Survey: Retailers subscribe to benefits of subscriptions and other recurring revenue programs

Retailers are seeing growing returns from recurring revenue programs such as subscription services, memberships, reordering and boxes. 

According to “Retail 2020: Recurring Revenue Programs Deliver Results,” a new survey of retail executives from relationship commerce platform provider Ordergroove and Napco Research, 77% of respondents currently offering or considering offering recurring revenue programs report that a recurring revenue program is a “prerequisite for doing business.” The other 23% consider recurring revenue as “nice to have, but not essential.” No respondents said it has no importance.

A majority of respondents reported benefits from their recurring revenue programs including “greater profitability” (65%), “greater revenue” (59%) and “increased customer retention” (49%). No respondents reported not seeing any benefits from recurring customers.

Eighty-seven percent of respondents are seeing the revenue contribution from their recurring revenue programs grow substantially year-over-year, with 93% of them expecting that this trend will continue in 2020. 

The most common metrics respondents are using to measure program impact include “purchase frequency” (69%), “repeat purchase rate” (66%), “total customer spend” (62%) and “average order value” (56%). On average, companies that offer recurring revenue programs report that 41% of their revenue can be attributed to them.

Napco surveyed executives at director level or above at retailers from $5 million to over $1 billion in annual revenue during Q4 2018.