Getting Subscription-Based Services Right

Last week we looked at the rise of subscription services. But it takes a lot more than simply curating products and putting them in a box to be successful at a subscription-based  business.

Here are some things to consider:


Getting pricing right is one of the most crucial aspects of a subscription business. It’s the key to acquiring new customers, increasing the value of existing customers, and reducing the amount of customer turnover.

Pricing is a delicate balance and having two to three tiers seems to work best. Like most pricing schemes, you want a basic price that is not far below a middle tier and a much higher priced premium option. Most likely this will encourage people to opt for the middle tier.

Depending on the vertical or category, pricing can be based on a variety of factors. Those can include functionality, usage levels, the time of day, incentives to reward loyalty, optimized to encourage bulk purchases, or based on long-term commitments.

Make Sign-ups Easy

You business needs to make it easy for everyone to sign up. Whether the customer is on mobile or their desktop or another device, they need to have  a simple, straightforward way to subscribe and move through the process.

Use Billing as Branding

Subscription service billing can be complex. There can be different billing dates and periods. Subscription services often have to prorate services.It’s important to put effort into creating your billing and invoices. Treat them like branding materials. These monthly statements will be one of the many ways that customer interact with you. If the invoice is confusing and people aren’t sure what they’re paying for, they’ll stop dealing with you. Make costs and services transparent and easy to understand. Simple and accurate and attractive should be top goals.

Put Customers First

Strong customer relationships are at the core of the subscription business model. Without them, there can be no sustainable recurring revenue growth. In the Subscription Economy a majority of customer transactions consist of changes to existing subscriptions: renewals, suspensions, add-ons, upgrades, terminations, etc.That means having good customer service 7x24x365. It also means reaching out to existing customers on a regular basis. And maybe considering offering special deals or discounts for loyalty or additional purchases. Most large companies generate just 15 to 25% percent of their revenues from brand new customers. Reaching out to existing customers is key and minimizes churn.

Align Metrics

Subscription business need to focus on metrics such as lifetime customer value, retention rate, recurring profit margin, cost of acquiring new customers, etc.Track these key performance metrics and others to align with your business goals.

Remain Flexible

Because subscriptions are big business, there is a lot of competition. The market changes quickly. As do customer behaviors. You must be flexible and dynamic on pricing and offerings. Regularly evaluate where you stand and what needs to be done to adapt to the marketplace. Ideally, you want to stay ahead of the competition and be constantly evolving.

Leverage Affiliates

If your subscription business doesn’t have an affiliate program, you’re missing out. A well-run affiliate program can help promote your offerings to a much wider audience. Additionally, affiliates can also help you acquire first-time customers, increase brand awareness and drive revenue.