“The Subscription Economy is Thriving in the UK” – John Phillips, VP-Europe, Zuora

By Aarthi Rayapura July 26, 2016

A new YouGov study  “A Nation Subscribed: 2016 State of the UK Subscription Economy” shows the widespread impact of the Subscription Economy in the UK, with far-reaching implications for companies in virtually every industry. The study found that 40 million Brits (78% of the adult population) are now subscribing to at least one product or service. Some key findings from the study are:

  • Subscription business models have already transformed the media, entertainment, and food and drink industries – more than a quarter of the UK population (27%) now subscribes to video streaming services such as Netflix, Amazon Prime or Sky Go.
  • UK consumers are now interested in how subscriptions could transform their lives in other areas, particularly internet of things-enabled future services such as home security services (almost half 45%) or self-driving cars (a quarter, 25%).
  • The popularity of subscriptions has spread beyond the young digital natives, with four out of five (78%) Brits aged 55+ now subscribing.

We spoke to John Phillips, VP for Europe at Zuora on the need for the study, its findings and what it means for businesses in the UK:

Why did you feel the need to conduct this study?
At Zuora here in the UK we work with a variety of companies in both the B2B and B2C spaces, who are facing demand from their customers to offer more flexible models for consuming their products and services. We recognized this shift many years ago and even coined the term “Subscription Economy”! While we’ve seen it happen across the world, we were curious to understand the trends and wanted to confirm the consumer shift directly from the British people.

What and who’s driving this change in consumer behaviour?
It’s a global phenomenon. The way consumers like to consume goods and services has changed dramatically. We are witnessing a once-in-a-century shift from products to services as people increasingly value personalised outcomes and experiences over owning products. They want immediate access to the latest and the best and have no patience for outdated products. This has transformed the business-consumer relationship from a one-time purchase to an ongoing relationship.

Contrary to what most people think, we found that the popularity of subscription services in the UK is not being driven solely by young digital natives. Almost four out of five (78%) Brits aged 55+ subscribe to at least one product or service, compared to 76% of those aged 16-24. 15% of over 55s even say they couldn’t live without some of their subscription services. This statistic alone is enough to show how widespread the shift is and the extent to which subscription models have been adopted.

Which industries are well placed to transition into a subscription model in the UK?
The Subscription Economy is thriving in the UK. Consumers have become accustomed to the benefits of subscription services in industries such as entertainment, music, and food. The most popular digital subscription service in the UK is video streaming – over a quarter (27%) of consumers subscribe to the likes of Netflix, Amazon Prime or Sky Go. Subscriptions to media publications (17%), financial services (12%) and food and drink services (5%) tap into consumers’ desire to have increasingly flexible, personalised and ongoing relationships with brands.

We see this demand growing to other industries as well such as IoT services. The study found that almost half of Brits (45%) would be interested in subscribing to home security services, smart heating, cooling and lighting (41%); personal health care (41%); smart cities (37%); and self-driving cars (25%).

Brits now spend on average 12% of their disposable income on subscription services. There’s a lot of potential and a ready market for all these industries to tap into!

In your experience of working with subscription companies, what would you say are the must-have’s for long-term success?
Companies that are subscriber-centric are best placed to win. It isn’t easy but it’s important that all your departments from product to operations to finance focus on your subscribers’ needs and preferences. It’s important that your employees are armed with the right tools and skill sets. Opt for cloud-based, agile and flexible solutions across all customer touch-points from sign-up and delivery to billing and invoices.

Successful companies are often those that can answer in the affirmative to the following questions:

  • Have you oriented your business around customers, rather than products?
  • Do you understand when, where and how customers want to use your services?
  • Are you ready to be transparent with your customers?
  • Are you creating compelling experiences for customers?

“Subscriber First” should really be your mantra!

Download the complete study: “A Nation Subscribed: 2016 State of the UK Subscription Economy”.
And register now for our annual Subscribed conference – November 15th in London!