Zuora, the leading subscription management platform provider, released the latest edition of its annual Subscription Economy Index™ (SEI) designed to measure the collective health and growth of subscription businesses across industries including Software as a Service (SaaS), Manufacturing, Media, Publishing, Telecommunications, and for the first time since its inception in January 2012, Healthcare.
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“In some cases, this slow down could represent users who refrained from upgrading services in an economic downturn, in others, it could represent the short-term result of businesses offering users steeper discounts. Still, subscription spending continued to expand while sales in the non-subscription companies contracted.”
The global pandemic has become a catalyst for long-term change across the business landscape, accelerating trends in work, health, retail, education, media, manufacturing and more. Despite the subsequent economic downturn, the Subscription Economy® has maintained momentum, growing more than 400% over the last 8.5 years as businesses and consumers alike demonstrate a growing preference for access to subscription services over the ownership of products, a trend referred to as The End of Ownership.
In fact, subscription sign-ups are on the rise, and while S&P 500 companies saw sales contract at an annualized rate of negative 10% in Q2 2020, subscription businesses in the SEI expanded at a rate of 12%. As a result, IDC’s Worldwide Digital Transformation Spending Guide suggests that digital transformation will continue despite the challenges presented by COVID-19, with global spend on digital transformation technologies and services forecasted to grow to $1.3 trillion in 2020.
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“There’s a clear opportunity for businesses to reimagine and transform their approach to the market in order to meet customers where they are today, and ultimately provide value through positive subscriber experiences,” said Dr. Carl Gold, Chief Data Scientist at Zuora. “By looking at various indicators including growth, churn and discounts for the past two quarters ending in June, we can see that subscriptions models are uniquely positioned to adapt to external market demands and pressures, helping businesses embody the agility, automation capabilities and insights to make strategic, informed business decisions in any climate.”
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