Gen Z Subscribers Steer Clear of Commitment

As subscription services target younger consumers, Generation Z is proving to prefer shorter stints over long-term commitments.

According to findings from PYMNTS Intelligence’s study “The Subscription Commerce Readiness Report: The Loyalty Factor,” created in collaboration with sticky.io, which draws from a census-balanced survey of more than 2,000 U.S. consumers, a plurality of Gen Z consumers are shorter-term subscribers.

Specifically, the findings revealed that 10% of “short-timers,” those who subscribe for just 14 months on average, were in this generation a greater share than any other lifetime value (LTV) persona group. Plus, the same study found that Gen Z was disproportionately likely to cancel their subscriptions, because they deemed the subscription unnecessary.

This may in part be because of how many subscriptions these young consumers hold at a time. The PYMNTS Intelligence report “The Impact of Subscription Models on Consumer Choice,” which is based on a survey of more than 2,100 U.S. adults, finds that Gen Z consumers disproportionately tend to be multi-model — highly valuable subscribers who enjoy multiple subscriptions of more than one type.

Given this group’s enthusiasm for adopting new subscriptions — if not for committing to them for the long haul — many firms are targeting their memberships toward young consumers, and many companies that already target young consumers are adding subscription offerings.

Tinder, for example, derives much of its revenue from its subscription offerings, which can be as low commitment as charging by the week. The dating app has been targeting its offerings toward Gen Z, as parent company Match Group’s CEO Bernard Kim told analysts on a call discussing the company’s most recent financial results.

“[Our] teams [have looked] at ways to bring more depth into member profiles and also keep that core experience intact. This is actually coming from extensive testing with our core users and direct feedback from Gen Z and our younger users,” Kim said. “We have to make sure that we’re balancing that swipe experience with a great UX that delivers a new experience that resonates with the new generation of users.”

And Snapchat, which skews toward a younger audience, has been quickly growing its relatively new subscription Snapchat+ program, which enables members to use new features before they get released and to test out experimental capabilities.

“We made progress diversifying our revenue through Snapchat Plus, our subscription service that offers exclusive experimental and pre-release features which now has more than 4 million subscribers,” Evan Spiegel, co-founder and CEO of the app’s parent company Snap, stated on the tech firm’s most recent earnings call.

Since the July call, Snapchat+ exceeded 5 million members last month, according to a recent report.

Granted, short-term subscribers can be converted into more loyal consumers with the effective use of customer data, as Brian Bogosian, CEO of sticky.io, related to PYMNTS’ Karen Webster in an interview.

“You need to understand what it is about what you are offering that appeals to them and ensure that your front-end-loaded investment to acquire a customer is in balance … along with cross-sell and upsell opportunities,” Bogosian said.