Interviews, insight & analysis on digital media & marketing

Success in the subscription economy: How retailers use brand-to-brand partnerships to drive record performance

By Lee Metters, Client Partner, Brand Partnerships at Awin

Since 2021, UK households have been battling high inflation, trying to fend off steep cost-of-living increases that have negatively impacted the economy. As a result of this high inflation, consumers have had to make tough choices on where they spend.  Still, the wheels of commerce and technology have continued to turn, presenting a new way for people to acquire goods and services with greater financial predictability.

Subscription services provide consumers with access to offerings (products and services) for a set sum, paid at regular intervals, typically monthly or annually. According to the Zuora Subscription Economy Index (SEI), these types of businesses have grown an astounding 3.7 times faster than the S&P 500. Further, UBS predicts the subscription economy will reach $1.5 trillion by 2025, more than twice its value just three years ago. 

Driving it all has been demand, which shows no sign of letting up. Research from Whistl reveals UK shoppers spend over £2 billion annually on subscriptions, more than 80% of households utilising at least one. And while areas such as food and streaming services continue to lead the subscription pack, other segments are getting in on the action, offering a range of subscriptions on items from shaving products to pet supplies. 

A victim of success

Despite their increasing popularity and strong market potential, subscription-based businesses are not immune to threats. In fact, just trying to keep up with their rapid success has caused significant growing pains. 

For instance, today’s consumer spends hundreds of pounds on monthly subscriptions, and managing these can quickly spiral out of control. In response, a majority of UK banks now enable customers to easily cancel direct debit payments for subscription services. While this does give users some much-needed control over how they manage and consume subscription services, it causes a lot of customer churn.

That means providers of subscription services must continually search for new customers. 

Sharing customers and success

With the need to constantly acquire new customers, more and more subscription providers are looking into brand-to-brand partnerships, easily enabled through affiliate marketing. This is essentially a collaboration between non-competing retailers who partner to achieve mutual success. Through a brand partnership campaign, subscription advertisers can be introduced to the customers of another brand – and often it’s a group of active and motivated shoppers.

One way a campaign could play out is for the brands to offer complimentary gifts during the checkout process. The global affiliate marketing platform, Awin, recently facilitated a successful collaboration between Myprotein and SimplyCook, where shoppers were provided with a free trial of its recipe box subscription.  After a Myprotein purchase, customers would get instructions on how to redeem their free SimplyCook trial. As a result, Myprotein referred over 55,000 customers to SimplyCook, over a quarter of which became subscribers.

A further advantage of brand-to-brand partnerships over traditional gift campaigns is that subscription services yield valuable first-party data. In SimplyCook’s case, it was able to leverage the information to effectively retarget Myprotein customers. And with a tracking link embedded in the redemption email, Myprotein was able to earn commissions on all successful free trial redemptions.

Time to partner up?

When a partnership is well aligned, subscriber conversion rates are usually higher than with other acquisition channels. For instance, in 2023, Awin supported multiple subscription brands to achieve the following results through brand partnerships:

  • 20% average increase in conversion rates when a subscription is offered as a free gift
  • 48% average conversion into full paid subscriber following a free trial
  • 19% year-over-year increase in acquisition performance for subscription advertisers

If you’re thinking of partnering up, the first thing to do is identify the right partner, and the key to this is ensuring you have complementary customer demographics. In the case of Myprotein and SimplyCook’s campaign, customers were of similar age, and “health & fitness enthusiasm” was cited as a shared value. 

Further, it’s important to ensure there’s no competition between partner companies and products. There needs to be open collaboration and trust among all parties in order for this to work, and that’s particularly true when commissions are involved. 

Remember, you’re known by the company you keep, so partner well and be a good partner to others.