Part I: How is a Membership Model Different Than a Subscription Model?

In the retail world, "membership" and "subscription" are frequently used interchangeably, confusing consumers and diluting the value each can bring to the business. However, our research reveals that most consumers perceive a distinct difference between these two types of programs despite brands not trying to differentiate between them. The Bond Loyalty Report highlights each program's unique value based on a survey of over 1,000+ consumers across various age segments. It was found that customers view memberships as distinct from subscriptions. Chief among what makes them distinct is whether or not they provide a sense of community, exclusivity, and relevancy.

Subscriptions: Convenience at Its Core

Subscriptions operate on the principle of habit formation, encouraging consistent consumer behavior through regular, predictable deliveries of goods or services. For instance, replenishment subscriptions (like Dollar Shave Club) offer routine shipments of essentials, creating a frictionless experience where convenience is key. Predictability is essential here; behavioral science indicates that when customers rely on regular service intervals, they begin to develop a habit, turning subscriptions into an automatic routine. 

Discovery or exploration subscriptions (e.g., FabFitFun) offer a more curated experience, introducing subscribers to new products or services that they may not have otherwise discovered, often with an element of surprise and delight. These services engage subscribers with the excitement of discovering new items each delivery, adding an experiential layer to the transactional nature of subscriptions.

When you subscribe to a service or product, you're paying for goods or services delivered at regular intervals, often at a discounted rate. Think of your favorite streaming service, meal kits, or monthly beauty boxes. The primary appeal is ease and predictability—subscribers know what to expect and can rely on consistent delivery without the need to repeatedly place orders.

The transactional nature of subscriptions means that they can often be impersonal. While they may include personalized elements such as tailored recommendations or curated boxes, the relationship between the consumer and the brand remains largely functional. The goal is to simplify life, save time, and, often, save money. Only 58% of customers who consider a program to be a subscription have a likelihood to renew, further indicating the transactional nature of subscriptions (The Bond Loyalty Report).

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