Key Takeaways
- Three subscription models: replenishment (auto-reorder), curation (surprise boxes), and access (membership perks).
- Subscription customers have 3-5x higher CLV than one-time buyers, making higher acquisition costs justifiable.
- Churn is the critical metric: even 5% monthly churn means replacing half your subscribers every year.
Subscription Commerce Models
| Model | Example | Churn Challenge |
|---|---|---|
| Replenishment | Dollar Shave Club, Amazon Subscribe & Save | Low churn (products are consumed regularly) |
| Curation | Birchbox, Stitch Fix | High churn (novelty fades, preferences mismatch) |
| Access | Costco, Amazon Prime | Low churn (ongoing value from perks) |
Replenishment has the most sustainable economics: customers need the product regularly, switching costs exist, and churn is driven by product dissatisfaction rather than boredom. Curation boxes have the highest initial excitement but also the highest churn because the surprise factor diminishes over time.
Frequently Asked Questions
Related Services
Related Terms
MRR
Monthly Recurring Revenue. The predictable revenue a subscription business earns each month.
Customer Lifetime Value (CLV)
The total revenue a business can expect from a single customer account throughout the entire business relationship.
Churn Rate
The percentage of customers who stop doing business with a company during a given time period.
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