May 2018 | Point of View

America’s relationship with subscription services

Budgets have evolved with a swarm of new services with recurring monthly fees emerging, ranging from foundational elements of life to niche offerings.

America’s relationship with subscription services

Knowing millions of consumers spend billions of dollars per month on subscription services, our team was drawn to these questions: How happy are people with various subscription services? Which are they most or least dependent on? Are they acutely aware of the expenses, or does it amount to background noise?

We conducted an analysis of 2,500 Americans’ budgets, spanning 21 categories of subscription service. What follows are our most useful findings.

Perception vs. Reality

We suspected people underestimate how much they spend on subscription services, so to begin our survey, we played a little game to test the theory. It involved three steps:

  1. We began by asking people to think generally about “recurring monthly expenses associated with digital services, devices and subscription boxes.
  2. Then we gave people 10 seconds to guess how much they spend per month on such expenses.
  3. After recording an initial answer, we asked people to take 30 seconds to think about the question more carefully, before answering a second time. We prompted them with specific examples of services and service categories, including “WiFi, mobile service, Netflix, Spotify, Birchbox, Dollar Shave Club, GoDaddy, PlayStation Now, iCloud, Fitbit, etc.” 

Here's what we found:

  • Average of first guesses (10 seconds): $79.74/month
  • Average of second guesses (30 seconds): $111.61/month 

That’s a 40% increase in estimated spend between the two guesses.

Next we took people through an exhaustive inventory of their recurring monthly expenses, across 21 categories. A number of services, particularly apps, have free versions. For our analysis we focused solely on consumers using paid versions of these apps.

Once respondents’ inventories were complete, we had a new number to contend with: $237.33. Across the 21 categories we measured, that was the average total spend.

  • First guess: $79.74/month
  • Second guess: $111.61/month
  • Actual spend: $237.33/month 

That’s a 112% increase from the first to second guess and a 197% increase from the first to actual spend.

Below is a snapshot that shows how much people underestimated and overestimated their actual spend.

Clearly, most Americans are unaware of how much they spend on subscription services. When pressed for a quick answer, they dramatically underestimate the amount. This is a boon for companies operating subscription models… and a bust for advocates of conscientious budgeting.

Below is a list of the services from most popular to least popular, along with the most frequently selected amount spent on each service. Note: Respondents were allowed to select the closest amount to what they pay per month, in $10 increments. So, if someone pays $8.99 per month for an app, they selected $10.

Top of Mind Expenses

Once we established which services each respondent subscribes to, we asked people to rate how acutely aware they are of that monthly expense, on a scale of 1-10.

Built to Last

We assessed people’s relationships with subscription service(s) from each category, in two ways:

  1. How satisfied are they with the service(s)?
  2. To what extent do they feel attached to or dependent on the service(s)? 

For each subscription, respondents could identify one of four statuses:

  • Happily hooked
  • Happy, but not hooked
  • Unhappily hooked
  • Unhappy, not hooked

On the whole, our data shows that people are happy with their subscription services. They may be surprised to know exactly how much they spend on such services in total, but there seems to be a broad base of highly retainable customers in the categories we analyzed. What’s most interesting for us is the consideration of attachment to certain services, or as we’ve termed it, who’s “hooked” on what. One interesting example in this regard: people are most “happily hooked” on music streaming services, like Spotify, but much less so on mobile phone service, despite the fact that for most customers, their beloved music streaming platforms would not exist without mobile.

Are you responsible for Customer Success and retention as part of a subscription business model? Looking for key insights and the latest benchmarks? We can help.

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