Apple, Nike, Disney, American Eagle, Caterpillar. Companies across tech and beyond are starting to leverage subscriptions as part of their business strategy. New data suggests that this move could be exactly what most businesses need to attract and maintain customers at a time when consumer attention is fleeting and requires instant and personalized gratification.
According to info from Zuora’s Subscription Economy Index, which measures growth of subscription companies across verticals, subscription businesses grew revenues about five times faster than S&P 500 company revenues and U.S. retail sales from Jan. 1, 2012, to June 30, 2019. In addition:
Business services and manufacturing industries experienced the lowest churn rates across all sectors, with 16.2% and 20.4% churn rates, respectively. However, Media (37.1%) and Publishing (28.2%) industries saw the highest amount of churn. Apple’s subscription services include Apple Music, Apple Arcade, Apple News, the iPhone Upgrade Program, and the upcoming Apple TV+.
IoT and manufacturing subscription companies exceeded their industry S&P 500 benchmarks by more than 5X. IoT subscription businesses also achieved the highest annual growth rate of Average Revenue Per Account (ARPA) at 14.3%, more than 2x the SEI average of 6.5%.
The publishing industry generated the least amount of revenue from usage-based pricing compared to other industries at 17%, while the sector with the highest percentage of usage-based revenue was Business Services (57%). The full report can be found here.
