Subscription businesses have grown nearly six times faster than the S&P 500 over the last 9 years, with changing consumer preferences driving a 437% rise in revenues for such businesses since 2012.
The latest bi-annual Subscription Economy Index (SEI) from subscription management platform provider Zuora shows that in 2020 revenues of subscription companies in the SEI grew 11.6%, while sales for the S&P 500 declined by -1.6%.
In Q4 alone, subscription businesses experienced revenue growth of 21%, seven times faster than S&P 500 companies’ growth rate of 3%.
In an online survey of consumers in 12 countries for a separate Zuora report, The End of Ownership, 78% of adults said they subscribe to at least one service, up from 71% in 2018, with convenience (42%), cost savings (35%) and variety (35%) cited as the main reasons for doing so.
Almost three quarters (72%) would prefer to be able to pay for what they use, rather than a flat fee.
Nearly two-thirds (64%) of subscribers say they feel more connected to companies with which they have a subscription than they do to ones from which they make one-off purchases.
Amy Konary, Founder and Chair of The Subscribed Institute at Zuora, said: “Now is the time for companies to embrace the subscription business model. Our bi-annual Subscription Economy Index suggests that brands can increase value to their customers through the on-going delivery of services when and where they’re needed.”
She added: “We recommend that businesses design their offerings for ultimate consumer flexibility and freedom so that customers can tap into them anytime, anywhere, to whatever extent they choose.”
The Zuora cloud-based subscription management platform automates and orchestrates the entire subscription order-to-revenue process.