For hard times the tech and consumer industries have made a lot of noise about “subscriber fatigue.” The very model that business and consumer platforms have built upon for growth and predictable revenue appears to be under threat in a changing economy.
However, there is one problem with that idea. it’s not right. Subscriptions don’t die. they just evolve.
Smart companies are replicating the subscription model with variations such as usage-based billing. Here’s what we’ve learned from supporting over 4,500 subscription businesses with subscription billing and revenue management as they respond to changing times.
A brief history of subscriptions
Today’s generation of subscription models has had a strong run since the rise of Salesforce in the mid-2000s and has been normalized in B2B by major companies like Adobe and Microsoft.
If you’re already offering a subscription-based model and you’re seeing subscribers churn, making assumptions about why they’re churning is a recipe for failure.
In B2C, company after company sought to replicate Netflix’s success. The long-tested model that sounded like a relic of the world of newspapers and book-of-the-month clubs dating back to the 1600s became the hottest trend in technology and e-commerce. And the digital infrastructure has provided ample opportunities for innovation.
But in 2022, the conversation changed. When Netflix reported that it lost 200,000 subscribers in Q1 2022 and expects to lose another 2 million subscribers in the coming months, a new story was born in both B2B and B2C. Many industry commentators saw this as signaling a much deeper shift, where customers were cutting costs and abandoning subscriptions as a category.
What is really going on?
However, the facts tell a very different story. Netflix’s second quarter reports included a loss of 1 million subscribers. Its findings suggest that “subscriber fatigue” is not what it seems. Furthermore, new businesses are still being built entirely around subscriptions, and traditional businesses are still accepting subscription offers at a staggering rate.