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The Netflix Model Comes to Tacos and Salads As Subscriptions Prove Popular With Consumers

Taco Bell and Sweetgreen recently joined the subscription party. Should your company be next?

Looking to hang onto customers? Take another look at your subscription model–assuming that you have one. More and more industries seem to be offering them, from airlines to cinemas to pet food providers.

As the pandemic ground the world to a halt in 2020, more consumers turned to subscriptions as they retreated to the comfort of their homes and embraced digital services. But it seems that this change in consumer behavior could be permanent.

Subscription management platform Zuora released a new report that shows that customers at subscription-facing businesses are sticking around. The Redwood City, California-based Zuora’s Subscription Economy Index tracks the growth of the subscription economy; the index comprises hundreds of companies in industries from media to business services and beyond.

Zuora’s report highlights that churn rates (or the rate of customer attrition) dropped from 6.3 percent in 2020 to 5.4 percent in 2021. Churn rates sat at 6.5 percent in 2019.

So why are customers sticking around? Zuora’s report points to a greater emphasis in improving both customer service and a customer’s journey. Churn rates will decline as companies grow more sophisticated in their subscription offerings, according to Amy Konary, founder and vice president of the Subscribed Institute at Zuora.

Konary tells Inc. that the churn rate is “a sign that the subscription economy is maturing to the point that companies are getting really good at giving customers things that they want to continue to subscribe to.” She uses Netflix as an example. The entertainment platform exhibits ongoing value because it constantly updates its streaming catalog, which means that a customer’s journey doesn’t end after a given time. Even if a customer finishes Netflix’s entire streaming catalog within a month, there’ll still be the promise of new content not too far away.

Other companies are taking note. Taco Bell and Sweetgreen joined the subscription brigade in January. Sweetgreen introduced its new Sweetpass pilot program, which runs consumers $10 and offers them a $3 daily credit for 30 days. Taco Bell also invited its connoisseurs to enjoy 30 tacos over 30 days–all for just $10. The repetition could convert casual customers into daily ones.

Taco Bell and Sweetgreen aren’t the only restaurants to go subscription. Panera and Pret a Manger offer coffee subscriptions as well. It’s a given that subscriptions provide consistency. But they also provide resilience, especially in uncertain times. Konary explains that subscriptions exemplify an ongoing relationship between a consumer or business and a provider. That said, subscription models aren’t for every business.

“I think it’s really hard to have a subscription model where there’s no digital component,” Konary says. “For companies that don’t have a digital conduit to their customers, it’s a lot harder to create those compelling journeys.”

This article was written by Melissa Angell from Inc. and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to [email protected]

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