3 Predictions for the Subscription Economy in 2020

Subscription business models extend far beyond the software industry. Across the board, industries – from automotive to media to retail and beyond – are witnessing the true impact of the Subscription Economy, reimagining their businesses to meet new consumer demands for access to services over the ownership of physical products.

By transforming into valuable service providers, companies far and wide are establishing deeper relationships with their customers and, in turn, setting their businesses up for long-term success and scalability.

The opportunity is clear: subscription businesses, on average, are growing revenues 5X faster than S&P 500 revenues (18.2% versus 3.6%) and U.S. Retail Sales (18.2% versus 3.7%).

Witnessing the incredible momentum and diversification of these businesses over the past year, Zuora CEO Tien Tzuo, Zuora EMEA MD John Phillips, and Zuora Chief Data Scientist Carl Gold have provided three predictions for how businesses will sustain growth throughout 2020.

Prediction #1: Retailers will ask customers to pay for loyalty.

For decades, retailers have offered a slew of rewards and discounts for customers (think Black Friday sales), essentially paying for customer loyalty. However, the end result is grim. More than 5,800 stores in the U.S. have closed this past year. In 2020 and beyond, retailers will begin to flip the script on traditional loyalty programs. To build real loyalty, retailers will evaluate what customers prefer to invest in, to sign up for, to subscribe to, and create membership programs that align with these insights.

– Tien Tzuo, Co-founder & CEO, Zuora

Prediction #2: Winners of the MaaS race will emerge.

Everyone is looking to win a piece of the MaaS pie, but it’s likely the victor won’t be a traditional mobility provider like Uber or Lime. It will take a lot more than offering access to on-demand transport options. Instead, it will take an ecosystem of touchpoints that drive insights and create deeper customer relationships. It’s up to OEMs to harness the opportunities in front of them to integrate with technology platforms like Amazon on Apple’s ecosystem. Otherwise, as we’ve seen in numerous industries – take Kodak cameras versus the iPhone, it wouldn’t be surprising to see OEMs get left behind, with the tech giants coming out on top

– John Phillips, EMEA Managing Director, Zuora

Prediction #3: We’ll enter the next phase of the streaming wars.

With some of the biggest streaming services anticipated in 2019 officially launched, 2020 will bring a new dimension to the streaming wars. While we will see more bundling, international expansion and a number of new streaming services in 2020, the biggest challenge for all companies in the streaming wars will be finding new ways to regulate and fight churn using customer data.

– Dr. Carl Gold, Chief Data Scientist, Zuora

Interested in keeping up with the latest trends in the Subscription Economy in 2020? Subscribe to Zuora co-founder and CEO Tien Tzuo’s Subscribed Weekly newsletter to receive insight into the latest subscription news every week.

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