A subscription is a business model known as “continuous purchase” in Japan. The customer signs an agreement to pay a monthly fee for continuous service.

There are various offerings available, including streaming services such as video distribution and e-books, as well as platforms that allow you to take online courses, but what kind of companies are succeeding with ongoing, recurring plans? This article will examine instances of successful and unsuccessful subscriptions and explain the fundamental factors behind these outcomes.

What’s in this article?

• B2C subscription success stories
  
• B2B subscription success stories
  
• Examples of unsuccessful subscriptions
  
• Success factors for subscription services
  
• Subscription FAQs
  
• Setting up a payment environment for subscription services
  

B2C subscription success stories

First, let’s examine some case studies of successful B2C (business-to-consumer) subscription services.

MELS Plan

Menicon’s MELS Plan is a contact lens subscription service in which subscribers exchange their lenses monthly instead of replacing them. The recurring rate covers the MELS Plan, so there is no cost for each pair.

The MELS offering is flexible enough to respond to changes in vision and to replace or change lens type due to discomfort. Lenses could become dirty, scratched, or broken, but subscribers can always exchange them for a new pair without paying extra on top of their regular monthly fee.

Furthermore, if your address changes for any reason or you encounter contact lens issues while on a medium- to long-term business trip in Japan, assistance is readily available at any MELS Plan member facility nationwide.

Kirin Home Tap

Kirin Home Tap, a service provided by major beer manufacturer Kirin Company, is a subscription service that allows you to rent a dedicated beer tap for free, along with biweekly deliveries in large-capacity PET bottles, ensuring convenience and freshness. There are two plans: 4L-per-month and 8L-per-month. The shipment schedule can be adjusted up to six days before the planned delivery date, with shipping costs included in the fixed monthly rate.

The success of Kirin Home Tap can be attributed to the increased time spent at home due to the restrictions on serving alcohol in bars and izakaya caused by the COVID-19 pandemic. Users have received this service well as it lets people who usually drink in bars to enjoy draught beer at home.

Kirin Home Tap benefits customers because they can skip deliveries while going away for a long time and don’t need a beer. They can also place additional orders if they need more for a home party (delivery charges for extra orders are not included in the monthly fee and are billed separately).

Pansuku

Pansuku is a subscription plan that provides regular frozen bread deliveries from partner bakeries across Japan for a fixed price (shipping included).

Pansuku’s customers love bread, and it’s become a popular program for those eager to try new varieties from around the country. Additionally, Pansuku uses its unique freezing technology to maintain exceptional freshness and flavour, conducting its own quality control and freezing processes. The items you receive can be stored in the freezer for over a month and can be defrosted and reheated whenever you want, which is one of the reasons it’s so successful.

Two types of fixed-price packages let you choose from the following options: once every two weeks, once a month, or once every two months.

If you don’t have much freezer space or are going away for a few days, you can change the delivery date. Users can also pause the service for a while after their next order.

WORLDLIBRARY Personal

WORLDLIBRARY Personal is a subscription service that allows you to purchase children’s picture books for a fixed monthly fee. Delivery is included, and each selection is chosen to match your child’s age and development. Many publishers are entering the subscription e-book market for novels and manga, but WORLDLIBRARY stands out with a curated line-up, each title handpicked by an expert.

One of its main advantages is the broad range of global works you won’t find in typical retailers. Since picture books often cost around ¥2,000, this plan offers them at a lower price (¥1,300 per month at the time of writing) than if you’d normally pay in-store.

This model is well suited for families who frequently invest in their children’s reading experiences and for those curious about stories from around the world but don’t know which ones to choose. If a title you already own is scheduled for the next delivery, you’ll receive another picture book or a ¥1,000 token instead.

WORLDLIBRARY Personal is a service for individuals, but there is also a rental option (WORLDLIBRARY Rental) for corporations that can be used in common areas of facilities.

Toysub!

Toysub! is a subscription programme that lets you rent educational toys appropriate for your child’s developmental stage. The flat fee (monthly or annual package) includes delivery and return postage, and there are three packages: one where you can exchange the toy at any time, a bimonthly delivery plan, and one shipped every three months. Each product is carefully selected based on over 1 million pieces of age-specific data and questionnaires, and the total number included is determined by the package chosen. All items are thoroughly cleaned by hand upon return.

The benefits of using Toysub! include not having to worry about throwing away expensive toys when they get old or having an excessive collection and not having enough space. There are no extra charges for stains, damage, or loss (except in specific instances), and it is also possible to purchase your favorites at a discount.

B2B subscription success stories

Next, let’s look at some examples of successful B2B (business-to-business) subscription services.

Sansan

Sansan is a cloud–based business card management system specialising in sales and can automatically aggregate contact data, including online business cards, by company or person. You can also manage company information, sales history, etc., in one place and share data across the organisation. It also allows teams to automatically receive updates on personnel changes at key partners and other valuable sales data and quickly and easily view past meeting reports linked to business cards, facilitating smooth interaction with clients (Sansan’s personal business card application must be installed to receive the latest information).

In Japan, which has a long-established business card culture, Sansan benefited from the fact that employees could conduct sales activities using online cards when physical exchange was not possible due to the pandemic. Now, the fact that users could add value beyond paper–based business cards by unifying customer data in a digital format has also contributed to the service’s success.

GOODGREEN

GOODGREEN is a subscription service that lets you rent office plants for a fixed monthly fee. There is no minimum term, such as six months or a year, and companies can cancel after the first month if they’re unsatisfied, which is a major benefit. In addition to regular replacement and maintenance of indoor plants, GOODGREEN also provides interior design and placement suggestions.

RULO Biz

Panasonic’s RULO Biz is a robotic vacuum cleaner for commercial use and a subscription solution for businesses, including cleaning companies, general industries, retailers, and restaurants.

RULO Biz was introduced in 2022 to reduce dependency on maintenance crews. It’s easy to oversee because the management and operation of the equipment are centralised through the cloud. The basic monthly rate includes system usage fees, annual inspections, and maintenance. The cloud system can also track sanitation cards and is suitable for office environments that require customised upkeep schedules.

RULO Biz’s success can be attributed to its relationships with workers who want pristine office spaces. Rather than selling devices and ending the partnership, RULO Biz provides ongoing cleaning services with robot vacuums as a subscription.

Examples of unsuccessful subscriptions

There are also plenty of examples of failed subscription ventures. Here are a few below.

SAKELIFE

Clear Inc. launched the sake subscription service SAKELIFE. This program was designed to meet the needs of customers interested in sake but didn’t know what to choose. There were two tiers: the “Horoyoi Course,” which delivered a 720 mL bottle for ¥3,150 per month, and the “Guinomi Course,” which delivered a 1,800ml bottle for ¥5,250 per month.

That said, many later switched to other companies because they cancelled their contracts after about two years, making it difficult to expand the business. Subscribers became more confident in choosing sake based on their preferences and understood how to enjoy it. They were satisfied with the service but no longer needed to rely on it, so they cancelled.

AOKI suitsbox

Suit manufacturing company AOKI’s suitsbox offering was a subscription in which individuals paid a fixed fee and received a set of suits, shirts, and ties each month. They returned the items from the previous month when the new box arrived. However, the company cancelled the service in December 2018, just six months after its launch.

The key audience was much different than the company had anticipated: it wanted to target 20- to 30-year-olds less likely to wear suits in the workplace, but the customer age group was mostly in their 40s. Since these 40-something patrons were also the age group that frequented physical retailers, the stores and the subscription programme competed against one another, which could have led to the decision to discontinue. Subscribers were also reportedly dissatisfied with the product line.

Gyu-Kaku All-You-Can-Eat PASS

Gyu-Kaku, a yakiniku restaurant chain, launched its All-You-Can-eat PASS subscription trial at three stores in the Tokyo metropolitan area in November 2019. The PASS, which cost ¥11,000 per month, attracted attention because it allows holders to use the all-you-can-eat package, which usually costs ¥3,480, as many times as they want. Nevertheless, sales of new cards stopped on 7 January 2020.

Since the beginning of the year, there has been a surge of new subscribers due to a trend on social media and TV programmes. All three stores in the trial were fully booked, with reservations made by PASS holders. This resulted in regular diners being turned away, and there were also cases where people could not make a reservation even if they had a PASS.

Special care must be taken with restaurant subscriptions because ingredients cost money, and there are also physical limits to the amount of space and number of patrons that can fit inside. In the case of Gyu-Kaku, if customers who wanted to get their money’s worth tried to use the PASS excessively, it became difficult for the stores to make a profit, and they risked losing sales opportunities because non-PASS holders could not eat at the establishment.

Success factors for subscription services

Now that we’ve examined these case studies, let’s discuss what made the wins successful.

Consider what new angle you can offer customers

A subscription business model generates profit by offering ongoing access to customers, rather than selling a one-time product or service.

These providers need to offer enough incentives to clients to retain them over time. To do this, they must maintain quality while considering what new value they can offer and be flexible enough to respond to market trends and changes.

Use data to improve and solve operational problems

One of the benefits of a subscription–based business is that data is easy to collect. Use the data to analyse problems and make changes to improve the user experience.

For instance, suppose sales suddenly drop, or there’s a month with high cancellations. In that case, it’s important to investigate what happened that month and look for clues to the problem, both external (such as a competitor having a big sale) and internal factors (such as a surge in orders disrupting logistics).

Understand your ROI to secure growth and revenue

It’s also important to be aware of the return on investment (ROI, a measure of how much profit was generated compared to the cost of the business).

Subscriptions require significant initial investment costs for content creation, product development, advertising, and system implementation, and the path to profitability differs from that of a one-time sales model. As a result, you need to set prices in line with the ROI to establish a stable revenue stream.

Growth is key to the success of a subscription offering. As with any venture, you must look beyond the present, focus on future expansion, and monitor market trends and competitors.

Set KPIs to evaluate performance properly

Even if you want to use data to drive improvements, it can be challenging to understand the situation or problem at hand without clear goals and indicators. Therefore, you need to set subscription key performance indicators (KPIs, used to measure and evaluate business performance to achieve goals) to understand the current state of the operation.

The subscription landscape is constantly changing, and companies must be flexible to continue offering products and services that keep their customers loyal. Pay close attention to your clients’ needs and update and revise your KPIs accordingly.

Aim to improve customer satisfaction through repeated PDCA cycles

Ongoing agreements mean that subscriptions depend on establishing and maintaining a good relationship with buyers to make a profit. Therefore, by repeating the PDCA (plan–do–check–act) cycle per your KPIs, you need to improve your operations and constantly increase subscriber satisfaction.

Subscription FAQs

We have compiled a list of frequently asked questions about subscriptions.

What are the risks of a subscription business?

Instead of a one-time sale and profit, the subscription business model involves collecting a fixed amount of money gradually, and it takes time to start making a profit. This means that there is a risk that a lack of sufficient funds can negatively impact the operation, as profits are only generated after a certain number of users have been reached. If you get into a cycle where you can’t easily recoup the cost of your initial investment because you set your prices too low in the early stages, you could be in a state of perpetual loss.

Why are subscriptions so popular?

One reason subscription options are so popular is that consumer attitudes are changing. As we’ve seen with commercial robotic vacuum cleaners, customers are no longer just looking to acquire products but for a better lifestyle facilitated by goods and services. This might result from a shift in people’s attitudes towards finding value in “using” things rather than “owning” them.

Where is the subscription market heading?

The number of companies adopting recurring service models continues to grow, and the subscription market is expected to expand further. However, as mentioned earlier, some have experienced failures in the past. Success in this field demands thorough preparation and detailed market research before launching your venture.

Setting up a payment environment for subscription services

Subscriptions also require a secure online payment environment that customers can confidently use. For instance, entrepreneurs looking to launch such a business can use Stripe Billing – a specialised platform for managing recurring transactions – to provide various related functions, such as regular customer billing, payment methods, and a deposit management system. Businesses can design a plan tailored to their needs and enhance all subscription-related administrative tasks.

Subscriptions have become an increasingly common part of our daily lives. Still, you need to strive to simplify your payment operations and make them more efficient to ensure you can continue to satisfy your clients.