Subscription Model Integration in Retail

I've been quiet about this for months, but it's time to share. After 8 years running pure ecommerce brands, we've completely pivoted our business model: every product we launch now has subscription component. Not because subscriptions are trendy. But because economics are undeniable. Here's what happened when we added a $27/month subscription option to a beauty brand selling a one-time $59 product (with proper funnel in place too): -Customer Acquisition Cost remained identical -Average first-order value increased by 14% -Customer Lifetime Value jumped by 40% -Retention rate at 49% after 6 months The difference between struggling and thriving in ecommerce often comes down to unit economics. When your LTV is 1.5X your CAC, you're barely surviving. When your LTV is 4X your CPA, you can outspend any competitor. Subscriptions change the entire psychology of your marketing. When you sell one-time product or have sh*t funnel with sh*t upsells you need to convince customers to buy again and again. When you sell subscriptions you only need to convince them once. Then inertia works in your favor. Most brands approach subscriptions completely wrong. They treat them as a minor addition to their business, not a fundamental shift in their model. Our approach: We design products specifically to create ongoing value. Every new product must answer: "Why would someone continue using this month after month?" The first 14 days are also critical. We've built a 9-touch onboarding process that drives initial product usage and builds habit formation. We've built systems that track customer usage patterns and send timely reminders when they should be seeing results or need to reorder. Each subscriber receives exclusive content tied to subscription journey - improving results and creating deeper brand connection. Before each renewal, customers receive a preview of what's coming next and how it builds on their current results. Results: Our retention rates are now 2.7X industry average, and our CAC payback period decreased from 62 days to 32 days. Successful DTC brands of the next decade won't be selling products. They'll be selling ongoing transformations, delivered through physical products. If you're still focused solely on one-time purchases, you're building a business model that's increasingly difficult to sustain. The shift isn't easy. But it's necessary. And not making shift is harder in the long run.

🎥 Regal’s $250M bet on subscriptions: brick-and-mortar is embracing the monthly model to drive customer loyalty and stable revenue. Regal Cinemas has raised $250M to upgrade their theaters on the back of its successful $18.99 Regal Unlimited plan. They’re not alone. Supercuts offers unlimited haircuts for $14.99 while Panera Bread has their Unlimited Sip Club for $11.99, these innovations showcase how traditional retailers are adapting to meet modern consumer demands. You can benefit from these insights as well. It’s a great time to buy small businesses. Assess the current operations to determine how seamlessly a subscription model can be integrated. Businesses with streamlined operations and efficient customer service are better positioned to handle the increased engagement that comes with subscriptions. Create a subscription package that offers clear and compelling value. Invest in affordable off the shelf technology that supports subscription management. Ensure your staff is well-trained to handle the nuances of a subscription model. They should be able to assist customers with sign-ups, cancellations, and any service-related queries efficiently. Excellent customer service is critical to maintaining subscription satisfaction. To find small businesses available for acquisition, platforms like BizBuySell are invaluable. There you can identify potential businesses that fit your criteria, review detailed listings, and connect with sellers. This platform can help you find businesses that are well-positioned for the integration of a subscription model, ensuring a smoother transition and higher chances of success. The traditional Software as a Service (SaaS) model is increasingly being replaced by Results as a Service (RaaS), which focuses on delivering tangible outcomes rather than just software access. This shift emphasizes the value of results over mere usage. However, for retail businesses, the experiential aspect of their services makes the subscription model even more compelling and sustainable in the long term. Retail experiences offer tangible, repeatable benefits that align perfectly with the RaaS philosophy. By focusing on the outcome—whether it's a fresh haircut or an unlimited movie experience—retail subscriptions can provide consistent satisfaction and justify recurring payments. With the Regal Unlimited subscription, customers are incentivized to visit the theater more often. Each visit presents a chance to upsell concessions like popcorn, soda, and candy, which are high-margin items. Additionally, Regal can offer premium seating, special screenings, and other exclusive experiences for an added fee, enhancing the overall customer value and driving additional revenue streams. Implementing a subscription model not only enhances customer loyalty but also significantly improves a business’s valuation. Recurring revenue from subscriptions provides a predictable income stream, which is highly valued by investors.

Here is something we are trying with a client of ours… Step 1 - Customer places an order Step 2 - This triggers an automation that sends them an email letting the reader know that they are two orders away from unlocking a reward Note, this is a subscription-based business model, so our goal is to keep people subscribed for a longer period. We found that those who kept their subscription for 3 renewal periods tend to stay on for a significant period after. So our focus is getting people to that magic number of three. Step 3 - Customer places a second order Step 4 - Triggers an email that clearly lets the reader know they are 1 order away from a reward Step 5 - Customer places third order Step 6 - Triggers an email that delivers two things. The first is some sort of discount towards their next order for the reader. The second and more important reward that is delivered is a discount code that is more than the welcome series offer that the reader can send to a friend. Now, ensure this discount is only valid for first-time purchases to prevent the same person from using it themselves What this does is allow us to leverage existing customers’s (who we know love our business based on how many times they purchased) network with a focus on then acquiring a new customer. The great thing about this is that, assuming the friend of the customer buys, we are able to save a bunch of money on ad spend to acquire a customer, while at a discounted rate, who has a high likelihood of demonstrating similar purchasing behaviour to that of the original customer who triggered the automation in the first place. The reason we interlaced two incentives is because we needed the purchaser to also have something for themselves as well as for a friend, and we didn’t want them to feel misled leading up to the giving of the discount with the comms in the build-up emails.

🔥 TikTok Shop unlocked subscriptions, and for consumable sellers, this changes everything. Here’s how it reshapes offer strategy, profitability, and costs: 💡 Offer Strategy Shift No more relying solely on deep discounts to drive one-time purchases. Instead, sellers can craft recurring bundles, intro offers, and retention-driven upsells to lock in repeat customers from Day 1. Retention's become a good revenue driver 💰 Profitability Boost Subscription models = predictable revenue. Lower CAC (customer acquisition cost) per order, higher LTV (lifetime value), and better margins over time. Instead of chasing flash sale spikes, brands build a steady revenue base that compounds. 📈 Consistent GMV vs. Choppy Sales Right now, TikTok Shop sales graphs look like a rollercoaster—big spikes during campaigns, then drops. With subscriptions, brands get predictable GMV, making planning, budgeting, and scaling way smoother. Instead of starting from zero each month, brands stack recurring revenue on top of new sales. 🚀 Brands selling consumables (beverages, food, supplements, etc.) should be rethinking TikTok Shop strategy ASAP. The brands that nail subscription adoption early will own retention, reduce ad dependency, and scale profitably.