Is Your Business Suitable for a Subscription Model?


Aug 8, 2019 • 7 min read

Suitability of subscription models

Subscription models have come a long way from traditional mediums such as newspapers and magazine subscriptions to modern services such as Netflix and The Dollar Shave Club.

In the United Kingdom alone, nine out of ten people subscribe rather than purchase products or services upfront. Increasing consumer demand influenced the evolution of subscription models.

Subscription is on the rise, with more and more businesses wishing to hop on the bandwagon. However, is adopting a subscription model for you?

Recurring Revenue

Securing a steady stream of income for your business regularly brings in many benefits. The subscription model provides a way for businesses to take advantage of recurring revenue and retain customers. It is an excellent method for business growth if executed correctly.

Recurring revenue may improve your net cash flow, thus increasing operating liquidity and reducing the risk of technical insolvency.

You would be able to pay your suppliers on time or even in advance.

Failing at Subscription

Subscription models are not absolute. Here are three wrong things businesses do that may jeopardize their chances of creating a successful subscription program.

1. Wrong approach

It's more than just collecting payments from your customers every month and providing them a service. It doesn't matter if you have a killer product or service, if your customers do not feel any attachment to your brand, you will be on their priority list of subscription plans to be cancelled.

Therefore, customer engagement is very important. You may have gotten subscribers on-board, but retaining them and keeping them loyal to your brand is a whole different story altogether. Never neglect your subscribers. Treat them how you would treat your loyal customers.

A lack of engagement may negatively impact your brand reputation. You may be faced with a scenario of losing your subscribers, and them potentially not coming back as a customer.

With that being said, don't start filling your customers' inboxes with emails and promotions. You want to turn your customers into advocates, not adversaries. Find the optimal level of engagement to retain subscribers.

2. Wrong Mindset

Businesses start with the wrong mentality which may carry on to their subscription program offering. Don't just start a subscription service just because everyone else is doing it.

Customers won't miraculously like your products or services just because you offer a subscription plan. The truth is the actual product or service matters.

Think of the subscription model as a tool you may use to enhance your business and generate recurring revenue.

The notion that customers are "locked-in" after they subscribe is a fallacy. If your customer service is sub-par or the product or service you are offering is not up to standard, your subscribers will cancel their subscription program.

3. Wrong audience

Finding your audience is instrumental to the success of your subscription model. Often, businesses target too broad or too narrow, spending too many resources on people who don't care about their products.

The time, money and effort spent could have otherwise gone to developing the actual product or service, or even marketing to the correct audience.

Customer loyalty stems from a value-added product or service, superb customer service, and engagement. It might be difficult acquiring your first few loyal target customers.

However, once you get a few customers who absolutely LOVE your product or service, you will start to see more and more people joining in through the power of word-of-mouth marketing

Subscription in Various Industries

Subscription can come in many forms, and different models suit different businesses. For example, if you are in the Food & Beverage (F&B) industry, the model that you offer may vastly differ from a business in the Automotive industry.

BOOK by Cadillac

A great example of a subscription model in the automotive industry is BOOK by Cadillac. The brand offers subscribers the freedom to ride and swap specific models of Cadillac up to 18 times a month, with maintenance and insurance coverage, all for a fee of $1500 per month.

Style Theory

The fashion industry presents itself with a few key subscription models. One of them is offered by Style Theory. At $129 per month, you would be able to rent unlimited designer clothing and do away with the hassle of not knowing what to wear every single day.

Burger King

Burger King introduced its subscription model recently, where subscribers have to pay a small fee of $5 a month to enjoy coffee every single day from Burger King's participating outlets. The company is looking to shake the F&B industry with its move and stand out from its competitors.

Relevancy to a Specific Industry

Subscription models can be transformed and molded in different ways for different industries. It is true that you may alter your subscription program to fit your industry as offering secondary products to your customers is also an option.

For example, if you are in the Beauty & Cosmetics industry, you may offer make-up services for your subscribers.

Nevertheless, it is important to take note that there are exceptions. You have to evaluate the business environment and determine if a subscription model is suitable for your business.

Creating Value

Customers hunt for value. Make sure that your subscription model value-adds to your customers. This could be in the form of price, product diversity, quality, and more.

Place customers first and think about their needs and what they can obtain from becoming a subscriber. Ultimately, it's about the customers as they are the ones who will generate sustained profits for you.

It hurts me to see businesses offering expensive subscription plans on products or services that do not benefit customers.


Subscription models may be a catalyst or hindrance to the growth of your business. Hence, do not simply throw caution to the wind and jump straight into subscription models. Always take time to evaluate the feasibility and the variations you could offer to your subscribers.

Many factors influence the suitability of subscription models to a specific industry. Securing recurring revenue from subscriptions may work wonders, but you must continuously improve your products or services and engage customers. Otherwise, your customers will cancel their subscription plans without hesitation.

If you have any questions regarding the suitability of subscription models to your business, feel free to talk to us! We are more than happy to help.

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Jonas Ngoh

Jonas is a writer from Singapore with a creative flair. He loves thought-provoking questions and is eager to leave a legacy behind.