Study Finds AI and Machine Learning Will Be Key for DTC Subscription Service Success

77% of brands are missing their greatest opportunity to meet subscription service revenue targets: AI and ML

Intellimize, the first and only programmatic conversion rate optimization platform (CRO), released a co-branded eTail study, ‘How Brands Can Succeed In The Subscription Economy.’

As many as 75% of direct-to-consumer (DTC) brands are predicted to have a subscription based offering by 20231. The study found that scaling personalization for every visitor, using AI and machine learning, will provide these brands the greatest opportunity to stand out and efficiently achieve their revenue targets.

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The study indicated that subscription services are growing in popularity as consumers seek simplified ways to streamline their shopping and repurchasing process. As DTC brands seek better ways to support their customer’s subscription needs and remain competitive in the highly saturated marketplace, more than three-quarters are missing a critical piece to enable them to scale the exceptional customer experiences that will be required.

“Subscription models provide higher customer lifetime value (LTV), but all too often, as marketers we put these programs on auto-pilot. Artificial intelligence (AI) tools, like Intellimize, deliver a competitive advantage to brands which enables them to personalize customer engagement and overall experience, resulting in a higher lifetime value, ” said Tracy Sestili, VP of Marketing at Intellimize.

Despite 90% of respondents having existing website conversion rate optimization (CRO) programs and 70% of respondents reporting success through personalization, only 23% of them are using AI or ML to help scale their CRO and personalization efforts for every visitor.

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The study’s respondents stated AI will likely deliver “essential competitiveness” for brands in the future, as well as “a higher engagement rate and better subscription turnover”. Other respondents believe AI will be central for supporting “gamification models” as well as more “sophisticated” customer experiences.

Several of the respondents agree that AI offers the most promising future for their subscription sites, especially in terms of personalization. As one marketing department head from a toys and hobbies brand put it, “Artificial Intelligence-supported customer engagement features will provide wider opportunities for new customer acquisitions, journey analysis, and customized experiences every time.”