How To Create A Successful Subscription Model

How To Create A Successful Subscription Model

The subscription business model has never been more prevalent, from the growth of SaaS to the sudden glut of subscription boxes. So much so that Gartner research predicts that by 2020, all new entrants into the tech industry, as well as 80 percent of existing businesses, will sell some subscription bundle. However, this does not imply that launching a premium service is easy. The subscription model, which relies heavily on recurring consumer relationships, necessitates a relentless emphasis on delivering long-term value.

Providing the degree of continuous and compounding value is only possible when companies recognize their consumers inside and out—and this occurs early in the company's planning. To assist you in getting started, we've created a step-by-step checklist that guides you through the process of creating a subscription service. We'll go over research, goal-setting, and a lot more, so let's get started!

Subscription models are now a central business model in the information and technology industry. They need to create one excellent tech product that regularly engages the audience with improved features. Instead of managing various product lines, companies will now concentrate on customer experience and reviews.

Consider introducing a subscription program if you start your own online company or need to pivot your business model. Continue reading to learn how to convert conventional apps, eCommerce, or a service-based company into a subscription product.

Why Implement a Subscription Service?

A subscription business model or service offers access to an online portal for a set period and cost. Typically, this entails various pricing choices that offer either greater versatility or a lower price for a more prolonged investment.

Although subscription models are becoming more popular in software and eCommerce companies, there are many approaches to service and pricing. Some companies ultimately adopt the model and grow their services around it. Others take a softer approach, giving incremental discounts in exchange for reordering regularly.

Subscriptions Can Help You Better Predict Growth

It would be best to estimate revenue, expenditures, and cash flow regardless of your business model. Choosing a subscription service for your business model will help to simplify this step. You have strict service tiers to monitor, prominent introductory offers to track and forecast growth based on sign-ups, churn rate, and subscription duration.

If you sell physical goods, your subscriber list, coupled with anticipated growth, will help you predict your stock requirements ahead of time. This way, you will avoid keeping a surplus inventory, dump products for a lower price, and even order sufficient quantities to meet demand.

Convert customers into subscribers

Most large corporations claim that brand new costumes produce just 15 to 25% of their sales, implying that repeat customers generate most of the revenue. Focusing on returning consumers and subscribers helps businesses reduce the costs of acquiring a new audience while still cultivating brand loyalty.

Amass More Profitable Customer Data

According to Shopify, modeling and storing subscription data enables merchants to provide benefits such as recurring sales reports on existing, current, and churned subscribers. It allows the company to connect with your audience more effectively and generate targeted content during the customer journey.

Many major brands report creating distinct marketing strategies for subscribers and non-subscribers and strategy to turn non-subscribers into subscribers, such as email promotions and targeted subscription and account formation offers.

Related article: 3 Tricks to Reduce Subscription Box Shipping Cost

Sell The Same Product In Multiple Ways

A single product could be offered in several forms using the subscription model, such as a one-time purchase and a subscription, like packages or cross-selling. Bundling, cross-selling, and subscriptions enable brands to be innovative in understanding how their consumers want to interact with their goods and services.

How to Create a Successful Subscription Model for Your eCommerce Brand

Creating a subscription service should resemble the business planning process. It entails preliminary study, review, assessing the customer's needs, and then testing and execution. Here are the five steps you should consider taking to get started.

1. Conduct market research

What can you do to convert your SaaS product into a recurring subscription plan?

First and foremost, you must determine who your target audience will be. And if you already have clients, you must decide who would prefer a subscription to a conventional product. It entails going back to basics and determining what the users are currently battling.

If you've figured out what they're going through, look for ways to incorporate their needs into a longer-term service. You're not only solving a problem for them once; you're consistently delivering over weeks, months, and years. You must be confident that you can provide a solid solution right away and that you have enough room to keep developing over time.

You're trying to figure out what's wrong right now. Comprehend how your product/service, or a new version of it, will help customers. Then, to plan an updated pipeline for your business, you must constantly predict how your customers' problems will change over time.

2. Perform a Competitive Analysis

A thorough examination of possible rivals should be included as part of the business research. You may already have a few in mind, or you may have to do a new review to help understand who your competitors will be in the subscription service market.

Software development can be a particularly competitive sector. CTOs choose their favorite software providers and suppliers by consulting websites and conducting online consultations. And, since hundreds, if not thousands, of websites online, competition for SaaS businesses is relentless.

What you should look for to help describe your subscription model is the potential to undercut the competition. Perhaps it is the product itself, as well as the features that are accessible. Maybe it is offering better and more effective customer service or a more appealing pricing model.

3. Define Your Buyer Persona

Buyer personas are a research-based method of segmenting the target audience. It gives an accurate picture of how consumers perceive commodity pricing and value propositions. Subscriptions allow you to serve several personas at the same time.

Assume you're releasing a tech product focused on customer relationship management. This product can have several subscription tiers or membership plans. Perhaps one tier is inexpensive but only offers access to your product's core features. However, for a significantly higher price, the high-end level provides a comprehensive suite of solutions.

As in the previous example, you will almost certainly need to identify and sell to multiple personas. It is your responsibility to consider who these people are, what they want, and how you can improve your product to best support them.

4. Create a Pricing and Bundle Strategy

When transitioning to a subscription business model, the most critical and nuanced factor to consider is subscription pricing and benefits. They directly influence the three simple growth strategies: attracting new subscribers, increasing loyalty and sales per current customers, and minimizing customer turnover. A fixed subscription price is often detrimental because it eliminates the potential for flexible and innovative pricing strategies.

Many brands prefer to establish pricing strategies based on the factors that are most important to their market. For example, if your company wants to maximize the quantity of interaction, tailor the pricing to encourage more use (e.g., unlimited usage deals). If you're going to maximize your average order quantity, set subscription pricing that enables subscribers to order in bulk at a predetermined schedule at discounted rates.

Finally, if customer satisfaction is your goal, consider creating incentive programs or extra "points" for those who want to subscribe at checkout.

As you can see, the subscription model allows for a great deal of flexibility and ingenuity in customer engagement. There are also freemium options, early-bird specials, free trials, packs, and other promotions. Remember your business objectives, begin with a simple pricing tier, and then adapt as you know what your subscribers want!

5 Get in Touch With Your Target Audience

As per invespcro, acquiring a new customer is five times more costly than retaining a current one. It means you must be able to attract and retain your audience. It is often the most daunting aspect of consumer acquisition. Since bringing the product into their hands is usually needed to get them on board.

The best thing you can do is approach sales and onboarding programs as the beginning of a long-term partnership. You want to demonstrate that you plan ahead of time and wish to provide about a customer beyond their initial sign-up. It can range from direct interaction or training to providing them with a rough roadmap of upcoming changes, features, and activities that they will access.

You want to use any promotional tiers (such as a free trial) as soon as possible to convert to a monthly or, preferably, an annual account. Give them access, demonstrate their potential with your product, and maintain the early engagement to get them on track.

Related: What Is UPS SurePost? How Businesses Can Benefit From It


Subscription models open the door to recurring profits and long-term customer relationships. Go through the same business planning phase you used to launch your company, but this time concentrates on promoting the ongoing benefits of your company.

You're preparing your subscription company for growth by keeping the consumer at the center of any decision you make. Always note that maintaining these relationships is the secret to your success as you grow your company.

Following these measures will allow you to keep your target focus on the customer, which will lead to a greater comprehension of how to build a subscription service. Bring the technical resources on board and begin developing a safe and performant product that provides continuous reliability. Also, don't be afraid to experiment and iterate. After all, this is a subscription service, and you'll need to make changes to remain competitive.

Next article: Amazon Product Listings Optimization Guidelines

Looking for eCommerce fulfillment partner?

Let's Chat

Looking for a FBA Prep Partner?

Let's Chat
Recent Posts
We publish hundreds of articles monthly across a wide range of topics!
No items found.

Continue reading

No other blog posts found.