Buyer behavior · Quasi-experimental customer-level analysis with heterogeneous treatment effects
The Impact of Subscription Programs on Customer Purchases
Journal of Marketing Research · 2022
Summary
Subscription increased customer purchases, with economically meaningful and persistent effects that varied across customers.
For your marketing
Possible founder application
When studying a paid plan or membership, distinguish benefit-driven usage from behavioral effects of the upfront commitment. Segment responses and evaluate retention and margin alongside purchase volume.
Reported result
What the study found
Subscription increased customer purchases, with economically meaningful and persistent effects that varied across customers. The authors attribute about one-third of the purchase effect to program benefits and the remaining two-thirds to a noneconomic effect consistent with sunk-cost behavior.
Research question
What the authors investigated
How does paying an upfront fee to join a subscription program affect members' subsequent purchases?
Design
The authors combine a difference-in-differences approach with generalized random forests to compare subscription members with similar nonmembers and estimate heterogeneous effects.
Sample and setting
Members and nonmembers of a retailer or marketplace subscription program; the abstract does not identify the firm or provide sample size.
Scope and transfer
Limitations to keep in view
The evidence concerns a retailer/platform subscription program and uses a quasi-experimental design. The estimated mechanism and purchase effect may differ for SaaS subscriptions with different fees, benefits and usage patterns.
Research sources
Journal of Marketing Research abstract and institutional record; method and headline decomposition are stated in the abstract.