According to a leading credit card processor, retailers can turn millennials into loyal customers by offering products and services via subscription.
Compared to Baby Boomers (born between 1946 and 1964) and Gen Xers (birth years ranging from the early-to-mid 1960s and ending birth years ranging from the late 1970s to early 1980s) Millenials, also known as Generation Y or the Net Generation (born between 1980 and 2000) are more comfortable to pay for things, especially physical products, on a recurring basis.
The research reveals that 70% of Millennials have a product subscription. Gen Xers have only 44% and Baby Boomers have only 19%. Almost 90% of Millennials have a service subscription. Gen Xers have 78% and Baby Boomers have 67%.
According to the mentioned processing company, this doesn’t mean e-commerce merchants should view this as an opportunity to target older consumers with subscriptions. The point is that they should become more tenacious with regard to the younger generation, who are expected to grow their spending power to $1.4 trillion by 2020.
Based on the research, 77% of the consumers who don’t currently have any product subscription aren’t likely to subscribe in the future.
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The senior product leader for e-commerce at the above mentioned company notes that merchants can take advantage of this type of business model. He mentions the following advantages:
- Customer lifetime value (CLV) to a merchant goes up. A consumer can click “buy” once and get products shipped every month without any further thought or action.
- Services that wouldn’t be affordable if billed in one lump sum become less costly. Millennials are quite interested in this since they like using online services but have the tightest cash flow as compared with previous generations.
- A growing recurring revenue stream can help increase the value of your company.
He further notes that though merchants can enjoy a number of benefits, they should make sure their payment provider offers features for recurring billers that maximize approvals and minimize unnecessary declines.