Subscription Handbook: Understand KPIs and subscription models

At Subscrybe, we love subscriptions and we’re convinced that the model is better for people, planet and profit. But starting out in the subscription field can be a daunting task and you need to understand the terms and KPIs that are key to running your subscription business effectively. In this guide, you will find a glossary handbook for the most important terms and KPIs as well as interesting facts about the potentiale of the subscription model.

This guide is the encyclopedia of subscription terms. If you wish to learn how to build your subscription business, download our free e-book here.

We recommend bookmarking this page for future reference. Here are the KPIs:

The subscription glossary

Customer Lifetime Value (CLV)

• Definition: A prediction of the total value a business will derive from their entire relationship with a customer.
• Importance: Understanding CLV helps companies in making decisions about how much money to invest in acquiring new customers and retaining existing ones. Also, CLV is the single most important KPI in a subscription business. Improving average CLV across your entire base will define the difference between failure and success.

Average Revenue Per User (ARPU)

• Definition: The average revenue generated per user or customer over a specific period.
• Importance: ARPU provides insights into how much revenue each customer brings, aiding in pricing and marketing strategies. Not only is this KPI another side of the CLV coin, it also gives you a tangible overview of your pricing and buying frequency. ARPU is especially important to consider, if you’re running a retail subscription aimed at cultivating repeat purchases and capturing new market share through offering complementary products.

Customer Acquisition Cost (CAC)

• Definition: The total cost of acquiring a new customer, including all aspects of marketing and sales.
• Importance: Knowing CAC helps subscription businesses assess the efficiency of their acquisition strategies and adjust for better ROI. Allowing a CAC of around 33% of the CLV is respectable and a good measure for most subscription companies. Naturally, allocating a higher acquisition cost in a subscription business is expected as you hope to be able to continually profit from the new customer through loyalty and retention.

Share of Wallet (SOW)

• Definition: The amount of a customer’s total spending that a business captures in the products and services it offers.
• Importance: Increasing SOW indicates a growing loyalty and preference for a brand over its competitors. This is a good measure of how loyal your customers are in your category. Are they shopping streaming services elsewhere? If so, are there ways that you can improve your offer to capture that share of the customers wallet? In retail, the same concept applies – can you leverage your existing loyalty to start selling new product categories to your existing subscribers?

Monthly Recurring Revenue (MRR)

• Definition: The amount of predictable revenue a company expects to receive every month from its active subscriptions.
• Importance: MRR provides a clear view of a company’s financial health and growth trajectory, allowing for better planning and forecasting – this is not so much a performance marker as it is the KPI that helps you forecast whether your subscription base is on the right track.

Churn Rate

• Definition: The percentage of customers or subscribers who cancel or do not renew their subscriptions during a given time period.
• Importance: A key metric for understanding customer retention and satisfaction. Lower churn rates indicate higher customer loyalty and product/service satisfaction. Obviously, this is extremely important. Lower churn means higher CLV and keeping subscribers around is exactly what any membership business should be focused on. Remember, measuring churn across months and years is not the same – consider, which metric is the best for your business – or measure both, if you have annual subscribers as well.

Customer Retention Cost (CRC)

• Definition: The total cost of retaining an existing customer, including all marketing and sales activities aimed at extending a customer’s lifetime with the company.
• Importance: Helps businesses assess the efficiency of their retention strategies and budget allocation towards retaining customers versus acquiring new ones. Naturally, there is cost tied to retaining customers and you shouldn’t be afraid of this. However, measuring the success of your CRM efforts is important to identify areas where you can improve. One interesting way to save money on retention is implementing AI in your CRM efforts to improve automation and reduce manual processes.

Average Customer Lifespan (ACL)

• Definition: The average amount of time a customer continues to subscribe to a service, over the span of a lifetime – meaning, the total revenue created from a customer throughout the entire lifespan – including if the customer has churned in and out during the customer relationship.
• Importance: This metric gives businesses insight into the long-term value of customer relationships and helps in forecasting future revenue.

Revenue Churn

• Definition: The amount of revenue lost in a given period due to customers cancelling or downgrading their subscriptions.
• Importance: Revenue churn highlights the financial impact of losing customers or downgrades, complementing the subscriber churn rate by adding a financial dimension to customer attrition.

Customer Engagement Score (CES)

• Definition: A metric that quantifies the engagement level of customers with a product or service, often based on usage patterns, feature adoption, and interaction frequency.
• Importance: High engagement scores can indicate satisfied customers and predict lower churn rates, while also identifying upsell opportunities. Engagement is extremely important when working with subscribers – not measuring it is a crime! Only engaged subscribers will stay around for a long time – so invest in engaging them through gamification, loyalty rewards and the like. You can read more about how to do this in our report on Creating Habits

Quick Ratio (SaaS Quick Ratio)

• Definition: A metric that measures a company’s ability to grow its recurring revenue despite churn, calculated as the ratio of new MRR (including expansions) to lost MRR (including contractions and churn).
• Importance: It provides insight into the growth efficiency of a subscription business, where a higher ratio indicates healthy, sustainable growth.

Net Promoter Score (NPS)

• Definition: A customer loyalty metric that measures the likelihood of customers to recommend a company’s product or service to others, on a scale of -100 to 100.
• Importance: NPS is a strong indicator of customer satisfaction and can predict business growth and customer loyalty trends. This metric can be used in user surveys to gain information on the satisfaction in your subscriber base

Expansion Revenue

• Definition: Additional revenue generated from existing customers through upsells, cross-sells, and add-ons beyond the original subscription fee.
• Importance: Indicates the ability of a business to grow its revenue within its existing customer base, showing the potential for scalable growth without solely relying on new customer acquisition.

Trial Conversion Rate

• Definition: The percentage of users who convert from a free trial to a paid subscription.
• Importance: A critical metric for businesses offering free trials, indicating the effectiveness of the trial experience in convincing users of the value of the subscription. This metric is mostly important if you offer free trials, which most subscription companies do. It’s also a tough one to grow – try working with strong incentives to convert, as the first conversion is historically the most difficult one.

The 9 subscription models defined by Subscrybe:

Green Fee Subscriptions

• Definition: A monthly or yearly payment that offers access to exclusive benefits and/or discounts
• Example: Amazon Prime offers shipping, streaming, and shopping benefits for a yearly fee.

Consumption Subscriptions

• Definition: A monthly (or bi-monthly / quarterly) delivery of FMCG products needed by the subscriber. This can be razors, meal boxes, wine, pet food etc.
• Example: Meal boxes like HelloFresh makes it easier to consume and plan dinner and lunch meals

Surprise Box Subscriptions

• Definition: Once a month (or bi-monthly) subscribers receive a curated package of carefully selected products within a field that they are passionate about
• Example: Bark Box delivers a box of goodies for your dog every month, including treats, toys and care products.

Content Website Subscriptions

• Streaming services, newspaper sites or any other websites that offer content at the cost of a subscription fee
• Example: Masterclass offers a streaming platform to consume e-learning in an engaging and challenging way

All-You-Can-Eat Subscriptions

• Definition: These subscriptions offers a library of content and/or other consumption for a single subscription fee. Most classic streaming services use this model
• Example: Spotify grants you access to all of the world’s music and podcasts – but you pay the same price no matter how much you consume (all you can eat)

Simplifier Subscriptions

• Definition: These subscriptions puts a daily need into a subscription, so you minimize your concerns with maintenance and changing needs. Instead of going to a repair shop every time your bike breaks, you pay monthly to get a new bike without worrying about the time it takes to repair the old one.
• Example: Swapfiets offers bikes on subscription with an underlying service model, so all maintenance is included in your monthly price. If your bike breaks, you simply receive a new one within 24 hours.

Peace of Mind Subscriptions

• Definition: Peace-of-Mind subscriptions operate as insurance, giving the subscriber less concerns about broken products. You pay to avoid the concern of suddenly having to replace a product
• Example: GrandVision offers a glasses subscription, so you are totally insured if your glasses break or if your vision needs change over time. You subscribe to having perfect vision as opposed to owning a pair of glasses

Tailormade Subscriptions

• Definition: A subscription where you create your own selection of benefits tailored to your needs
• Example: HelloFresh lets you choose from a wide range of different recipes depending on your family size, likes and dislikes and diet.

Loyalty Drivers: Integrated and Value-Added

Subscrybe operates with 10 loyalty drivers, defined as integrated or value-added drivers for subscriber loyalty ie. retention. These are the elements either included in the value proposition or around the core service that motivates subscribers to stay around.

Integrated Loyalty Drivers: The ability of the concept, service or product to create loyalty through content, features or services. These are:

• Gamification
• Networking
• History
• Multi-User
• Switching Costs

Value-added Loyalty Drivers: Initiatives that lie around the core product or service which rewards subscriber loyalty and increases retention. These are:

• Points
• Rewards
• Discounts
• Status
• Exclusivity

Let’s dive into the elements and examine what they mean and what you can use them for.

Integrated Loyalty Drivers:

Gamification

Gamification refers to the application of game-design elements and game principles in non-game contexts. This strategy involves integrating game mechanics into a product, service, or campaign to motivate participation, engagement, and loyalty. Gamification leverages the human psychological predisposition to engage in gaming by incorporating elements such as points, levels, challenges, leaderboards, and rewards to create a fun, competitive, and engaging experience for users.

In a subscription business, gamification can be a powerful tool to improve customer loyalty and retention by making the user experience more engaging and rewarding. Here’s how gamification can be utilized in this context:

Rewards for Engagement: Subscribers could earn points for engaging with the service, such as logging in daily, watching videos, completing surveys, or making regular purchases. These points could be exchanged for rewards, such as discounts, exclusive content, or free merchandise, which encourages continued engagement and subscription renewal.

Tiered Memberships: Implementing levels or tiers that subscribers can achieve through their engagement or purchase behavior can incentivize users to increase their activity. Each level could unlock new benefits, creating a sense of achievement and encouraging loyalty.

Challenges and Competitions: Hosting challenges or competitions encourages subscribers to engage more deeply with the service. For instance, a fitness app might challenge users to complete a set number of workouts in a month, with top performers receiving rewards or recognition.

Social Features and Leaderboards: Incorporating social features and leaderboards can tap into the competitive nature of users. Seeing how they stack up against others adds a fun, competitive layer to the subscription, motivating them to improve their standing through increased engagement.

Personalized Milestones: Recognizing and celebrating personal milestones, such as the anniversary of a subscription or achieving a personal best in a challenge, can make the experience more personal and rewarding. This fosters a deeper emotional connection to the brand.

Feedback and Participation Rewards: Encouraging feedback on new features or services through gamified elements (e.g., earning points for providing feedback) can improve the product while making users feel valued and involved in the community.

Educational Content: Gamification can also make educational content more engaging, which is especially useful in services that offer learning as a key component. Earning badges or certificates for completing courses or levels can motivate users to continue their education.

Networking

Network effects refer to the phenomenon where a product or service becomes more valuable to its users as the number of users increases. This concept is especially powerful in subscription-based businesses, where user engagement and the overall value proposition can significantly benefit from the growing user base. Here’s how network effects can be utilized in a subscription business to improve loyalty and retention:

Social Sharing and Invitations: Encourage users to invite friends or colleagues to join the service, potentially offering incentives for both the inviter and the invitee. As more people join, the service becomes more valuable due to increased interaction and social engagement, enhancing user loyalty.

User-Generated Content: Platforms that allow users to contribute content, such as reviews, tips, articles, or videos, can leverage network effects by becoming more valuable and content-rich as the user base grows. This not only improves the service’s value proposition but also encourages users to stay engaged and renew their subscriptions to access an ever-growing repository of content.

Community and Forums: Building a community or forum where subscribers can interact, share experiences, and support each other creates a sense of belonging and attachment to the service. As the community grows, the value of the subscription increases due to the wealth of shared knowledge and the supportive network.

Collaborative Features: Incorporating features that allow users to collaborate or compete with each other in real-time can enhance the value of the service. For example, a fitness app might offer group challenges or a learning platform could enable study groups. These collaborative elements become more engaging as more users participate.

Personalization and Recommendations: Utilize data from a growing user base to improve personalization and recommendation algorithms. As more users interact with the service, the system can better understand preferences and behaviors, leading to more accurate and valuable recommendations that enhance user satisfaction and retention.

Exclusive Events and Perks for Network Growth: Reward users for contributing to network growth by offering exclusive events, content, or perks. For instance, users who are instrumental in growing the community might get early access to new features or special recognition within the platform.

Marketplace Dynamics: For subscription services that include a marketplace component (e.g., e-commerce platforms, service marketplaces), the network effect can greatly enhance the variety and quality of offerings as more sellers and buyers join, making the platform more attractive to all participants.

History

Presenting historical usage data to subscribers involves giving them insights into their interaction and consumption patterns with the service over time. This strategy can be highly effective in subscription businesses for enhancing user engagement, demonstrating value, and ultimately improving loyalty and retention. Here’s how it can be utilized:

Personalized Usage Reports: Provide subscribers with regular reports or dashboards that highlight their usage patterns, such as how much content they have consumed, features they use most frequently, or progress in courses or challenges. This personalized data can help users see the value they are getting from the subscription, encouraging continued use and renewal.

Milestone Celebrations: Recognize and celebrate milestones based on historical usage data. For example, an app could celebrate the anniversary of a user’s subscription, a milestone number of books read on a reading app, or a significant achievement in a learning platform. Celebrating these milestones can create a sense of achievement and deepen the emotional connection to the service.

Recommendations Based on Past Behavior: Use historical usage data to refine recommendations for content, products, or activities. By understanding what a user has engaged with in the past, the service can offer more tailored suggestions, improving user satisfaction and encouraging further engagement.

Visualizing Progress and Trends: Offer visualizations that allow users to see their progress and trends over time. For example, a fitness app might show a user’s workout frequency, intensity, or improvement in performance. These visualizations help users track their progress towards goals, motivating them to continue using the service.

Engagement and Retention Emails: Send targeted emails based on historical usage data that remind users of their achievements, suggest new goals, or highlight unused features of the service. These emails can re-engage users who may be less active and remind them of the value the subscription offers.

Customized Incentives for Renewal: Offer renewal incentives based on a user’s interaction with the service. For example, if the data shows that a user is highly engaged with a particular feature or content category, offer a discount or bonus related to that interest when it’s time to renew.

Feedback and Improvement: Use historical usage data to solicit feedback on features or content. Asking users for their input based on their engagement patterns can make feedback more relevant and actionable, while also making users feel valued and involved in the development of the service.

Benchmarking Against Peers: For services where comparison adds value (such as fitness or learning platforms), showing users how their usage or progress compares to that of their peers can motivate them to engage more with the service. This should be done sensitively to encourage motivation rather than discourage users who may be below average.

Multi-User

Multi-user effects in a subscription business refer to the benefits and dynamics that arise when a subscription service allows multiple users to share a single account or subscription plan. This approach can significantly enhance loyalty and retention by fostering a shared user experience, increasing the perceived value of the service, and creating a sense of community among users. Here’s how multi-user effects can be utilized:

Family or Team Plans: Offering subscription plans that allow multiple users, such as family members or team members in a business, to use the service under a single subscription. This not only makes the subscription more cost-effective but also encourages users to stay with a service that accommodates their group’s needs.

Shared Experiences and Engagement: Multi-user accounts encourage shared experiences, whether it’s family members discussing a show they watched together on a streaming platform or team members collaborating on a project using a software subscription. These shared experiences can deepen the relationship with the service and increase its integral value in users’ daily lives.

Cross-User Recommendations and Discoveries: In multi-user accounts, the actions of one user can inform recommendations for others on the same account, leading to new discoveries and engagements. For example, a streaming service might recommend a movie to one family member based on another’s viewing habits, introducing them to content they might not have found on their own.

Increased Usage and Engagement: Having multiple users on a single account typically leads to higher overall engagement with the service, as different users utilize it for their needs. This increased engagement can improve the service’s metrics and make the subscription more indispensable to the group.

Social Features and Collaboration Tools: Enhancing the service with social features or collaboration tools that multi-users can take advantage of. For example, a music streaming service might allow family members to create shared playlists, or a productivity tool might offer collaborative project management features for teams.

Customization and Personalization for Each User: Providing personalized experiences for each user within a multi-user account, such as individual profiles or personalized recommendations, ensures that the service remains relevant and engaging for all users, not just the primary account holder.

Incentives for Adding Users: Encouraging subscribers to add more users to their account by offering incentives, such as additional features, increased storage, or discounts. This not only increases the value of the subscription but also expands the user base within each subscribed unit.

Feedback Loops from Multiple Users: Gathering feedback from multiple users on a single account can provide a richer understanding of how the service is used and valued. This feedback can be invaluable for improving and tailoring the service to better meet the needs of diverse user groups.

Retention through Group Dependency: Once a group of users, like a family or team, becomes accustomed to using a service together, the likelihood of canceling the subscription decreases. The service becomes a part of the group’s routine and canceling would affect all members, not just one.

Switching Costs

Switching costs are the costs that a customer incurs as a result of changing from one product or service to another. In the context of a subscription business, leveraging switching costs strategically can improve loyalty and retention by making it less desirable or more cumbersome for subscribers to switch to a competitor. Here are five examples of how switching costs can be utilized:

Data Portability and Customization: Make it easy for users to import their data into your service but difficult to export it to a competitor. This can include personalized settings, historical data, or user-generated content. The more a user has customized and invested in setting up their account, the less likely they are to leave, as they would not want to lose their personalized experience or have to recreate it elsewhere.

Exclusive Content or Features: Offer unique content or features that cannot be found on other platforms. This could be exclusive access to certain articles, videos, tools, or software features. When users become accustomed to these exclusives, the prospect of losing access by switching to a competitor creates a significant deterrent. This is famously utilized by Apple to make leaving the eco-system emotionally “painful”.

Integrated Ecosystem: Develop a suite of products or services that work seamlessly together, creating an ecosystem that users invest in. The more products or services a user subscribes to within your ecosystem, the higher the switching costs, as moving to a competitor would mean losing the convenience and integration they have become accustomed to.

Learning Curve and User Familiarity: Design your service in such a way that users invest time in learning how to use it effectively. This can involve complex features, customization options, or unique interfaces. The time and effort spent mastering your service act as a switching cost, as users are less inclined to start over with a new service and go through another learning curve.

Loyalty Programs and Long-term Benefits: Implement loyalty programs that reward users for their continued subscription, such as tiered membership levels with increasing benefits over time, or points systems where points can be redeemed for valuable rewards. The prospect of losing accumulated benefits or having to start over with a competitor’s loyalty program discourages users from switching.

Value-added Loyalty Drivers:

Points

Loyalty points programs are a strategic tool used by subscription businesses to encourage continuous engagement and retention by rewarding customers for their loyalty. These programs offer points for various customer activities, which can then be redeemed for rewards, discounts, or exclusive benefits. Here’s how loyalty points can be effectively utilized in a subscription business:

Create a point system to utilize gamification: Depending on your business, creating a loyalty point system can help you motivate subscribers to do specific actions or make specific purchases. Loyalty points will have to be calculated as some sort of discount or benefit that the customer can enjoy, when points have been saved. This model is also referred to as “Earn and Burn” logics.

Points for Subscription Renewal: Reward customers with points every time they renew their subscription. The longer the renewal period they commit to, the more points they could receive. This not only incentivizes longer commitment periods but also makes the act of renewal itself feel rewarding.

Points for Usage and Engagement: Encourage active engagement with the service by offering points for different types of usage, such as watching videos, completing lessons in a learning platform, or making purchases through a subscription-based e-commerce site. This strategy helps in keeping the service top-of-mind and increases the perceived value of staying subscribed.

Bonus Points for Milestones: Award bonus points for reaching certain milestones, such as subscription anniversaries, a set number of purchases, or completion of specific challenges within the service. Celebrating these milestones with points enhances customer satisfaction and fosters a sense of achievement and loyalty.

Flexible Redemption Options: Offer a variety of options for redeeming loyalty points, including discounts on future subscriptions, exclusive access to premium content or features, merchandise, or even the option to gift subscription time to friends or family. Flexible redemption options make the loyalty program more appealing to a wider audience and provide tangible value for continued engagement with the service.

Rewards

A reward system in a subscription business can significantly enhance loyalty and retention by acknowledging and incentivizing subscriber actions and commitment. While a loyalty points system rewards customers with points for various activities that can be collected and exchanged for rewards, a “level-based” reward system categorizes subscribers into different levels or tiers based on their engagement or achievement, unlocking specific rewards and privileges as they progress. Here’s how a level-based reward system can be utilized effectively:

Tiered Membership Levels: Implement a structure where subscribers are placed into tiers or levels based on their subscription longevity, spending, or engagement metrics. For example, new subscribers might start at a “Bronze” level, with the opportunity to advance to “Silver” and “Gold” levels as they meet certain criteria, such as subscription duration or usage intensity. Each tier offers progressively better rewards, such as exclusive access, special discounts, or personalized customer support.

Exclusive Access for Higher Tiers: Offer subscribers at higher levels exclusive access to new features, content, or products before they’re available to lower tiers or non-members. This not only makes higher-tier subscribers feel valued but also motivates lower-tier subscribers to increase their engagement to gain access to these exclusives.

Special Recognition and Status Symbols: Recognize subscribers of higher tiers with special status symbols, badges, or profile enhancements that are visible within the service or community. This public acknowledgment serves as social proof of their loyalty and engagement, encouraging both the recognized subscriber and others to aspire to or maintain high levels of engagement.

Personalized Experiences for Top Tiers: Offer personalized experiences or services to subscribers in the top tiers, such as dedicated customer support, custom content curation, or the ability to influence future service features. These personalized touches enhance the perceived value of the subscription and deepen the subscriber’s emotional connection to the service.

Invitations to Exclusive Events: Invite top-tier subscribers to exclusive events, such as webinars, meetups, or online Q&A sessions with key figures associated with the service. These events can provide valuable networking opportunities, deepen the community feel, and reinforce the subscriber’s sense of belonging and loyalty to the brand.

Discounts

Discounts are a straightforward yet effective strategy to improve loyalty and retention in a subscription business. By offering targeted discounts, businesses can encourage continued subscription, reward loyalty, and make subscribers feel valued. Here’s how discounts can be strategically utilized:

Renewal Discounts: Offer discounts to existing subscribers as an incentive to renew their subscription for another term. This could be a percentage off the regular subscription price or a fixed amount. Renewal discounts acknowledge the subscriber’s ongoing commitment to the service and reduce the temptation to cancel or switch to a competitor.

Volume or Bundle Discounts: Encourage subscribers to upgrade to higher-tier plans or to bundle additional services by offering discounts on these options. For example, subscribers could receive a discount when they switch from a monthly to an annual plan, or when they add another service to their existing subscription. This not only increases the subscriber’s investment in the service but also enhances their engagement and perceived value.

Loyalty-Based Discounts: Implement a system where subscribers earn discounts based on their loyalty milestones, such as the length of their subscription or their engagement level. For instance, after a year of continuous subscription, a subscriber might receive a 10% discount on their next billing cycle. This type of discount rewards subscribers for their loyalty over time and encourages long-term commitment.

Referral Discounts: Offer discounts to subscribers who successfully refer new customers to the subscription service. Both the existing subscriber and the new customer could receive a discount, making this a win-win situation. Referral discounts not only incentivize current subscribers to promote the service but also expand the customer base, creating a network effect that enhances the service’s value.

Seasonal or Occasional Discounts: Provide discounts during certain seasons or on special occasions, such as holidays, the subscriber’s birthday, or the anniversary of their subscription start date. These discounts can serve as a thank-you gesture that makes subscribers feel appreciated and more likely to continue their subscription.

Status

Status and level effects in subscription businesses, exemplified by programs like Booking.com’s Genius program, effectively utilize psychological principles of exclusivity, achievement, and recognition to enhance loyalty and retention. These programs categorize subscribers into different tiers or levels based on their engagement, spending, or loyalty, offering progressively superior benefits as customers move up the ranks. Here’s how status and level effects can be strategically used:

Tiered Benefits System: Create a structured tier system where subscribers are rewarded with increasing benefits as they ascend through levels based on their activity, such as booking frequency in the case of Booking.com or subscription longevity and usage in other contexts. Higher tiers could offer exclusive benefits, such as special discounts, early access to new features, or complimentary upgrades, making subscribers feel valued and motivated to reach the next level.

Recognition of Status: Publicly recognize the status of subscribers within the program through badges, titles, or other indicators of their level. This not only provides a sense of achievement but also encourages a psychological attachment to the status, making subscribers less likely to switch to a competitor and lose their earned recognition.

Exclusive Access and Offers: Provide exclusive access to sales, offers, or services only available to subscribers of certain tiers. For instance, higher-level members might get access to an exclusive support line, early check-in times for travel-related subscriptions, or first dibs on limited availability products. This exclusivity enhances the perceived value of maintaining or improving one’s status within the program.

Personalized Experiences: Tailor experiences and offers to the preferences and history of the subscriber as they move up levels. Personalization can increase with tier, from general perks at entry levels to highly personalized services or recommendations at top levels. The more a service feels “tailored” to a subscriber, the more likely they are to remain loyal.

Engagement and Feedback Opportunities: Offer subscribers at higher levels the chance to influence future offerings or give feedback directly to decision-makers. This can make loyal subscribers feel like part of the company’s community, deepening their commitment to the service. For example, top-tier members might be invited to participate in roundtable discussions or beta test new features.

Exclusivity

Exclusivity can be a powerful tool in a subscription business, transforming the service into a coveted “exclusive club” that offers members not just products or services, but a sense of belonging to a select group. This strategy taps into the human desire for status and community, making the subscription more valuable and desirable. Here’s how exclusivity can be leveraged to enhance loyalty and retention:

Members-Only Content and Features: Offer exclusive access to content, features, or products that are available only to subscribers. This could include premium articles, exclusive video content, special editions of products, or advanced features of a software. The Rapha Cycling Club, for example, provides its members with unique cycling routes and experiences that non-members can’t access, enhancing the perceived value of membership.

Exclusive Events and Experiences: Organize events, meetups, or experiences that are exclusive to members. These could range from live Q&A sessions with experts, special webinars, members-only competitions, to physical events like private shows, tastings, or group rides for clubs like Rapha. These events not only provide value but also foster a sense of community among members, enhancing their attachment to the brand.

Priority Access and Previews: Give subscribers priority access to new products, services, or sales before they are available to the general public. This could include early product releases, pre-sale tickets, or early bird pricing on new offerings. This sense of being “first” reinforces the exclusivity and privilege of being a subscriber.

Customization and Personalization: Allow subscribers to customize or personalize products and services in ways that are not available to non-subscribers. This could involve personalized product recommendations, custom-designed items, or tailored experiences. Customization makes the subscription feel personal and exclusive, increasing its value to the subscriber.

Private Communities and Networks: Create private online communities or networks where subscribers can connect, share, and learn from each other. These communities can be platform-based, social media groups, or even in-person clubs. For instance, Rapha Cycling Club members have access to an exclusive app where they can connect with other members, share routes, and organize rides. These communities reinforce the sense of being part of an exclusive group, enhancing loyalty and retention.