Businesses might be drawn to subscription services because they have the potential to transform their financial stability and cultivate lasting customer relationships.

Unlike traditional one-time purchases, subscriptions provide a predictable and recurring revenue stream, which allows companies to forecast income and confidently invest in growth. This steady influx of cash flow can fuel innovation, improve efficiency, and mitigate the financial risks associated with market fluctuations.

Subscriptions inherently encourage customer loyalty and engagement. By continuously delivering value through curated products, exclusive content, or ongoing service, businesses can create a sense of community and belonging among subscribers. This deepens the customer-brand connection and leads to increased lifetime value (LTV), person-to-person recommendations, and a more resilient customer base in the face of competition.

With all of these benefits, it’s not surprising that the global subscription economy market is projected to increase from $593 billion in transaction value in 2024 to $996 billion in 2028. While the particular processes and practices vary by industry and business type, this guide covers the basics of how to get started with selling a subscription service.

What’s in this article?

• Identify your target market
  
• Design a compelling offering
  
• Set pricing strategies
  
• Create marketing plans
  
• Simplify the subscription process with Stripe
  
• Manage and retain subscribers
  
• Analyze and optimize subscription service performance
  
• Scale your subscription business for long-term growth
  

Identify your target market

First, define your ideal customer. Assess both those who might buy your product and those who could see the most value in an ongoing relationship with your brand. Consider these factors:

• Demographics and psychographics: Demographics include age, location, gender, income level, and education. Psychographics include lifestyle, values, interests, and attitudes. For a subscription service, knowing the mindset and daily life of potential subscribers is key. For example, maybe they are tech-savvy millennials who value convenience or busy parents looking for family-friendly entertainment.

• Pain points: What problems does your subscription service solve? Conduct surveys, focus groups, and one-on-one interviews to directly gather insights from potential customers. This feedback can show specific needs and preferences that your service could address.

• Market segments: Divide your broader market into specific segments based on their unique characteristics and needs. For instance, if you’re launching a fitness app, segments might include beginners looking for guidance, advanced athletes seeking performance tracking, and casual users interested in maintaining a healthy lifestyle. Each segment will have different expectations and usage patterns.

• Competitors: Look at who your competitors are targeting and how they position their subscription services. Identifying gaps in their strategies can help you find a niche market or an underserved audience segment.

Before fully committing to a target market, validate your assumptions. Use small-scale marketing campaigns, prototype testing, or a soft launch to gauge how your customer segments react and confirm there’s a real demand for your subscription service.

Design a compelling offering

Next, decide what will be included in your subscription. Will it be a curated selection of goods, access to digital content, or a recurring service? Your offering should be consistently high quality, deliver on your brand’s promise, and meet your customers’ needs.

Here’s a closer look at how to craft a product or service that captivates and retains customers in a crowded market.

• Value proposition: Define what makes your subscription unique. What can subscribers not get elsewhere? This could be exclusive content, convenience, savings, or personalized options. Make sure your value proposition resonates deeply with your target audience’s desires and needs.

• Customization and flexibility: Control and personalization go a long way. Customizable plans where subscribers can modify their preferences, frequency of delivery, or even pause their subscription can make these services more attractive. This flexibility helps accommodate changes in your customers’ lives and reduces churn.

• Packaging and presentation: First impressions matter, especially in a subscription model. Design your packaging to reflect your brand and the quality of the product. Make the unboxing experience delightful and shareworthy. For digital subscriptions, create an intuitive and aesthetically pleasing user interface to improve the overall experience.

• Add-ons and upsells: Consider ways to increase the lifetime value of each customer. This can be done through add-ons, upgrades, or additional services that complement the subscription. For example, a coffee subscription service might offer exclusive brewing equipment or special one-time purchases of rare blends at a member discount.

• Feedback loop: Incorporate mechanisms for ongoing customer feedback into your subscription model. This helps you make immediate improvements and understand evolving customer trends, allowing you to adapt your products or services to fit changing preferences over time.

Set pricing strategies

Setting the right pricing strategy is a delicate balance between what your market can bear and what it costs to consistently deliver exceptional value. Here are some different ways to approach pricing.

• Cost-plus pricing: Start by calculating the total cost of providing your service, including sourcing, packaging, delivery, and overhead. Add a reasonable margin on top of these costs. This method ensures that you can cover costs while still turning a profit.

• Competitive analysis: Look at your competitors’ pricing structures. Determine if they have tiered pricing. What does their base package include? Understanding the competitive environment can help you attractively position your service, either by undercutting competitors on price or by providing superior value at a similar price point.

• Value-based pricing: This strategy involves setting prices primarily based on the perceived value to the customer rather than just the cost. For subscription models, especially with unique content or services, value-based pricing can be particularly effective. It requires a deep understanding of your customers’ needs and how they perceive the difference your service makes in their lives.

• Tiered pricing: Using multiple pricing tiers is a powerful way to support different market segments. Each tier can provide progressively more value, features, or flexibility. This accommodates different budgets and allows customers to choose a tier that fits their needs, which can increase overall uptake and satisfaction.

• Freemium model: This involves providing a basic version of your service for free while charging for premium features. The free version can attract users and build trust while the premium version generates revenue. This model works well for digital services, where the marginal cost of adding new users is low.

• Psychological pricing: Consider the psychological aspects of pricing, such as charging $9.99 instead of $10. This strategy can make a price seem lower than it actually is and can subtly encourage sign-ups.

• Trial periods and money-back guarantees: A trial period or a money-back guarantee can reduce the perceived risk for potential subscribers. This is particularly effective for attracting users who are uncertain about committing to a monthly or annual fee. It demonstrates confidence in the quality of your service and can convert trial users into long-term subscribers.

Create marketing plans

Your marketing strategy should communicate the value and unique positioning of your service, attract potential subscribers, and build community around your brand. Here are some strategies to help you achieve these goals.

• Content marketing: Develop and share valuable content that resonates with your target audience. This could include blogs, videos, tutorials, or infographics that address common questions, showcase your product’s usefulness, or share customer success stories. Content marketing can also boost your search engine optimization (SEO) efforts and establish your brand as a thought leader in your industry.

• Social media marketing: Use platforms where your target audience is most active to build brand awareness and reach potential subscribers. Share behind-the-scenes content, testimonials, and special promotions. Social media is also useful for running targeted ads to reach a broader audience.

• Email marketing: Build an email list and use it to nurture leads. Send regular updates about new features, exclusive subscriber offers, and insightful content that adds value. Email marketing allows for personalized communication and is effective at moving leads through the sales funnel to conversion.

• Referral programs: Encourage current subscribers to refer friends in exchange for perks such as a free month or exclusive access to new products. Referral programs can dramatically increase your subscriber base, as recommendations from friends or colleagues carry weight.

• Influencer partnerships: Partner with influencers who share your brand’s values and speak to your target audience. Influencers can provide credibility and extend your reach, introducing your subscription service to potential subscribers who trust their opinions.

• Retargeting campaigns: Use retargeting to bring back visitors who didn’t subscribe on their first visit to your website. Show them targeted ads to remind them of your service’s benefits and address any barriers to sign-up they might have encountered.

• Promotions and limited-time offers: Create urgency with limited-time offers such as discounted rates for the first three months or special pricing for early adopters. These promotions can accelerate decision-making for unsure customers.

• SEO and paid search: Optimize your website for search engines to increase organic reach and use paid search to appear at the top of search results for relevant keywords. This helps capture high-intent users actively searching for services such as yours.

• Partnerships and collaborations: Establish partnerships with other companies whose products or services complement yours. This can open up new channels for promotion and introduce your subscription service to like-minded audiences.

Simplify the subscription process with Stripe

Stripe can help make the subscription process run smoothly. It can handle payments and improve both business processes and customer experience. Here’s a closer look.

• Integration: Stripe can integrate with your website or app and make it straightforward for customers to sign up. Its flexible application programming interfaces (APIs) can fit with your existing setup so you can maintain a consistent user experience that feels natural and unobtrusive.

• Automated billing: With Stripe, you can set up automatic billing cycles for your subscriptions to facilitate on-time payments without manual intervention. This automation can mitigate your company’s administrative burden and reduce errors.

• Customizable billing cycles: Whether your customers prefer to pay monthly, quarterly, or annually, Stripe lets you customize billing cycles to match their needs. This flexibility can help increase conversion rates, as customers appreciate being able to choose the payment schedule that works best for them.

• Security: Stripe complies with the highest security standards and protects sensitive customer information throughout the payment process. This security can be a major selling point for potential subscribers.

• Scalability: As your subscription base grows, Stripe scales with you. It’s designed to handle everything from a few dozen to hundreds of thousands of subscribers, so you don’t have to worry about switching payment processors as your business grows.

• Global reach: Stripe supports numerous currencies and payment methods, making it easy for international customers to sign up. This capability can substantially broaden your market reach and allow you to easily expand your service into international markets.

• Dunning management: Stripe’s sophisticated dunning tools help manage and recover failed payment attempts. This feature automatically retries failed payments and simplifies the process for customers to update their payment information, which can help majorly reduce churn caused by payment issues.

• Real-time analytics: With the Stripe Dashboard, you can monitor subscriptions in real time and gain insights into revenue, customer behavior, and churn rates. These analytics can help you make informed decisions and optimize your subscription strategy.

Manage and retain subscribers

As a subscription service, creating valuable customer relationships will play an important role in building revenue and brand reputation. Here are some strategies to effectively manage and retain your subscribers.

• Excellent customer service: Providing prompt, helpful, and friendly customer service is key. Make sure your subscribers have easy access to support whenever they need it, whether it’s through a chatbot, email, or by phone. Quick resolution and polite interactions can make all the difference in subscriber satisfaction.

• Regular communication: Stay in touch with your subscribers through regular updates about new features, content, or any changes to the service. Transparency builds trust, and keeping subscribers informed can make them feel valued and connected to your brand.

• Engagement strategies: Develop ways to keep your subscribers engaged with your service. These can include interactive elements, member-exclusive events, or community-building activities to encourage long-term loyalty.

• Personalization: Use data to customize the subscription experience to individual preferences. This could mean recommending products, adjusting content, or personalizing communications based on subscriber behavior and history. Personalization shows that you understand and care about your subscribers’ preferences and can improve their satisfaction.

• Feedback loop: Implement a system for collecting and analyzing subscriber feedback. Regular surveys, feedback forms, and requests for reviews can provide invaluable insights into what works and what doesn’t. Use this feedback to continuously improve your service.

• Incentivize renewal: Provide incentives for subscription renewal, such as discounts, loyalty rewards, or exclusive bonuses. These perks can motivate subscribers to stick around and even upgrade their plans.

• Proactively manage churn: Monitor your churn rate closely and analyze the reasons for cancellations. Address these issues proactively by improving the aspects that cause dissatisfaction, or by reaching out to unhappy customers with personalized offers that encourage them to give your service another chance.

• Flexible subscription options: Provide flexible subscription plans. Allowing subscribers to pause their subscription, switch between different tiers, or customize their frequency of delivery can support their changing needs and prevent cancellations.

Analyze and optimize subscription service performance

Maintaining a successful subscription service requires continuously monitoring performance and making improvements to keep your service relevant. Here are some tips on how to analyze and optimize subscription service performance.

• Monitor key indicators: Keep track of major indicators of your subscription service’s health. This includes how much money you’re making each month, how many customers you retain, and how much you’re spending to capture new subscribers. Monitoring these metrics gives you a quick snapshot of where you stand.

• Look closely at data: Use data analytics for a deeper look at your subscribers’ behavior. Where do they click? What features do they use the most? This information can help you see what’s catching on and what might be missing the mark.

• Test and learn: Try out new things, whether it’s tweaking your sign-up page, adjusting your prices, or introducing new features. Small tests can lead to big improvements. Compare different strategies to see what works best and make decisions based on real results.

• Segment your audience: Look at your subscribers in groups based on what they like, where they come from, or how they use your service. This can help you see who your most valuable customers are and what specific groups might need more attention.

• Consult customer feedback: Regularly ask for feedback and take it seriously. Are there common issues that keep popping up? Are subscribers asking for a feature you don’t currently offer? This direct line to your customers can guide your decisions and areas for improvement.

• Check out the competition: Stay aware of what other similar services are doing. What can you learn from them? Is there a strategy they’re using that you haven’t thought of, or a new way you can set yourself apart?

• Review your finances: Routinely review how financially sustainable your service is. Are some plans more profitable than others? Has a recent change affected your bottom line? Understanding the finances can help ensure you’re growing both your number of subscribers and your profitability.

• Optimize operations: Make sure your internal operations are as effective as possible. Improving these processes can have a major impact on the customer experience and your costs.

Scale your subscription business for long-term growth

Here are some strategies to successfully scale your subscription business over time.

• Strengthen your foundation: Before scaling, make sure your current setup is solid. This includes a reliable customer support system, a strong fulfillment process, and technology that can easily handle more subscribers. A strong foundation prevents growing pains that could hurt your service quality as you expand.

• Automate what you can: As you grow, you’ll find that manually handling every aspect of your business isn’t feasible. Look for opportunities to automate processes such as billing, renewals, and customer onboarding. Automation saves time, reduces the chance of errors, and can help deliver an excellent customer experience.

• Expand your offerings: Consider introducing new products or tiers of service that resonate with different market segments. This could mean adding premium options for your most engaged subscribers or more budget-friendly choices to attract a new audience. More variety can mean more paths to upsell and grow revenue.

• Improve customer retention: Scaling is as much about customer retention as it is about acquisition. Invest in retention strategies such as loyalty programs, regular feedback loops, and personalized content or offers. These strategies can help improve customer satisfaction and make them more likely to continue subscribing—and to suggest your service to others.

• Use data for decision-making: Use the data you collect to drive your growth strategies. Which marketing channels are most effective? What features do subscribers use the most? Data insights can help you make informed decisions about where to invest your resources for the best return.

• Tap into new markets: Explore new geographic or demographic markets—growth can come from reaching new audiences. Make sure your marketing and products or services can adapt to fit these new audiences, and that you consider cultural nuances and preferences.

• Build partnerships: Form strategic partnerships with other businesses that offer complementary products or services. Partnerships can be mutually beneficial through shared marketing efforts and growth of both customer bases.

• Stay flexible: The market’s and your subscribers’ needs will evolve, so stay flexible as you scale. Be willing to pivot your strategies and products or services based on subscriber feedback and market trends. This adaptability can be a key driver in sustaining long-term growth.