I’m no fortune teller, but something about the beginning of a new year and a new decade makes me want to start spouting predictions. Actually, this isn’t the first time I have taken a crack and predictions. The final chapter of my new book THE FOREVER TRANSACTION is all about the future of subscription and membership models too.

Here’s what I think will happen:

There will be a right-sizing of the “Subscription Box” industry. I have nothing against curated boxes sent monthly or quarterly to your home. In fact, if you read this newsletter regularly, you know how much I love my Cowgirl Creamery Cheese of the Month membership. But there are too many subscription boxes, and many of them lack enough value to justify an ongoing relationship.

There are two key issues with subscription boxes

  1. Most people have a limited appetite for discovery of new products. After the third or fourth variety box of cigars/lipsticks/energy bars, subscription fatigue sets in for many of us.
  2. Without economies of scale, distribution advantages or supply chain efficiencies, it’s difficult to provide value beyond “curation”. It’s kind of like all the little boutiques run by people with great taste–being good at spotting great products does not necessarily result in a viable business

Subscription “Managers” Will be Everywhere. Subscription fatigue is on the rise. It’s hard to remember what subscriptions we have, let alone use our subscriptions enough to justify the cost. Many subscriptions, frankly, aren’t that good. And too many subscriptions “hide” the cancel button. As a result tools like Trim, Truebill and Wells Fargo Control Tower, which help consumers manage (cancel, negotiate terms) their subscriptions are on the rise. Consumers are growing weary and picky when it comes to forever transactions.

Subscription CMOs will swing back toward strategy and away from “growth hacking”. Growth hacking has been enjoying a moment for the past 5 years or so–with the charge being led by the marketing department. The idea of growth hacking is basically a focus on small changes on key metrics. In subscription-based businesses, these small changes can have a disproportionate impact on customer lifetime value (CLV). And CLV is an increasingly important metric for recurring revenue businesses as evidenced by the work of Professor Dan McCarthy at Emory University and Professor Peter Fader of Wharton. I’m a fan of this quantitative, rigorous management approach. But I’m noticing that in many organizations, growth hacking is replacing good old fashioned strategy. In other words, organizations are not taking a step back and considering whether there’s a true product market fit and if the organization has a unique, defensible position in the market. We need more market-driven strategy to provide a north star for the growth hackers.

Consumers will start subscribing to the thing itself, not just services and boxes. It’s already possible to subscribe to our toothbrush, exercises bike and fridge, but 2020 will be the year that “membership of things” becomes popular. The declining cost of sensors and rise of machine learning will make it possible to have smart everything. Get ready to subscribe to dishes that tell you if your dinner is healthy, mirrors that suggest you replace that stained blouse and beds that adjust based on your sleep patterns.

Big Companies will try to buy their way into the Membership Economy through Acquisition. People often ask me why I use the phrase Membership Economy and not just “subscription”. A subscription is a pricing tactic, but to truly be successful the organization needs a membership mindset–that is, to treat the people it serves like members, with a focus on building a long-term relationship. Culture is critical in this strategy. And that is why many organizations try to buy their way in through acquisition–not just for the active customers but for the “active-customer-building-machine” that knows how to build these relationships. Cases in point–Fitbit’s acquisition by Google, and Harry’s Shave Club by the owners of Schick.

Healthcare will become increasingly consumer-centric, which will lead to more forever transactions. We spend money on healthcare to stay healthy, right? And yet most healthcare charges are transactional. In fact, in many cases, we aren’t even seeing the same physician from visit to visit. More than one surgeon has told me they do everything in their power to avoid talking to patients about anything except the specifics of the surgery (transaction). It’s less about staying healthy than about fixing what’s broken — like a mechanic. But all around us are glimmers of a better world–concierge medicine which allows you to call your physician directly and have appointments that last more than 6 minutes. Apps to help patients comply with prescriptions for chronic issues, to lose weight and maintain healthy habits and even subscriptions to medical devices instead of required purchase of devices. Let’s rethink the entire healthcare system around a forever promise of maximum minutes of healthiness!

Ultimately, everyone will get in on the Membership Economy action. Five years ago, when I wrote The Membership Economy, it was hard work showing people how virtually any organization could benefit by reinventing its offerings with a long-term, formal relationship at the heart. By treating customers like members, and using tactics like subscription pricing and digital community, organizations could build “forever transactions” with the people they served, no matter the organization’s industry, size or structure. Today, if I tell someone I’m a subject matter expert on subscription pricing and membership models, they almost always tell me about their own organization’s Membership Economy aspirations and challenges.

I predict that in 2020 your organization will be working on its subscription, membership or digital community, and that it’s likely to become a strategic priority from the top down. 2020 will be the year that subscription pricing becomes part of the “new normal” for every type of organization

What do you see in your crystal ball?