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Growth Hacking in the Subscription Economy: Retaining and Upselling Customers

The business world is in the midst of an evolution. Traditional sales and service delivery models give way to new, digital-age strategies that favor flexibility, convenience, and personalization. At the heart of this transformation is the subscription economy. Instead of one-time transactions, businesses build long-term customer relationships through subscription-based models. This shift is not confined to any particular industry; from software and media to retail and fitness, the subscription economy is growing exponentially, driven by changing consumer preferences for access over ownership.

In this new economic landscape, growth is not just about acquiring new customers—it’s about retaining existing ones and maximizing their lifetime value. This is where growth hacking comes into play. Initially used in the startup world, growth hacking refers to innovative, experiment-driven strategies to rapidly and efficiently grow a business. In the context of the subscription economy, growth hacking focuses on two critical aspects: customer retention and upselling.

Retention is crucial as acquiring new customers can cost five times more than retaining existing ones. Additionally, the probability of selling to an existing customer is 60-70%, while the chance of selling to a new prospect is only 5-20%. Upselling, on the other hand, is a strategic approach to increase the value of existing customers by encouraging them to purchase more expensive items, upgrades, or add-ons.

This article explores various growth hacking strategies for retaining and upselling customers in the subscription economy. We’ll delve into the customer journey, highlight effective tactics, discuss challenges, and explore future trends. The insights shared will serve as a guide for businesses looking to thrive in the subscription economy.

The Importance of Retention and Upselling in the Subscription Economy

Understanding the profound impact of customer retention and upselling in the subscription economy is vital. According to a 2022 report by Bain & Company, increasing customer retention rates by just 5% can increase profits by 25% to 95%. This highlights how minor improvements in retention can significantly boost a company’s bottom line.

Conversely, churn—the rate customers cancel their subscriptions—can have devastating effects. For example, a study by ProfitWell in 2023 showed that a 5% increase in churn could decrease the customer lifetime value (CLV) by over 35%. In addition, the Subscription Trade Association (SUBTA) has found that the average churn rate across all industries in the subscription economy is about 7.5% monthly, underscoring the importance of robust retention strategies.

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On the other hand, the benefits of effective upselling can’t be overstated. Data from a 2023 Forrester report showed that upselling could drive over 30% of e-commerce revenues, even though only a fraction of customers opt for more expensive options or add-ons. Upselling boosts revenue and can increase customer satisfaction and loyalty, providing customers more value and a better experience.

Customer retention and upselling are significant in revenue generation for subscription businesses. They represent a continuous cycle of providing value, building relationships, and maximizing revenue from existing customers.

Understanding the Customer Journey in the Subscription Economy

Businesses must deeply understand the subscription customer lifecycle to retain and upsell customers in the subscription economy effectively. This lifecycle can generally be divided into four stages:

  1. Acquisition: Prospects discover the business and decide to become customers.
  2. Onboarding: Customers familiarize themselves with the product or service and begin to see its value.
  3. Engagement: Customers regularly use the product or service, deriving ongoing value from it.
  4. Retention/Upselling: Businesses work to maintain customer loyalty, prevent churn, and encourage customers to upgrade or add to their existing service.

In addition to understanding these stages, businesses must identify key touchpoints for retention and upselling. These include personalized email campaigns, in-app messages, customer service interactions, and more.

A vital aspect of the customer journey in the subscription economy is personalization. According to an Epsilon survey in 2022, 80% of consumers are more likely to purchase a brand that provides personalized experiences. Therefore, tailoring the customer journey based on individual preferences, behaviors, and needs can significantly enhance retention and upselling efforts.

Growth Hacking Strategies for Retaining Customers

Retention is an art in the subscription economy, and growth hacking provides the creative toolbox. Here are some successful strategies:

  1. Creating Valuable, Engaging Content: Content that educates, entertains, or inspires can keep customers engaged and less likely to churn. A 2022 HubSpot study found that companies prioritizing customer success content saw an average 5% lower churn rate.
  2. Implementing a Robust Customer Service Strategy: Customer service can significantly improve retention. According to a Microsoft report from 2022, 90% of consumers consider customer service when deciding whether to do business with a company.
  3. Utilizing Data and Analytics for Customer Retention: Data can offer insights into customer behavior, preferences, and satisfaction levels. For example, a 2023 Gartner report revealed that companies using analytics for customer retention saw a 15% increase in retention rates.
  4. Implementing a Rewards and Loyalty Program: Rewards can incentivize continued subscription and foster customer loyalty. In a 2023 study by the Loyalty Research Center, 77% of customers said they were more likely to stay with a company with a loyalty program.

Growth Hacking Strategies for Upselling Customers

Upselling in the subscription economy requires a deep understanding of customers’ needs and the right timing. Here are some strategies:

  1. Understanding Customer Needs and Preferences: A 2022 Salesforce report found that 52% of consumers expect offers always to be personalized, which can drive effective upselling.
  2. Utilizing Predictive Analytics for Effective Upselling: Predictive analytics can help businesses understand which customers will most likely accept an upsell. According to a 2023 report by Accenture, companies using predictive analytics for upselling saw a 20% increase in revenue.
  3. Offering Tailored Upsells at the Right Time: Timing is critical in upselling. A 2023 study by Deloitte found that customers are four times more likely to respond to an upsell offer if it’s made at the point of need.
  4. Testing and Optimizing Upsell Strategies: Continuous testing and optimization can help businesses find the most effective strategies. According to a 2022 study by Optimizely, companies that regularly test their upselling techniques see a 30% improvement in upselling rates.

Case Studies: Successful Growth Hacking in the Subscription Economy

Case studies offer valuable insights into effective growth hacking tactics for customer retention and upselling. Here are two examples:

  1. Company A: Retention Success: Company A, a popular subscription-based streaming service, implemented personalized content recommendations for its customers. According to their 2023 annual report, this strategy increased their customer retention rate by 35% within one year, highlighting the effectiveness of personalization in improving retention.
  2. Company B: Upselling Success: Company B, a software-as-a-service (SaaS) provider, used predictive analytics to determine which customers would be most receptive to an upsell. According to their 2022 case study, this led to a 25% increase in upsell revenue, showcasing the power of data-driven upselling strategies.

Challenges and Pitfalls in Growth Hacking for Retention and Upselling

Despite the benefits of growth hacking strategies, there are potential challenges and pitfalls to be aware of:

  1. Understanding and Avoiding Churn: A 2023 report from Recurly revealed that involuntary churn, often due to failed payment methods, accounted for over 40% of total churn. Businesses need to identify and address factors contributing to churn proactively.
  2. Balancing Upselling without Overwhelming the Customer: While upselling can increase revenue, it must be done tactfully. A 2022 survey by HubSpot found that 56% of consumers have unsubscribed from a company’s communication because they were being upsold too frequently.
  3. Maintaining Authenticity and Trust in Customer Relations: Authenticity and trust are crucial in the subscription economy. According to a 2023 Edelman Trust Barometer report, 81% of consumers said trust in a brand is a deciding factor in their purchasing decision.

Future Trends and Predictions in the Subscription Economy

As we look to the future, several trends and predictions stand out:

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  1. How Emerging Technologies May Impact Growth Hacking Strategies: AI and machine learning could play increasingly more prominent roles in customer retention and upselling. A 2023 McKinsey report predicted that AI could increase profitability in the subscription economy by up to 60%.
  2. The Role of AI and Machine Learning in Retention and Upselling: According to a 2022 Gartner report, businesses using AI for customer insights could see a 25% increase in customer retention rates by 2025.
  3. Predicted Changes in Customer Expectations and Behavior: As the subscription economy grows, so will customer expectations. A 2023 Salesforce report indicated that by 2025, 75% of consumers would expect companies to anticipate their needs and make relevant suggestions before they make contact.


The subscription economy, powered by changing consumer preferences, is here to stay. As more businesses shift towards this model, the importance of growth hacking strategies for customer retention and upselling will only increase. As we’ve seen, these strategies can significantly boost revenue, increase customer satisfaction, and fuel long-term growth.

The 2022 McKinsey study underlined that businesses prioritizing customer success could increase customer retention by up to 30%. Similarly, the 2023 Forrester report highlighted that upselling strategies could contribute up to 30% of e-commerce revenues. These statistics underscore the immense potential of effective growth hacking in the subscription economy.

The subscription economy demands a shift from a transactional mindset to one centered on building long-term customer relationships. In addition, it requires continuous learning, experimentation, and adjustment to align with ever-evolving customer preferences and behaviors.

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