AI Retention Attention: Predictive Analytics in Today’s ‘Subscription’ Economy

Discover how AI can drive retention with subscriber consumers.

Since the upheaval of 2020, several new trends have emerged in the world of business-to-consumer relationships. Predictive analytics and the subscription economy are two of the biggest. 

The predictive analytics software market is expected to reach $41.52 billion before 2028. Considering that its market value was a mere $5.29 million in 2020, it’s safe to say that interest in this uniquely insightful form of AI is becoming one of the most important tools for running a successful business. 

As consumers withdrew from brick-and-mortar shopping in favor of deliveries and subscription services, a new iteration of the modern consumer has evolved. 

In this blog, we’ll cover the complex relationship between AI analytics, subscription business models, and consumer behavior. Plus, we explain how understanding these tech tools and factors can increase customer retention and lead to longer-lasting consumer relationships. 


What Is The Subscription Economy? 

The term “subscription economy” refers to the emerging business landscape in which businesses focus on providing subscription-based services to their customers. These businesses may provide software (SaaS), entertainment, or physical products on demand to their subscribers.

Increasingly, we are seeing consumers gravitate towards brands that offer a tier-structured product model—brands that offer continuously refreshed waves of products for them to consume, often tailored to their individual preferences and needs. 

Take the following mega-brands as examples: 

  • Netflix 
  • Apple Music
  • Blue Apron 
  • HelloFresh
  • Chewy 
  • Microsoft
  • Shopify

There are also reams of smaller-scale brands making waves in the subscription economy scene, from customized monthly wine deliveries to coffee, shaving kits, and beyond. 

Subscription services work best when they are personalized, and that’s where AI comes in. By utilizing predictive analysis, businesses can offer consumers more customized product experiences, leading to higher retention and more lasting brand-to-consumer relationships that get stronger over time. 

One of the core components of contemporary business success is the need to engage customers in long-term relationships. Not only does this provide stability, but it also reduces costs too. Studies show that it costs up to five times as much to attract a new customer as it does to retain an existing one. Retention is something that subscription-based services can provide by the nature of their continuous structure. 

Today’s consumers choose customization over generalization and constant improvement over predictable outcomes, even when it comes with ownership. Consumers are satisfied even if they don’t own the products they use, provided they have access to a constant stream of new services, products, or entertainment. 

Think Uber instead of car ownership. Netflix and Hulu over VHS or DVDs. Spotify instead of CD and vinyl purchases. Compared to their parents and grandparents, modern consumers want innovation, continuation, and a constant rotation of fresh choices to choose from. 

They prioritize innovation over ownership, the latter of which is perceived as unnecessary or even obsolete. This is likely to stem from the sheer nihilism and lack of faith most consumers have in the future of the planet, but that is a conversation for another day. 

Businesses that can adapt to these needs are the ones that will survive. Take the above-listed brands as examples. Subscription-based models are likely to pave the future of business. 

Predictive Analytics For Customer Retention And Experience 

AI and predictive analysis play an enormous role in the subscription economy business—and in just about every consumer-based business today. Why? Because AI-powered predictive analysis makes it possible to anticipate consumer needs and meet them in a seamless and effective way. 

There are many advantages to using AI-powered predictive analytics in business, especially for subscription-based models. Some of the main ones include:

1. Create more personalized customer experiences

According to 90% of marketers, personalization is a major contributor to a business’s success. One of the main selling points of predictive AI is that it provides keen insight into consumer wants and needs. But perhaps more importantly, what they are going to want and need next

This puts businesses that use predictive analysis programs in a powerful position. Not only can they anticipate consumer demands ahead of time, but they can also craft services and experiences in such a way that resonates with each customer on a personal level. 

2. Gain unique competitive advantages 

Subscription-based service companies that don’t use predictive analysis tools are going to be left in the dust of those who do. Knowing what customers want and forecasting future needs ensures that a business can plan properly and deliver on an ongoing basis.

This powerful form of AI has proven itself as an incredibly useful tool for improving customer acquisition and nurturing loyalty with long term customers. 

3. Improve production efficiency 

AI-powered predictive analysis tools can be used for more than just customer relations and experiences. They can also be used for administrative tasks like inventory tracking and managing production rates. 

With the right analytics, your warehouses can predict which products are going to run out fastest, which to produce at a faster rate, and when to order fresh materials for making more. They can also help detect and prevent future production failures that would set back your line of distribution. 

4. Meet consumer expectations

Meeting and exceeding consumer expectations is one of the most important actions any business can take. And while it is possible to achieve this with sheer blood, sweat, and tears, you no longer have to. 

Using predictive analytics to predict consumer needs and proactively find ways to meet them is a much faster and easier process when you have the right tools in hand. Data-driven predictions are becoming an indispensable tool for the subscription economy, and reading these benefits, it’s easy to see why. 

AI Is The Answer To Retention 

The world of business is constantly evolving and changing before our eyes. Using predictive analytics in the subscription economy has become one of the most prevalent tools a business can have. Especially when seeking to improve retention rates and foster long-term loyalty with customers.

The predictive analytics software tools we have access to today enable us to continually refine and improve active engagement models, producing more personalized experiences for consumers. 

They also allow businesses to anticipate future consumer behavior, making it easier for businesses to anticipate their audience’s next moves and start accommodating them before competitors do the same. 

All in all, we can expect to see a lot more AI-powered predictive analytics in business, particularly when it comes to the increasingly in-demand subscription-based business model.  

Charli Tanner
Charli Tanner

Charli is a content champion for a variety of online publications. She often covers topics that cater to business owners and entrepreneurs with a strong focus on finance for startups, productivity, management, and a few other topics.

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