things you don't even use. And if you're not vigilant, fees can go up without you realizing it.
"Ultimately, the quality and usefulness of the end product or service is going to determine loyalty," Mokhtarzada says. "But some companies have bait-and-switch type schemes where a consumer signs up at one rate, only to find the rate hiked up later on. Finding sneaky ways to charge customers more may help short-term revenue, but will cause irreparable damage to the brand in the long-run."
Then there are the subscriptions that are almost impossible to cancel. Either you can't figure out how to do it online or you have to spend hours on the phone getting passed from one customer service representative to another.
"One of the primary reasons consumers don't sign up for subscriptions in the first place is because they are worried they will forget to cancel or it will be difficult to do so," says Mokhtarzada. "That's why Truebill is launching a new Truebill Certification standard. Companies who commit to our above board subscription and cancellation policies will receive a badge they can display on their websites."
Love it or hate it, the subscription economy isn't going anywhere any time soon. For every new subscription that makes your life easier and your business run smoother, there are going to be five that are a complete waste. Which has to make you think: how many worthless companies does my business still subscribe to?
What are some other reasons to love or hate the subscription economy? Share in the comments below!