TLDR

  • Understanding generational differences in subscription behavior is critical to success with FMCG subscription marketing and channel strategy.
  • Millennials have more subscriptions than any other generation.
  • 80% of Millennials said they subscribed to make their life easier.
  • Millennials use introductory offers and often stick with a subscription after being gifted it.
  • Keeping Millennials requires a subscriber-centric strategy that includes a subscription hopping portfolio.
  • SKIM uncovered insights about subscription use, attitudes, and expectations with 16,000 consumer interviews in five countries.

While purchases of subscription-based products and services have skyrocketed in recent years, not every generation of consumers has adopted the “subscription lifestyle” with the same level of enthusiasm.

If you had to guess, which generation would you expect to have the most subscriptions? What SKIM learned in our recent research might surprise you.

SKIM recently studied subscription attitudes and behavior across four categories of physical goods: Personal Care, Household, Beauty, and Food & Beverage. We interviewed 4,000 U.S. consumers and uncovered generational differences that have important implications for subscription marketing and channel strategy.

Whether your company is exploring a shift to a subscription business model or looking to optimize the profitability of your existing subscription business, understanding these generational differences is essential for your success.

Millennials have seen the future, and they want it delivered monthly

Although they are not the “digital native” generation, Millennials are becoming the subscription lifestyle generation.

Our research revealed that almost half of Millennials have four or more subscriptions, far more than any other generation. By contrast, Boomers (and older) have not embraced subscriptions to the same extent; only 18 percent have four or more subscriptions.

Half of millennials have 4 or more subscriptions

Subscription marketing: 4 key insights for targeting the Millennial generation

1. Millennials prefer to shop online

Millennials are less likely to say they shop only in-store than any other generation. They are more comfortable in the digital commerce environment and believe in the safety, security, and convenience of having products delivered to their door. These preferences are important precursors to being willing to enter the subscription channel, especially for FMCG subscriptions.

Understanding Millennials’ digital shopping behavior for your category can also inform your subscription marketing strategy.

2. Millennials value convenience more than saving money

Saving money is important to consumers, but it is only part of the subscription lifestyle value proposition.

For Millennials specifically, savings is not the top reason for signing up for subscriptions. Convenience, in one form or another, is the driving factor behind their decisions and should factor into your brand messaging.

Millenials top reasons for sign up

3. Millennials respond to introductory offers and gifting

Because Millennials already have so many subscriptions, we expected them to be more jaded and less interested in new subscription offers. That turned out to be wrong: Millennials respond well to introductory offers. They are also the most likely of any generation to continue a subscription after receiving it as a gift.

Millennials respond to introductory offers and gifting

4. Millennials may be inclined to “subscription hop”

Since Millennials have more subscriptions to balance, they may be more likely to look for opportunities to change their subscription portfolio.

While that might increase the risk of churn, it also presents an opportunity for subscriptions marketers.

Millennials’ desire to try new things creates opportunities to continue the conversation.

Providing a variety of products and experiences for them is critical to keeping them in your subscription ecosystem.

One way to do that is to provide a continuing stream of new options. Millennials are very interested in trying something new; in fact, “wanting  to try something new” is a primary reason for canceling a subscription.

Both Gen Z and Millennials are used to a barrage of new ideas and products – Instagram and TikTok are testimonials to that. Your new product development strategy should focus on a continuous stream of products and services for the subscription channel.

Go To Market recommendations for CPG and D2C companies

The subscription channel offers unprecedented opportunities to create new conversations and develop direct relationships with your customers. The ability to develop one-to-one relationships at scale is too important to miss.

While the rewards are substantial, succeeding in the subscription economy is complex. Here is a model that can help you frame the business questions you and your team will need to address to implement a subscription strategy.

The Direct Customer Relationship Flywheel

Elements of GTM strategy for subscription business models

Value proposition assessment.  Pricing is very important, but it is only one component of the subscription lifestyle. This channel requires a nuanced response to the consumer choice of subscriptions over ad hoc purchases. When targeting Millennials, don’t overlook the value of convenience.

Learn more: Product Subscriptions – 3 surprising reasons behind consumer choices

Generational targeting.  Which generation is your primary target? Generally, we suggest Millennials because they are most open to subscriptions. However, your product mix may lead to targeting Gen X or Gen Z. Gen X is currently more open to adding subscriptions; however, Gen Z will become an important target for growth as they increase their incomes and family needs.

Subscription marketing strategy.  Introductory offers and gifting are important starting points to attract new subscription users.

Product portfolio.  How will you address the issue of churn versus subscription hopping and the desire to try something new?

Get subscription behavior insights for your category

The generational insights outlined here represent just a sample of the findings from SKIM’s ongoing first-party research into the subscription lifestyle. To date, we have interviewed 16,000 consumers in five countries to gain insights into subscription use, attitudes, and expectations.

Want to know more? Contact SKIM’s subscription behavior experts to dig deeper into the data and insights for your specific category.  

SKIM provides subscription channel advisory and research services to the world’s leading brands in strategy, product portfolio optimization, pricing, communications, innovation, and decision journeys. Reach out and schedule a consultation.