Good news! Your customer made a purchase, and a successful sale was completed. But that isn’t the end goal, is it? As an online ecommerce seller, you want customers to subscribe and continue using your service rather than make a one-time purchase.
But is that what customers really prefer? In today’s world, where online shopping has become the norm, customers expect flexibility. As of now these the long-term customer relationships that are the foundation of sustainable growth, not the single transactions. This is where you, as a Shopify e-commerce merchant, may feel unsure about which approach to choose.
But, what do customers actually prefer, and how can your business leverage those preferences to generate steady, recurring income?
A subscription model allows customers to receive the products or services you offer on a recurring basis. This recurrence can be weekly, monthly, annually, or even custom made.
Some well-known examples of successful subscription models include:
As the name suggests, a one-time model is one where the customer pays only once and receives the good or service for that single occasion.
Examples can be such as:
Short answer? You guessed it, the subscription model, but why? Because subscription e-commerce models provide dependable revenue streams, client loyalty, and repeat business, they have rewritten traditional retail.
Let look at the data’s really quick:
The subscription economy was expected to increase from $225 billion in 2020 to $500 billion by 2025, according to a McKinsey analysis. The reason lies in the combination of benefits and convenience that the subscription model brings to customers:
Convenience and efficiency are valued by consumers who lead more busy lives. Subscription models make it simpler to keep track of customers shopping requirements by providing smooth, automated deliveries and tailored recommendations.
After a busy day, customers prefer to be able to watch their favourite TV shows by just logging into their Netflix accounts, rather than buying the physical media for each show. Similarly, they would rather have their skincare products shipped to them each month, instead of setting aside free time to search for them online and make a separate purchase for each product.
Another good example for this is Hello Fresh. Home cooks can try out new recipes and meal planning with HelloFresh's weekly delivery of fresh supplies.
Another major advantage of the subscription model is its cost-efficiency for the consumer. To incentivize long-term commitment, most e-commerce platforms offer products and services at a significantly lower price point when customers choose a recurring subscription over a one-time purchase. This 'Subscribe and Save' approach creates a win-win scenario: customers enjoy consistent savings, while businesses secure predictable, recurring revenue.
For instance, millions of users rely on Amazon Prime because it provides streaming services, same-day or next-day delivery, and early access to promotions.
Lastly, a subscription service gives the user a genuine sense of being seen. These methods enable companies to collect and use useful data, allowing them to create highly personalized content and customized, targeted offers. This data-driven strategy turns a generic transaction into a personalized experience that speaks directly to each subscriber's particular interests.
In the Shopify world, brands like Ipsy or Birchbox do this by using beauty quizzes to ensure that every monthly subscription box contains products specifically matched to the subscriber's skin tone and style preferences.
Although this doesn't mean that the one-time purchase group does not exist. Actually, data shows that this second group has a higher motivation and likelihood to purchase your good or service, but the likelihood of making a second purchase is pretty low—only 23% make a second purchase. Meanwhile, the subscription model essentially encourages the customer to use your service again.
Take for example Adobe, Photoshop and other Adobe programs were first sold as one-time purchases (Creative Suite). A customer might be highly motivated to utilize the software after paying a premium price once, but they might not purchase another version for years or even ever. They repeatedly encouraged the customer to use the service again by switching to the subscription model (Adobe Creative Cloud).
Now that we know what customers prefer, how can you, as a Shopify e-commerce merchant, use this to your advantage?
Subscriptions work best when items are:
Subscriptions feel organic rather than forced if clients need your goods on a regular basis.
Subscriptions frequently fail when:
There is such a thing as subscription fatigue. Churn rises quickly if customers don't see continuous value.
Shopify merchants should concentrate on the following KPIs to make sure their subscription strategy is sound:
This metric helps you understand how much value each subscriber brings in and informs how much you can afford to spend on acquiring and retaining customers. CLV is especially crucial because it helps you assess whether customers are worth acquiring in the first place. Many subscription businesses aim for a CLV to Customer Acquisition Cost (CAC) ratio of at least 3:1, meaning customers ideally bring in three times more revenue than it costs to acquire them.
is the total cost of acquiring a new subscriber, including advertising, marketing, and sales expenses. Subscription ecommerce CAC can vary by category but often falls between $50 and $200+, depending on competition and marketing strategy.
The proportion of cancelled subscribers. High churn not only limits growth but can significantly erode lifetime value — reducing churn by as little as 5% can boost profits by 25–125%
is the opposite of churn and counts the number of subscribers over time. Retention indicates how effectively your subscription experience keeps customers interested, and churn indicates who you lose. Higher CLV and more consistent revenue are frequently indicators of strong retention.
captures the predictable subscription income your business earns each month. Consistent MRR growth (e.g., 10–20% month-over-month) is a good indicator that your subscription model is gaining traction and generating reliable income.
A sustainable subscription business seeks to maintain low churn, build MRR gradually, and expand CLV more quickly than CAC. You can gain a comprehensive picture of not only short-term performance but also long-term viability and profitability by tracking these KPIs collectively rather than separately. This is essential for creating a reliable, recurring revenue engine on Shopify.
First and foremost, the most important aspect of launching your subscription service is to deeply understand your audience. You must identify their specific needs, pain points, and purchasing habits to ensure your service provides enough ongoing value to keep them subscribed over the long term.
This is especially important for a Shopify e-commerce business, as customers who choose a subscription model on Shopify value 'set-it-and-forget-it' convenience. Subscriptions allow them to enjoy a seamless experience without the need to manually reorder every time. As a result, customers experience less friction, and merchants see a significant increase in retention.
Now, this is where Subi comes into action. We help you build an effective subscription management system that is both efficient and stable. It streamlines your operations to reduce costs, minimize errors, and improve customer satisfaction.
Here are some of the features we offer as your subscription service that are essential for a successful subscription model:
Subi adapts your subscription plans to the unique requirements of your clients. We provide you the freedom to adjust offers, product bundles, and paying cycles so that your subscription model precisely suits the tastes and purchasing patterns of your target market.
Subi lets you customize every aspect of the subscription experience, from personalized portals to bespoke plans, so your recurring service feels more like a natural extension of your brand than a generic adds on.
At Subi, we ensure that implementing a subscription service doesn't break the bank. Instead, we focus on driving efficient operations and streamlined logistics to help you maximize your margins while keeping your overhead costs low.
By rewarding client loyalty, we enable you to promote sustained commitment. By providing exclusive benefits like customized discounts, early access to new releases, or unique loyalty bonuses, you may use Subi to encourage customers to stick with the model. By continuously providing your most devoted customers with additional value, you turn a straightforward transaction into a long-lasting partnership that greatly lowers attrition and raises the lifetime value of your brand.
By putting these tactics into practice, you'll not only guarantee a profitable subscription service but also an active customer that encourages loyalty and repeat business.
As previously said, a one-time customer is still an essential component of your business even though they might not instantly result in regular revenue. To gain their trust, you must keep giving them something worthwhile. The hybrid technique is useful in this situation. You can accommodate all shopping habits by providing both one-time purchases and subscription choices. This allows you to make money right away while giving casual customers a clear path to become devoted subscribers.
By smoothly providing both subscription and one-time purchase choices without sacrificing the consumer experience, Subi makes it simple for Shopify retailers to adopt a hybrid strategy. Within a seamless, user-friendly checkout process, merchants can let customers buy things once or subscribe at their selected rate. Customers have complete control because to Subi's customizable subscription controls, which lower friction and boost trust. These features include pause, skip, swap, and simple cancellation. Simultaneously, retailers may maximize lifetime value while still capturing one-time purchases by converting one-time purchasers into long-term subscribers with the aid of integrated loyalty and retention systems. Subi allows retailers to expand consistently while satisfying contemporary customer expectations by fusing flexibility with recurring revenue solutions.
In the competitive world of Shopify e-commerce, sustainable growth is built on long-term relationships rather than isolated transactions. The emergence of subscription e-commerce has completely changed how we shop and engage with brands. Businesses must adjust to shifting customer demands and preferences as this model develops. Subscription e-commerce models will continue to be a major factor in growth and customer engagement since they provide unique advantages, experiences, and values. By using Subi to provide both one-time purchases and seamless subscription options, you can reduce friction, reward loyalty, and ensure your brand remains efficient and budget-friendly.
