Comparing Loop with?
Subscription models are everywhere! From Netflix to Spotify, to coffee clubs to skincare kits, the trend is on fire right now. But just because subscriptions are hot, doesn't mean they are a good option for every business. Before you jump into the world of recurring revenue, you need to ask yourself if the subscription model is a good fit for your product type, customer behavior, and business goals.
This guide will address everything you need to consider, from product fit and identifying if there’s market demand, to how to personalize the experience and increase retention. By the end of this guide, you should know if the subscription model is a good fit for your business and, if so, you’ll know how to begin!
Not all products are naturally suited to recurring purchases. So the first question is: do consumers have the need to regularly purchase your product? Products that address repeated problems or provide recurring value are good candidates for recurring processes.
Good candidates for recurring purchases include:
Example:
A skincare brand with products meant to be used daily can benefit from subscriptions, especially if customers reorder every 4–6 weeks. Compare that to something like formalwear, which isn’t frequently purchased.
If your product is used infrequently or varies wildly in need, a subscription model may lead to high churn.
Ask yourself:
Can I guarantee consistent quality and supply?
It may be possible for your product to be sold on a recurring basis and therefore, the customers can be kept if there is demand. Across some categories (like meal kits or beauty boxes), demand can be high and competition is fierce, making retention difficult.
Before you commit:
Pro Tip:
If you’re entering a saturated space, your subscription value proposition must be extremely clear and differentiated. Don’t just “bundle and save”, think about convenience, curation, savings, or surprise.
Today’s subscribers want a personalized experience. Whether it’s more flexible delivery dates, a specially curated product selection, or dynamic pricing, personalization is now a need.
Why it matters:
Personalization ideas:
Challenge:
Personalization requires data. Be sure that your e-commerce platform or subscription application will help you do it effectively at scale.
Churn is the single biggest challenge in subscription businesses. Even if your acquisition is strong, high churn can kill your business fast.
Benchmark:
A healthy monthly churn rate is under 5% for physical goods, and even lower for digital services.
Retention strategies to consider:
Formula to aim for:
Customer Lifetime Value (CLV) should be at least 3x your Customer Acquisition Cost (CAC). If you’re spending $30 to acquire a customer, you should aim to earn $90 or more over the lifetime of that customer.
Subscription brands aren’t just transactional, they’re relational. You need to nurture long-term trust and engagement through consistent, relevant communication.
Essential communication channels:
Social media and community to foster brand connection
Example:
Brands like Glossier and Oura Ring build communities around their products, not just selling but educating and connecting with their audience.
Ongoing communication isn’t just good practice it’s also one of the most effective ways to reduce involuntary churn caused by failed payments or disengagement.
A community can dramatically increase stickiness in a subscription model. Why? Because members feel like they belong to something bigger than just a product.
Community-driven brands:
Ways to build community:
Subscriptions thrive on emotional connection, not just convenience.
Once you've determined that the model fits your product, market, and customer expectations, here’s how to get started.
There are four main types of subscription models:
Choose based on your business goals and customer behavior. If you already sell products, you can add subscriptions to increase LTV. If you’re launching a new business, you may build it entirely around subscriptions.
Pick items that are:
Test idea: Build a “mock” box with sample content and use it in ads, landing pages, or pre-order campaigns. Gather feedback before launching full-scale.
Your pricing should balance affordability, value perception, and profitability.
Pricing strategies:
Use cost analysis to make sure you’re hitting your profit margin goals after product costs, shipping, and marketing spend.
A seamless digital experience is crucial for subscription success.
Use Shopify + Loop Subscriptions to:
Don’t forget:
No matter how great your product is, you need a marketing engine to grow your subscriber base.
Top marketing strategies:
Start small, track your CAC, and double down on what works.
Subscription apps for Shopify:
Email & SMS:
Analytics & Churn Reduction:
What are the main benefits of subscription businesses?
Predictable revenue, improved customer retention, stronger LTV, and easier inventory planning.
Are subscriptions profitable?
Yes, but only with strong retention and margins. A subscription model is most profitable when your CLV greatly exceeds CAC.
How do I reduce churn in a subscription business?
Offer personalization, give subscribers flexibility, communicate regularly, and use tools to recover failed payments automatically.
What are the risks of launching a subscription?
High churn, poor product-market fit, lack of differentiation, and underestimating operational complexity.
The subscription model offers incredible advantages but only if it’s a fit for your product, customers, and operations. Think of it less as a pricing model and more as a relationship model. If you’re prepared to offer consistent value, stay engaged, and optimize retention, a subscription can turn one-time buyers into lifelong fans.
Ready to launch your subscription business?
Loop Subscriptions makes it easy to power and scale your Shopify subscription experience with custom widgets, flexible bundles, and retention-first tools.
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