Customer Lifetime Value

Subscription beauty in 2027, still growing, but very different from what worked in 2020. A few years ago, subscriptions in beauty felt like a NOVELTY driven by discovery: monthly boxes, sample sizes, surprise. That model hasn’t disappeared, but it’s NO LONGER the center of gravity. As we move into 2027, subscription has evolved into something more PRGAMATIC: a retention engine, a data loop, and, when done well, a margin stabilizer. The short version: subscriptions are still relevant, but only if they solve a real, ongoing need. >>GROWTH has matured. +Beauty e-commerce is growing (high single–low double digits). +U.S. subscription beauty revenue sits around $3–4B. +Retention, monthly churn hits 5–10% without active optimization. +Subscription growth is shifting toward refills, replenishment, and personalization over discovery boxes. >>THREE MODELS are outperforming: The shift: from “subscription box” to “subscription logic”. The winning brands today don’t just sell subscriptions. They build their product and operations around recurring behavior. 1.-Refill-first systems. Concentrates and waterless formats go mainstream: buy once, refill on repeat, lower cost, less waste, less friction. 2.-Routine-based subscriptions. Built around rituals, not randomness, acne, hair repair, skin barrier. The product becomes a system. 3.-Adaptive personalization. No more static quizzes, subscriptions adjust to usage, seasonality, and changing needs. >>PRODUCT CATEGORIES that work best. Not every product belongs in a subscription model. The strongest performers share one thing: they run out. Discovery-heavy categories (like color cosmetics) are weaker unless tied to a system or strong community. +Skincare basics (cleansers, serums, SPF, barrier repair) +Haircare routines (especially treatment-led systems) +Derm-inspired or functional beauty (acne, aging, scalp health) +Ingestible beauty (with caution, regulation and trust matter) +Refillable essentials (deodorant, body care, cleansers) >>Benchmarks to keep in mind (2027 REALITY CHECK) These vary by category, but a healthy subscription DTC brand typically targets. If you’re far off these ranges, the issue is usually product–market fit, not marketing. +Conversion rate (site → subscription): 3–8% +Month 3 retention: 50–70% +Month 6 retention: 35–55% +LTV:CAC ratio: 3:1 or higher +Subscription share of total revenue: 40–70% for mature brands >>A SIMPLE WAY to think about it Subscription in beauty is no longer about selling more products. It’s about OWNING THE ROUTINE. If your brand can become part of someone’s weekly or daily habit, without adding friction, you have a real shot at building a durable DTC business in 2027. Lets go for it! Featured Brands Atolla Biossance Beauty Pie Bite Beauty Color Wow Curology Function of Beauty Hanni Hims / Hers Joonbyrd Prose Routine #beautyprofesionals #dtc #subscriptionbusiness #beautyfounders #ecommerce #brandstrategy #beautybusiness

This ONE billing change made us an extra $1.1M last year with zero price increases. If you run a subscription focused brand, steal this, implement it, and thank me later. Common subscription brands will spend weeks testing ad creative to lower acquisition costs by $3. But at the same time, subscription infrastructure itself is quietly bleeding revenue every month because nobody has looked at it since launch. This is the full system: Step 1: Convert to subscription without creating doubt → Pre-select subscription on product pages with crystal clear transparency → Show savings in immediately understandable terms → Compare one-time versus subscription side by side → Use social proof about what percentage of your customers subscribe → Make it very clear they can pause, skip, or cancel at any time Step 2: Eliminate checkout drop-offs → Emphasize permanent savings at checkout → Visualize the long-term savings impact → Stress customer control over their subscription → Every drop-off at checkout is a subscriber you already convinced on the product page and lost because the checkout created doubt Step 3: Nail post-purchase onboarding → Send a detailed subscription management welcome email immediately → Provide easy modification access points → Reinforce why subscribing was the right call → The first 48 hours after someone subscribes are where most first-month churn starts Step 4: Prevent churn before it happens → Send pre-billing reminders before renewals so there are no surprises → Enable adjustments without login barriers → Offer pauses instead of immediate cancellations → Keep the cancel button visible and accessible because hiding it destroys trust → Track cancellation reasons so you can improve the experience for the next subscriber Step 5: Long-term subscriber retention → Escalate perks for loyal subscribers → Run personalized win-back flows for churned customers → Test renewal incentives continuously because what works this quarter might not work next quarter All in all - If your average subscriber is worth $50/month and you're running 5,000 active subscriptions, a 10% improvement in retention adds $25K/month in revenue you would have otherwise lost. Over 12 months that's $300K from retention alone. Layer in the conversion rate improvement from pre-selecting subscription plus the checkout optimization and the churn prevention and you see how $1.1M becomes achievable without ever raising the price.

The subscription model is in trouble… Everyone is blaming “subscription fatigue”. Wrong. The real issue? Bad operators. We broke this down on the latest ASOM Podcast… Lazy marketers built subscription models thinking: • “Cancelation friction = more retention” • “Lock people in = guaranteed revenue” • “Throw in some average products = they’ll stay” Then 2024 hit. People got smarter. They started asking: • Do I actually need this? • Is this worth my money? • Can I get the same thing cheaper somewhere else? Subscription success isn’t about “locking people in”. It’s about making them WANT to stay. Winning brands today: - Build community (FabFitFun shifting from a “box” to a full lifestyle experience) - Offer personalization (BarkBox letting customers choose their dog’s treats & toys) - Constantly add value (think Amazon bundling free services, HelloFresh pivoting to ready to eat meals) If you’re losing subscribers, ask yourself: Are you making it painful to cancel, or impossible to WANT to stay? The ones that get this right? They win. The ones that don’t? They become case studies in failure. Which side are you on?

Formuland's lifecycle optimization journey with BMO Media truly followed the ultimate playbook for optimizing towards higher LTV through subscriptions. When we started working together, loyalty from returning customers was already strong. The opportunity was clear: convert more new subscribers into first-time buyers, increase email’s share of total revenue, and build a system that could carry real weight heading into Q4. Email had to become a top-performing channel for retention, not a supporting one. We focused on three levers to improve subscriptions: - First, campaign discipline and targeting. We increased campaign cadence with intention and tightened segmentation between prospects and returning customers. Messaging reflected where someone was in the journey, not just what was on the calendar. That shift alone created more relevant touchpoints and more first-time purchase momentum. - Second, flow optimization and SMS expansion. Automations were continuously tested and refined. Small creative adjustments, clearer offers, stronger sequencing. Flow revenue increased 54% quarter over quarter as a result. At the same time, SMS was expanded as a complementary retention channel. It reinforced high-intent moments and added incremental revenue without cannibalizing email. - Third, list growth and retention. Both email and SMS audiences grew steadily, which improved segmentation depth and engagement quality. More signal. Better targeting. Stronger performance across both campaigns and flows. Creative also played a real role. Educational campaigns highlighting specialty formulas like goat milk and sensitive baby options drove meaningful conversion lifts. Subscription-focused messaging performed especially well, reinforcing the recurring value of the product and strengthening long-term retention. The results: • 70% increase in Klaviyo-attributed revenue YoY • 48% increase in attribution YoY • 54% increase in flow revenue QoQ • 63% increase in email deliveries QoQ Email moved from being a background channel to one of the top-performing revenue drivers in the business. As a founder, here’s what stands out to me: Strong brands often underestimate how much performance is sitting inside their owned channels. When campaign execution is consistent, flows are optimized, and education is built into the strategy, email becomes an asset that compounds. For Formuland, this wasn’t just about a strong quarter. It was about building the foundation to walk into Q4 with a channel that could scale confidently.

The world's best subscription brands all focus on one crucial KPI: Increasing first-order subscription take rate. Here's why this is important: Subscription customers typically show higher lifecycle engagement, greater customer lifetime value, and much higher repeat purchase rates than one-time purchasers. In fact, a report from McKinsey & Company found that subscription customers tend to average a 15–25% retention rate after one year, while OTP customers often fall well short of this. This disparity matters because relying on OTP customers means you must be profitable from the very first order—otherwise, you’re forced to depend on additional capital via debt or equity. In contrast, a subscription-heavy model may allow you to absorb a loss on order #1, provided your retention curve supports long-term LTV gains. The improved margin profiles in subscription businesses can significantly ease the challenges of scaling profitably. Richie Mashiko and I talked in detail about this on the latest episode of the Boring Ecom Podcast. With all this in mind, I'd recommend optimizing your PDP to convert at least 60% of new customer orders into subscriptions. This can be achieved through: - Strong price breaks - Free gifts on the first order - Rewards for staying subscribed - Exclusive access to content, merchandise, or new products The key is to design your subscription program around your customers' needs and desires. The brands that've mastered this are AG1, Seed Health, and Everyday Dose. Check out the chart below to understand more about what motivates customers to subscribe. Follow me for more tips on what I've learned as a retention marketer for some of the world's fastest-growing 8 & 9-figure brands!

Trends Shaping Growth in 2025. As we wrap up April, smart subscription brands are already pulling levers that set them apart. Let’s highlight the big moves: Flexible Everything: From build-your-own bundles to cancel-anytime policies, flexibility is king. Subscribers want control – brands that offer customizable plans, easy upgrades/downgrades, and hassle-free cancellations are winning trust (and market share). Rigidity is out; adaptability is in. Value-Packed Partnerships: Innovative subscription companies are teaming up. Think meal kit + streaming service combos or fitness app + supplement box partnerships. By bundling offerings or perks across brands, they provide more value without reinventing the wheel, and both brands gain new audiences. AI-Powered Personalization: AI isn’t buzz; it’s making a tangible impact. 2025’s leaders use AI to predict churn, recommend products, and personalize content at scale. The result? Subscribers feel like the service “just gets them,” and engagement soars while churn dips. Ethical & Sustainable Appeal: Consumers care how you deliver. Subscription companies that use eco-friendly packaging, ethical sourcing, or support social causes are standing out. It’s not just about the product anymore, it’s about values. Show subscribers that staying with you makes a positive impact. Subscription + Membership Hybrid Models: The lines are blurring. Successful brands mix traditional subscriptions (monthly box, software access) with membership perks (community access, exclusive content, concierge support). This hybrid approach turns subscribers into invested members, not just customers. One thing is clear: The subscription models that thrived in 2020 won’t guarantee success in 2025. Evolve with the trends or risk getting left behind. Which of these are you incorporating this year?

Acquiring Customers Is Hard. Losing Them Is Easy. Most businesses—whether eCommerce or SaaS—spend a fortune on ads, influencers, and outreach to get new customers.  But what happens after the first sale or sign-up?  For many, the answer is… nothing. And that’s why they struggle with retention.  Retention isn’t just about keeping customers—it’s about keeping them engaged, happy, and spending more over time. After 20 years in marketing, I’ve seen what works.  For Product-Based Businesses (eCommerce, DTC, Retail) 🔹 Personalized Post-Purchase Sequences – A simple “thank you” email isn’t enough. Instead:   ✅ Follow up with product care tips, how-tos, and customer stories.   ✅ Offer exclusive discounts or early access to new products.   ✅ Gather feedback to show customers their opinions matter.  🔹 Loyalty & Rewards Programs – Customers love to feel appreciated. The best programs:   ✅ Offer points not just for purchases, but also for referrals, reviews, and social shares.   ✅ Provide VIP perks—early access, limited-edition drops, or surprise gifts.   ✅ Focus on emotional loyalty, not just transactional rewards.  🔹 Subscription & Replenishment Offers – Make repeat purchases effortless.   ✅ Automate reminders for products they may be running low on.   ✅ Offer a subscribe-and-save model for recurring purchases.   ✅ Create exclusive subscriber-only benefits.  For SaaS Companies:  🔹 Onboarding That Reduces Drop-off – First impressions make or break retention.   ✅ Guide new users with interactive tutorials and milestone-based check-ins.   ✅ Provide immediate value—don’t overwhelm them with features they don’t need yet.   ✅ Use behavioral emails and in-app nudges to keep engagement high.  🔹 Community & Education – People stay when they feel invested.   ✅ Build an engaged user community (private groups, webinars, AMAs).   ✅ Offer ongoing education (courses, use cases, best practices).   ✅ Showcase real customer success stories to inspire further usage.  🔹 Proactive Customer Support – Don’t wait for churn to happen.   ✅ Identify users at risk (e.g., those who haven’t logged in for weeks).   ✅ Send personalized re-engagement campaigns before they cancel.   ✅ Provide live chat or dedicated support for power users.  Retention isn’t a one-time effort—it’s a strategy.  If your business is struggling with repeat purchases or high churn, it’s not just about your product. It’s about how you engage your customers after the sale.  How is your retention strategy working right now?  #digitalmarketing #technology #management #entreprenuership #marketing

In the last month, we've audited 10+ brands' subscription programs. Here are 5 high-impact, low lift things you could do this week to grow your brand's recurring revenue: 1. Revamp your subscription renewal reminder flow 👉 use your subscription app's Klaviyo/Sendlane integration to include other elements besides "manage my subscription". Surprise & delight, add-on CTAs, delay options, etc 2. Update your cancellation flow 👉 Most brands are saving 2-4% of subscriptions in their cancel flow (if at all). The target should be 10%+. Your cancel flow isn't a root cause fix, but it's a GREAT Band-Aid and can really help get churn down if optimized the right way. 3. Optimize your dunning/failed payment campaign 👉 The majority of brands we audit have their failed billing attempt recovery flows set up incorrectly. It not only leads to lower recovery rate, but also a lot of pissed off customers. 4. Pre-select the subscription option on your PDP's buy box 👉 Just this one change can massively increase your subscription take-rate. Trust me on it. 5. Make your front-end subscription offer better 👉 The fastest-growing subscription brands get people on continuity from order #1. But these days, customers are unlikely to subscribe right away if it's not clearly more valuable than buying one-off. Anything you can do to improve your sub offer (or improve the translation of that value to the customer) will pay dividends.

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.

2 years ago, this haircare brand was struggling with customer retention, LTV and were stuck at $120k/mo in rev. Today, they make $400k/mo. Here’s what changed: When we first started working together, the brand had two main products: 1. A one-time purchase cap with red light therapy for hair regrowth 2. A subscription-based stem cell solution applied with a special applicator Initially, they lacked basic email flows and were generating less than 10% of their revenue from email. We implemented foundational setups like welcome series, abandoned cart, and browse abandonment flows. But the real game-changer was this subscription retention strategy: We created a six-email flow sequence, sent 30 days apart. Month 1: Congratulatory email with a roadmap of future discounts (20% off at month 3, 30% off at month 6) ↓ Month 2: Progress update and reminder of upcoming discounts ↓ Month 3: 20% lifetime discount offer ↓ Months 4-5: Social proof and before/after results ↓ Month 6: 30% lifetime discount offer The results were insane: • Subscription flow became the top-performer outperforming even the welcome flow • LTV shot up by 30% • Churn rates dropped significantly This strategy has worked so well, we've rolled it out to other subscription-based clients. Even a well-known LinkedIn personality. As more brands pivot to subscription models (rising acquisition costs, anyone?), this becomes even more critical. Overall, our relationship with the founders has been exemplary. We started with bi-weekly calls and collaborative brainstorming. Now, it's largely hands-off. We send weekly updates, and they've given us 10/10 feedback scores across the board - copy, design, communication, and reporting. The key? Honesty and transparency. We share wins and challenges openly. Work together to find solutions. It's why they're one of our best clients. If you're running an ecom brand and want to chat about how we can help, my DMs are open.