From making daily life ever more convenient to paying phone bills and even keeping wardrobes and kitchen cupboards stocked, the subscription economy is thriving and showing no signs of slowing down, says Pinar Koygun, Senior Director, Retail Vertical Growth at Worldpay.

And for good reason. A recent study indicates that the implementation of subscription services are becoming an increasingly prevalent strategy among retailers to stimulate financial growth. Subscriptions are no longer just about free shipping or occasional discounts, they are now a key tool for building lasting customer relationships.

Getting the medicine right

Our research showed that 72% of UK digital consumers are already using subscriptions, so it is clear that these types of models are becoming a staple for retailers too. Consumers often point to the convenience, predictability and the sense of exclusivity subscription models offer when asked why they choose to use them.

As such, expectations for subscription services are high. Consumers want flexibility, transparency and control. 96% of consumers say it is important to be notified before payments are taken. They also expect the ability to pause, reschedule or cancel their subscriptions with ease. Retailers who fail to deliver on these basics risk losing customers faster than they can acquire them.

But subscription models are not a one-size-fits all solution. Implementing a successful model requires careful planning, a clear strategy and a deep understanding of what customers truly want.

This means asking questions like: does the model make sense from an investment and return perspective? Are the resources in place to manage the service seamlessly? Most importantly, does it add value to the brand and align with the needs and expectations of the end customer? Without asking these questions, even the best intentions can fall short, leaving customers frustrated.

The payments puzzle

Managing subscription payments is an equally important piece of the subscription model puzzle. It is a complex process that involves deciding when to charge customers, offering the right selection of payment methods, handling returns, funding logistics and managing funds when goods are not received.

While this may sound daunting, a well-executed subscription model with a strong underlying payments layer provides predictable income, which is invaluable for strategic planning and scaling. With the right systems and partners in place, subscriptions then become the powerful driver of growth they have the potential to be.

Of course, acquiring subscription customers is only half of the goal – retaining them is just as important too. To boost customer lifetime value and encourage renewals, retailers must focus on creating a positive payment experience. This means making the process convenient, but also personalising it and integrating it with modern commerce channels, like social media.

Platforms such as Instagram and TikTok are increasingly supporting subscription models, offering businesses a unique opportunity to engage with customers directly. A subscription tied to a daily Instagram post, for example, can serve as a gentle reminder to renew while also fostering a sense of community and loyalty. These platforms also provide valuable insights into customer preferences, helping businesses further refine their personalisation strategies.

Not a magic elixir

Retailers, however, cannot simply implement a subscription and assume it is “job done”. Over the last few years, the number of subscription-based businesses have increased significantly, resulting in stronger competition and subscription fatigue. These models can also experience a high churn risk – the risk of customers not renewing their subscriptions.

To avoid these issues, companies must develop strong relationships with subscribers and constantly develop and personalise the service. Consumers expect more than just a transactional relationship – they want to feel valued. For digital products, this might mean offering exclusive content to subscribers. For physical goods, it could involve tailoring products to seasonal trends or including discount codes with deliveries.

According to Recurly’s 2024 State of Subscriptions report, merchants who allowed subscribers to personalise their subscriptions saw an additional $2.2billion in revenue from add-ons.

Success in subscription models requires more than just a good idea. It demands a commitment to understanding your customers, refining your approach and leveraging data insights to stay ahead of the competition. At its core, a successful subscription model is about building relationships that go beyond routine transactions. It is about creating experiences that make customers feel valued, understood and loyal. For retailers willing to put in the work, the rewards are well worth it.