There's something incredibly appealing about a subscription business. A customer purchases once, agrees to receive the product regularly, and suddenly the business has a more predictable revenue stream.
In theory, everybody wins. The customer doesn't have to remember to reorder. The business has greater visibility over future demand. Marketing becomes less dependent on constantly acquiring new customers.
But there's a fairly important assumption buried in that model. The customer has to keep wanting the product. And that is where subscription businesses become interesting.
A subscription isn't the same as loyalty
One of the mistakes I see in subscription ecommerce is treating the initial subscription purchase as though the customer relationship has been secured. It hasn't. You have simply created an arrangement for future transactions.
A customer might subscribe because the discount is attractive, because they're curious about the product or because they genuinely want the convenience. Those motivations aren't interchangeable.
Someone subscribing for a first-order discount may behave very differently from someone who has already purchased three times and knows the product is part of their routine. Understanding why people subscribe matters just as much as understanding how many do.
Not every product needs a subscription
I love a good subscription model. I also think businesses can be far too enthusiastic about applying one. The strongest propositions tend to solve a recurring problem.
Consumables are the obvious example. If someone uses a product regularly and needs to replenish it, an automatic delivery removes an annoying task. But the delivery frequency needs to reflect actual consumption.
A subscription that sends a product every 30 days when the customer needs one every 45 isn't creating convenience. It's creating a cupboard full of product.
Hannah Grant, Freshmade Creative
And eventually, a cancellation. Before launching a subscription offering, I'd want to understand how frequently customers use the product, how predictable that usage is, whether they value convenience and what flexibility they need. The model should fit the customer, not the other way around.
The first 90 days are doing a lot of work
For a new subscriber, the first few months establish what the relationship is going to feel like. Does the brand explain what happens next? Is the delivery schedule clear? Can the customer easily manage their subscription? Are they receiving useful information, or just a succession of emails reminding them they're subscribed?
A considered subscription journey might include an onboarding sequence, product education, a delivery reminder and a simple way to change the next order. The content should reflect the product and the customer's needs.
For some categories, education helps customers get more value from what they bought. For others, the most useful communication is simply a reminder that their next order is approaching. Not every customer needs more marketing. Sometimes they need fewer surprises.
Churn is a symptom. Find out what's causing it.
Churn is the rate at which subscribers leave over a given period. It's an important metric, but the percentage alone doesn't tell you much.
A customer might cancel because the product didn't meet expectations. Another might have too much stock. Someone else might be under financial pressure or no longer need the product. Those are very different problems, and they require different responses.
- Cancellations after the first delivery point at the acquisition offer, the product experience and the expectations set before purchase
- Cancellations after several deliveries point at consumption frequency, product accumulation and whether the subscription is still convenient
- Failed payments are a different issue again, and often the easiest to fix
The objective shouldn't be to make cancelling difficult. It should be to understand why people no longer want to stay.
Sometimes the best retention tool is a pause button
This sounds counterintuitive when your objective is recurring revenue. But giving customers control over their subscriptions can be one of the most sensible decisions a brand makes. Let them skip a delivery, change the frequency, swap a product or pause temporarily.
A customer who doesn't need another delivery this month isn't necessarily a lost customer. But forcing them to choose between receiving unwanted stock and cancelling entirely can turn a temporary inconvenience into a permanent departure.
I would rather a customer paused for six weeks and came back than received another product they didn't want and quietly resented the brand for it.
Your subscription platform and your email marketing need to talk
This is where the technology behind the subscription becomes commercially important.
If your subscription platform knows a customer has skipped their next order but your email platform doesn't, that customer might still receive a message encouraging them to replenish. If a payment fails and no appropriate reminder is triggered, you lose recurring revenue without anyone actively choosing to cancel. If your customer data is fragmented, you may struggle to tell new subscribers from long-term customers, paused subscriptions from people who have already left.
For Shopify subscription businesses, that usually means thinking carefully about how the subscription app, Shopify customer records and Klaviyo work together. Not just whether they're connected, but which events and fields are actually synchronising.
The subscription metrics I'd pay attention to
- Subscriber churn. How many subscribers leave during a defined period?
- Subscriber retention. How many remain active after one, three or six months?
- Customer lifetime value. How much contribution does the customer generate over the relationship?
- Customer acquisition cost. What does it cost to acquire a subscriber?
- Payment recovery. How effectively are failed recurring payments recovered?
- Pause and skip behaviour. Are customers adjusting their subscriptions before cancelling?
- Subscription contribution margin. What remains after product, fulfilment, payment and other variable costs?
I'd also compare subscription customers with one-off purchasers. A subscription customer isn't automatically more profitable, particularly if the subscription discount and fulfilment costs are substantial.
Recurring revenue should be earned repeatedly
The best subscription experiences make life easier. They remove something the customer would otherwise have to remember, provide a product they genuinely need and give them control when circumstances change.
That's the real value proposition. Not the discount. Not the recurring payment. Not the convenience to the business. The customer.
A subscription isn't a commitment your customer makes to your business. It's a commitment your business makes to remain useful to your customer.
Hannah Grant, Freshmade Creative
Frequently asked questions
How do you reduce churn in a subscription business?
Start by identifying why customers cancel. Improve onboarding, delivery flexibility, product experience and payment recovery based on the causes rather than relying solely on cancellation discounts.
What is a good subscription churn rate?
It depends on the category, subscription frequency, price and customer lifecycle. Compare cohorts over consistent periods and distinguish voluntary cancellations from failed payments.
Are subscriptions more profitable than one-off purchases?
They can be, but profitability depends on retention, acquisition costs, discounts, fulfilment expenses and customer lifetime value.
HG
Hannah Grant
Founder and director of Freshmade Creative, a Brisbane studio working across brand, marketing and digital.
