This is a fact: consumers are more and more suspicious to economic players because of the recent crisis and purchase power issues. As confirmed by the 2017 Edelman trust barometer, this distrust trend affects all types of authorities and institutions, including corporates.
Consumers are linking up the consumerist society model to several issues they are facing such as pollution, decline of standard of living or social wellbeing.
They are willing to take back control of their consumption by neglecting property and focusing more on usage, benefit and added-value. Subscription model seems a good answer to this request. Indeed, this consumption mode is way much more than spreading cost along the year and could be predominant in a near future, placing customer relations at the core of any business strategy. Could this result into a more transparent and sustainable economic system?
A win-win consumption mode
Subscription model is not new but has recently boomed thanks to the development of e-commerce and mobile commerce, as showed in an Elabe recent Pan-European survey stating that 85% of respondents have already at least 1 subscription. This high result is explained by the benefits of subscription consumption: budget management or adaptability to needs’ evolution. But subscription commerce also offers advantages to merchants: customer’s loyalty is improved as well as customers’ knowledge due to a closer relationship and financial situation of subscription-based companies is more stable as it secures recurring revenues.
Subscription model clearly seems to be a win-win deal. Nevertheless, this came with new expectations from customers that are more demanding towards big brands and corporates and expect them to follow some ethical rules when they run their business.
A role to play on sustainable consumption
Worldwide, consumption modes evolution goes hand in hand with citizens’ concerns. Financial crisis or climate change have negatively impacted consumers’ perception of the economy. A 2016 survey conducted by AlphaWise/Morgan Stanley Research states that 51% of respondents are considering “ethical credentials” very important or somewhat important when selecting which apparel retail shop to buy. Moreover, among key criteria for shoppers, “good ethics” comes before “sales, promotion and discounts”.
To make their choices of buying or nor buying a product or a service, consumers have now new criteria. This is especially true for food: not only taste and flavor but also benefits for health and origin are taken into consideration. This is a redefinition of economic patterns. And this how subscription economy can make its contribution. Based on recurring purchase, this is a good way to avoid compulsive buy for consumers now able to take control on their consumption, but also on brands. If these latter want to sustain customer’s loyalty and trust, they should respect some ethical rules. Subscription economy may become a catalyst in this new paradigm.
Some existing virtuous business models
More flexible and agile, subscription model can be implemented in different ways depending of the company’s type. Some brands are excellent experimental laboratory to observe what can come out from it. Let’s take the box sector for example: more and more players are entering the market and differentiating from competition in focusing on benefits for consumers and ethics.
NatureBox in the US and BioBox in Germany have adopted this exact positioning : providing high quality products that are good for health and/or respectful of the environment. In Spain, Naranjas del Carmen is promoting the concept of “crowdfarming” : consumers are renting an orange tree and have the guarantee to consume high quality fruits and can control the quantity they consume along the season. In the pay-as-you go field, subscription mode allows consumers to pay exactly for what they need and avoid them to over-consume or waste in the case of food.
In theory, subscription model doesn’t require from brands to necessarily adopt an ethical positioning. But in reality, evolution of mindsets is so important that brands and corporates don’t really have the choice. Subscription is a commitment that offers guarantees to both sides. Companies will benefit from recurring revenues and customers’ loyalty as long as they fit to their expectations and value.
A sustainable commitment is precisely the promise that comes with subscription.