The differences between subscriptions, memberships, and loyalty programs.

As the ecommerce landscape continues to change, businesses need to reevaluate their offerings to ensure they’re giving customers the best experience and the right level of access to their brand. 

With the increasing popularity of subscriptions, memberships, and loyalty programs, stores should determine which offerings they’d like to make available to their customers, and which will have the best impact for their business down the line. 

Though they may seem similar at first glance, each of these offerings have different advantages and benefits. Identifying their differences can help you determine which will be right for your ecommerce store. 

Subscriptions, memberships & loyalty programs, oh my!

Let’s walk through the basics of subscriptions, memberships, and loyalty programs, and each of their advantages. 


Subscriptions allow ecommerce businesses to collect recurring revenue by encouraging customers to make repeat purchases. With subscriptions, merchants can unlock reliable recurring revenue while building stronger customer relationships and decreasing churn. 

As customer acquisition costs (CAC) rise, more businesses are considering subscriptions to hold onto their current customers and cultivate this strong customer loyalty. With subscriptions, customers pay a recurring fee for a product or service. This in turn generates more revenue for your business as the customers return again and again. 

Seven Sundays offers straightforward subscription options for their customers, with a built-in discount.

Advantages of subscriptions

There are a number of advantages to the subscription business model, a few of which we’ve already detailed above. Businesses considering implementing subscription offerings can also expect:

  • Reduced customer churn
  • Better retention
  • Increased customer loyalty and engagement
  • Higher customer lifetime value (LTV)
  • Easier financial forecasting and inventory management
  • Lower customer acquisition costs

Paid memberships

Like subscriptions, paid membership programs (sometimes called paid loyalty programs) can allow businesses to tap into a reliable recurring revenue stream.  However, while with subscriptions, merchants are selling a recurring product or service, with memberships, merchants are selling recurring access to exclusive benefits.

Some examples of paid benefits for members are:

  • Free shipping or discounted shipping
  • Exclusive access to product launches
  • Access to events and online communities
  • Special discounts for products or services
  • Free gifts
  • Donations made in the customer’s name

Memberships and subscriptions aren’t mutually exclusive. While some merchants only offer one or the other, many may choose to combine the two to add even more value for their business and customers.

To ensure the membership succeeds, ecommerce businesses need to identify which perks would be most attractive to their target market and ensure that the value of these benefits outweighs their costs for customers.

Advantages of memberships

Memberships offer merchants a variety of benefits, and each benefit helps facilitate and perpetuate the others. First, these offerings help merchants increase their customers’ LTV by encouraging repeat purchases with the benefits they offer. Second, they allow businesses to gain key insights about their customers, as these customers are purchasing more and engaging more with the business.

Finally, memberships drive additional revenue for the business thanks to the increased LTV they generate and the added customer insights they provide access to. This additional revenue can then be funneled directly back into the program, increasing the number of signups and the value for the business.  

Free loyalty programs

Last but not least, free or unpaid loyalty programs are another consideration for ecommerce stores. Loyalty programs can be combined with subscriptions and paid memberships, rewarding customers for making purchases by allowing them to earn points or other rewards as they shop with your store. They can then redeem those points for products, discounts, or other perks (like donations made in their name). 

The value of free loyalty programs speaks for themselves, with 45% of subscription customers saying they’re more likely to keep a subscription for a year if there are perks associated with it.

Blume’s free rewards program, called Blumetopia, gives customers the chance to earn points with every purchase. 

Advantages of loyalty programs

Like paid membership programs, free loyalty programs offer customers attractive benefits that can encourage repeat purchases, increased LTV, higher levels of engagement, and better retention. However, free loyalty programs can help businesses attract a wider group of customers, as they do not require a fee to join. This can then provide the merchant with customer insights from a larger group. 

A winning combination: How these features can work together

Depending on your business model and the goals you have for the future, one or more of these ecommerce features could lead your company to greater success. Consider your target audience, business model type, and your marketing strategy. Ask yourself these questions:

  • Does your business offer a product or service that customers need on a regular basis? If yes, then subscriptions are right for your business.
  • Do you want to create a sense of community and belonging among your customers? Then implementing a membership program is the way to go. 
  • Do you want to incentivize repeat business? Subscriptions, paid memberships, and free  loyalty programs (or a mix) are all worth considering.
  • Are you looking for a predictable revenue stream? Then a combination of subscriptions, memberships, and loyalty programs could be best for your business.

As with any new business venture, utilize your customer data and analytics to determine what’s working and what’s not, then adjust. With each of these programs, you have the opportunity to build customer loyalty and increase retention, which is a huge priority in this time of high CAC. Start implementing subscriptions, memberships, and/or a loyalty program today and revel in the success it will bring your business.