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Report: Consumers will use subscription-based services if easy, affordable

Consumer study reveals top subscription services and how super subscriber shoppers select Internet, cable, mobile phone, streaming, grocery and other services.

May 27, 2015

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Subscription services have become an increasingly common part of consumers' lives from legacy products such as broadband, telephone and cable TV services, to newer offerings like streaming content and grocery delivery subscriptions. Blackhawk Engagement Solutions' latest shopper research evaluated the top subscription-based services and examined the ways consumers research and purchase these offerings, according to a company release.

"In the age of sophisticated and engrained deal-finding behaviors, shoppers have identified intelligent ways to not only save on subscription services, but leverage new kinds of subscription services to reduce the cost of older product and service options," Rodney Mason, GVP of marketing with Blackhawk Engagement Solutions, said in a statement. "Our research revealed the top incentives for motivating consumers to try or move to certain subscription services."

Key findings of the BES study include:

Grocery and consumer goods delivery a burgeoning subscription category: 16 percent of consumers reported using these subscriptions. Customer profiles of shoppers who use these services are provided in the report and include average spend in-store, age and income. The top incentive for trying grocery delivery services is free shipping (82 percent of shoppers prefer this option), which can be earned through a post-purchase validated reward.

Most subscribed services: 89 percent of Americans subscribed to Internet service, followed by 83 percent who subscribed to cell phone plans. While 74 percent had a cable subscription, basic cable (36 percent) is about to eclipse premium cable (38 percent), which could be due to migration to streaming/on demand services. More than half of consumers (52 percent) subscribed to streaming TV or movie content. And recurring grocery/consumer goods delivery subscriptions are just beginning to take off, but are already in the double digits, with 16 percent of Americans using these services.

Prepaid cards, paid termination fees top motivators for Internet subscribing: When looking for a new Internet service provider, most shoppers (59 percent) would select a provider that offered a prepaid card incentive versus monthly discounts or other incentives like a free tablet. And for shoppers interested in switching Internet service providers before their contracts have expired, a top motivator to do so is when the new provider pays the termination fee charged by the old provider (64 percent).

Triple-play bundle shoppers' path to purchase can be disrupted: Consumers shopping for a triple-play subscription (phone, TV, Internet) took three to six days on average to make their decision and shopped one to two competitors. Their path to purchase most frequently involved searching providers' websites, then turning to Google, then going in-store or calling and finally checking with Amazon before buying. Shoppers reported that this routine can be disrupted by a dynamically placed rebate adding more value than the best in-market instant discounts.

Online and digital delivery of movies skyrockets in popularity: More than half of consumers (57 percent) prefered online/digital delivery of movies versus 29 percent that rent movies from a store or kiosk and 15 percent that rent or buy online through a retailer.  In consideration of a $14.99 per month video streaming service, consumers overwhelmingly report that a free month of service would be the best motivator for trial. Finally, younger shoppers and shoppers with higher incomes have a higher propensity to use online/digital video content.

Top music streaming services: Half of the consumers reported using Pandora for streaming music services, followed by iTunes (35 percent), Spotify (18 percent), SiriusXM (16 percent) and others. A prepaid card is also the most favored incentive for signing up for services in this category, with 60 percent of shoppers selecting a $10 prepaid card reward as the best motivator for purchase.