From phone bills and streaming services to Apple laptops and tampons, subscriptions have become a routine part of our daily lives. But unlike one-time purchases, subscriptions tend to offer businesses higher lifetime sales and greater retention value.
It’s no wonder then, that more businesses are looking to sign us up — but not all of us want to.
In our latest Sifted Talks, experts from Daye, Stripe, topi and Kittl shared insights on how to succeed in the subscription economy. They include:
- Sam Lockwood, enterprise account executive at Stripe, a payments platform
- David Ressler, head of design at Kittl, a startup which offers AI-powered design tools
- Estelle Merle, cofounder at topi, a hardware-as-a-service provider
- Valentina Milanova, founder at Daye, a period care and gynaecological health startup
Here are the key takeaways from the panel:
1/ Establish your pricing at the start
One of the biggest challenges for startups entering the subscription space is setting the right price.
Stripe’s Lockwood cautioned against "price book explosion", where startups experimenting with subscriptions end up with outdated pricing for legacy customers, making it challenging to transition to the correct pricing later.
"Really try and understand the value of your product and what the right price point should be, and try to stay convicted with that. If you do need to experiment, use things like discounts that expire rather than giving them evergreen pricing." — Sam Lockwood, Stripe
2/ Always prioritise customer engagement
Different approaches are needed for traditional software subscriptions and hardware subscriptions. Merle described the model that topi, a hardware-as-a-service company, uses as B2B-2B — connecting hardware providers like Apple and Lenovo with customers who prefer renting over owning electronics.
She said topi takes an "enablement approach", where the goal is always to help both the hardware provider and the customer get what they need. To do so, they focus on the lifecycle of the underlying asset, but they also believe customer engagement is key.
"We consider: how do our sellers want to interact with their customers during that subscription? How do customers actually want to be interacted with while they have a running subscription with you? How do you provide them with relevant points of interaction?" — Estelle Merle, topi
3/ Be on the lookout for customer trends
Daye’s Milanova discussed how her company has responded to economic challenges by offering more discounts and discount codes.
She also explained that due to ongoing misclassification of its products— which include CBD tampons and hemp pads — on platforms like Google and Meta, Daye has shifted marketing budgets to focus on its community. Discount codes have proven to be a particularly effective tool.
"Say you want to talk about Daye products, you have a unique code, you advertise that on your social media channels, or you just share it with a friend in a WhatsApp group, then you will get credit, as well as actual cash payments every month." — Valentina Milanova, Daye
4/ Subscription success is about usage, not revenue
Lockwood said that customers are beginning to experience subscription fatigue.
"Businesses went from no subscriptions… to then having 20 or 30 different subscriptions,” he said. “What we've also seen, particularly in Europe, is the banks making it a lot clearer what you're subscribed to."
This has led customers to become far more analytical about subscriptions. It has also led to new usage-based models where you pay for what you consume, particularly in the media space.
Because of this, Lockwood advised startups to measure success through product usage rather than revenue alone.
"By moving to a usage-based model, you'll get more customers coming onto the product, and therefore more ability to measure and see meaningful impact from changes that you make." — Lockwood
5/ Identify power users and start building for them
Ressler at Kittl agreed that the way to grow a subscription is to focus on the users, particularly free users who might convert to a paid subscription at a later date.
To engage its community, Kittl produces YouTube and podcast shows, including a private Discord channel for its most advanced users, like product managers and UX research designers. These users get first access to new features and provide feedback in the channel.
"They're getting first access to a tonne of new features. We're back and forth about feedback, and it really helps both sides. It's insider access." — David Ressler, Kittl
6/ Don’t be afraid of the pause button
The panel agreed that transparency is a major issue for successful subscription services.
"I've spent a lot of time considering how much transparency to provide on our product roadmap — specifically how much to inform customers and partners about what's coming," said Merle. "You have to balance it out, show that you're delivering the things that you're promising."
Milanova added that offering flexibility, such as the ability to pause subscriptions, is key to retaining customers.
"Everyone's always extremely frustrated if they have a subscription that they can't pause with ease, so while it may seem counterintuitive to want to introduce flexibility within your subscriptions, we have seen that that's a really important reason for why we have really low churn." — Milanova
Like this and want more? Watch the full Sifted Talks here:
