Subscription Businesses Remain Resilient Amid COVID-19
Latest Zuora Report Shows That 4 of 5 Subscriptions Companies are Still Growing Despite Economic Impact of the Global Pandemic
Zuora, the leading subscription management platform provider, released the newest edition of its Subscription Impact Report designed to measure the economic impact of COVID-19 on subscription businesses from March 1 – May 31, 2020 compared to the previous 12 months (February 2019-February 2020). The report, analyzing both subscriber acquisition rates and average revenue per subscriber, compares Software and High Tech, Media, Consumer Membership and Internet of Things industry segments.
“While it’s still early in the lifecycle of the pandemic, it appears that companies with recurring business models have weathered the COVID-19 storm better than other models. Due to contracts and recurring revenue, companies are more closely aligned to their customers’ success”
COVID-19 has significantly impacted the global economy, prompting companies across all industries to quickly adapt to shifting market demands and shelter-in-place orders. Through it all, however, subscription businesses are proving their resilience. While S&P 500 sales in Q1 2020 contracted at a -1.9% annual rate, subscription-based revenue continued to thrive, growing at 9.5% in the same quarter, according to Zuora Chief Data Scientist, Carl Gold.
The latest Subscription Impact Report found that half (50%) of companies are still growing but have not seen a significant impact to their subscription growth rates amid COVID-19, while 18% actually experienced an acceleration. And while 17% of companies experienced slower growth, they are still growing, and only 14% of the companies analyzed experienced a contraction in subscriber growth.
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“It shouldn’t come as a surprise, but Subscriptions continue to deliver above-market growth. If these moments of time tend to accelerate underlying trends, we believe the current crisis will only accelerate the shift of the modern global economy towards digital services and subscription models,” said Tien Tzuo, cofounder and CEO at Zuora.
But no two subscription businesses are the same, and the economic crisis is impacting industries differently. While some focused on new subscriber acquisition via incentives such as free trials, others focused on retaining customers by providing payment relief, pausing services and more.
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