Recurring Revenue Goes Well With Recovery

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From Main Street to Wall Street, businesses got their heads handed to them by the pandemic, with the possible exception of brands that were able to quickly leverage direct-to-consumer (D2C) relationships and eCommerce capabilities for new revenues, namely the recurring kind.

PYMNTS’ September 2020 Subscription Commerce Tracker(R), done in collaboration with Recurly, digs into the rising popularity of subscriptions during and after lockdown, as the nation faces a long winter of uncertainty and looks for ways to stay occupied, fed and fussed over.

“Many [consumers] have been bypassing third parties like eCommerce marketplaces and turning instead to direct-to-consumer (D2C) channels. A recent survey of 2,200 U.S. consumers found that half of them used online D2C purchasing to buy consumer packaged goods, for example, and many shoppers believe these options allow them to better find their desired items,” according to the latest Subscription Commerce Tracker(R).

“These purchasing habits are likely to be long-lasting, too, with 73.2 percent of respondents who have adopted new shopping habits saying they expected to continue engaging in these activities after the pandemic ends.”

Moving quickly on new opportunities in D2C recurring revenue is the focus of the latest Tracker.

Highlighting DTC Value

PYMNTS’ latest Subscription Commerce Tracker(R) examines consumer behaviors since early in the outbreak, describing how D2C subscription commerce became a lifesaver last spring, even for things like ready-to-make meals, which until that point were doing just okay.

“The pandemic has caused many consumers to reprioritize how they want to spend their money, and meal subscriptions looking to keep budget-wary customers loyal may need to rethink their strategies,” the Tracker noted, adding that “meal subscription providers are taking fresh looks at consumers’ needs during the pandemic, and many are well-positioned for serving housebound consumers who are avoiding public spaces like grocery stores and wanting more convenient or interesting meals.”

It’s not just an opportunistic moment in business: D2C requires a strategy to fully deliver.

“To accelerate growth through subscriptions, D2C [companies] need to develop acquisition strategies that highlight the value of becoming a subscriber,” Dan Burkhart, CEO and co-founder of Recurly, told PYMNTS. “Additionally, they must develop subscriber retention strategies to ensure that the entire subscriber experience — every touchpoint, from promotions and product [user experience] to customer support and billing — is delightful every time. Adding subscriptions to the mix can help [D2C companies] expand their customer pools, retain existing ones and increase key metrics critical to growth, including customer lifetime value and increased revenue per customer.”

Subscription Options Ideal for the Times

D2C opportunities are busting out all over, from food to booze to household supplies. For some, it’s turning into quite a business model, tailor-made for touchless living.

Herbal supplement subscription company Mab & Stoke reported a 714 percent rise in month-over-month enrollments when it began offering payment tiers. Like subscription pause options, payment choice is another way that D2C brands are leveraging the trend.

“The company’s standard subscription plan gives customers 10 percent discounts on their orders, and the company responded to the pandemic by allowing customers to also choose to subscribe with 30 percent or 80 percent off discounts,” per the Tracker. “There are some limitations, with the company restricting how often a given customer can purchase items at the 80 percent discount level,” along with the selection-discounted price points.

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