As businesses face supply chain disruptions and labor shortages, the quality of the goods and services promised to subscribers is at risk of diminishing. This poses a challenge for subscription models which rely on user loyalty, as these same low barriers that make subscription services so attractive also make it easy for customers to switch to a competitor. The potential for customer dissatisfaction and churn is a major threat to the subscription model.

As inflation continues to soar, companies with a large base of long-term subscribers or those that deliver physical products under a subscription plan are feeling the crunch. With costs steadily increasing, the amount of revenue each customer brings in remains the same until they renew. This cost-revenue gap is becoming increasingly apparent and can no longer be ignored when subscriber growth slows or when it impedes their ability to deliver services. In some cases, this discrepancy between a company's cost structure and its subscription model has become too large to reconcile. Managers must now be mindful of this issue, even when subscriber growth is strong, to ensure their business remains viable.

Download June 2023 DTC Quarterly to read more how Tiia Koskela-Helenius navigates DTC subscription and continuity models, exploring the bumpy paths ahead and what companies can do to mitigate the risks.

Download the Quarterly using "Navigating DTC Subscription & Continuity Models - Bumpy Paths Ahead" button above.

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