In recent years, there’s been a global shift in consumer thinking. There’s now less focus on ownership and more of a desire for access to experiences. Consumers are looking to declutter their lives while maintaining access to creature comforts.
A recent report from Zuora calls this the “end of the ownership economy.” This shift also plays directly into the strengths of the subscription model. When a business figures out how to offer consumers the newest and best products without forcing the lifelong commitment that ownership represents, they can tap into this access-centric mindset.
Here, we’ll take a closer look at the results of this report, which outline these changing consumer desires. We’ll also share how your business can establish a program that speaks to consumers’ new needs.
Forget About Keeping Up with the Joneses
Accumulating possessions used to be considered a sign of success. This mindset has shifted greatly in the past few years. In fact, 68 percent of adults surveyed now say that owning things is no longer a status symbol.
This accounts for the success of subscription services like Rent the Runway. The company started as a service that rented dresses and accessories for formal events.
It has expanded rapidly in the past few years and now offers subscription services that allow customers to rent their entire wardrobes from the company. For busy professionals who always want access to the latest designer clothing, without having to make more space in their closet and put a significant dent in their bank account, Rent the Runway offers them the best of all worlds.
Even furniture ownership is on the outs. Startups like Feather allow customers to rent furniture on a monthly basis. For those in bustling cities who move often and don’t want the burden of furniture ownership, or people who want to switch up their interior design regularly, Feather solves their problem.
Brands like Rent the Runway and Feather are taking advantage of the changing perceptions around renting. While in the past it would have been gauche to borrow your clothing or furniture, subscription services that provide access to luxury brands are now new signifiers of wealth.
Consumers See Ownership as a Burden
Increasingly, ownership is seen not only as unimportant but also as a hindrance. As the gig economy continues to grow and people are more empowered than ever to work from anywhere in the world, owning things has become a barrier to the digital nomad lifestyle.
Fifty-nine percent of adults surveyed said that owning fewer things gives them a greater sense of freedom. Even for those uninterested in picking up and moving around constantly, the clutter, maintenance, and depreciating value that comes along with owning goods are all seen as major negatives. Subscriptions allow consumers to enjoy an experience without taking on the burden of ownership.
Think about a subscription music service like Spotify. In the not-so-distant past, if you wanted to listen to all of the music by your favorite artist, you had to buy their CDs.
Those jewel cases would pile up on your desk or bookshelf. If you ever wanted to declutter your space, you’d have to cart them off to a second-hand record store, where you’d likely get a dollar or two for the album that originally cost you $16 to purchase.
Now, subscription services allow you to access just about any song by anyone in the world at the touch of a button. And while you don’t own the music, you also don’t have to deal with the hassle of getting rid of it when you no longer want it.
Subscriptions Address Consumers’ Pain Points
Decluttering is not the only pain point that subscriptions address. Subscribers noted a lot of other benefits to the access-over-ownership model.
Forty-one percent of consumers cited convenience as a major benefit. Thirty-three percent mentioned the savings associated with subscriptions as a benefit, while 32 percent said they appreciated the access to benefits exclusive to members. The ability to upgrade and access the latest and greatest products was a driver for consumers as well, according to 30 percent of respondents.
Most Adults Already Have Subscriptions
The good news for those looking to start their own subscription program is that most consumers are already very comfortable with the concept of a subscription service. Seventy-one percent of adults already have a subscription of some kind, which is up from 53 percent just six years ago.
Here’s more good news: Most consumers don’t stop at one subscription. Adult subscribers average 2.7 subscriptions per person. This means there’s still plenty of room in the market for you to launch your own program.
What This Means for Your Business
As a business owner, now is the time to capitalize on this shift towards access and experiences. As consumers continue to move away from an ownership-based model of buying, companies clinging to traditional business models will be left behind.
Think about the problem you’re really solving for your best customers, your whales, and take it from there. Develop a product pyramid that offers a suite of complementary products and services to address those needs. Create a subscription program that encourages customers to move up the pyramid, from an enticing introductory offer up to the biggest subscription package that offers convenience and exclusive access.
The writing is on the wall: Consumers are looking for the convenience, ease, and flexibility that subscription services offer. When you embrace those central tenets of the new consumer mindset and create a service that addresses those needs, you set yourself up to win, with recurring revenue and strong growth potential.
About the Sterling Woods Group, LLC
The Sterling Woods Group’s mission is to help clients make sense of their data to predictably grow sales. We apply data science to help you optimize your sales funnel, improve your marketing ROI, launch new products successfully, and enter new markets profitably.
We use a hypothesis-driven, data-supported methodology to discover insights that no one else is paying attention to. Then, we help you assemble the right sales strategies, marketing plans, technologies, and resources to seize this opportunity.
About the Author
Rob Ristagno, founder and CEO of the Sterling Woods Group, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. Starting his career at McKinsey, his focus has always been on embracing digital technology and data science to spur strategic growth.
Rob is the author of A Member is Worth a Thousand Visitors and is a regular keynote speaker at conferences around the world. He has been featured on ABC, NBC, CBS, Fox, and Digiday.
He holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.
Rob lives outside Boston, MA with his wife, Kate; daughter, Leni; and black lab, Royce.