In today’s digital landscape, subscription models have become one of the most effective ways to generate predictable, recurring revenue. However, building a sustainable subscription business that thrives globally requires more than just offering a product or service—it demands a strategic approach based on market research, product-market fit, and customer retention.
In this post, we’ll walk you through the process of creating a profitable subscription model from finding market gaps to leveraging growth strategies, with tips on global expansion and retaining customers effectively.
The post is only an entry in to the topics. If you want a team who can help you with this check out thareja.services
I included a Sprint Plan of Action at the end. 🙂
Finding a Gap in the Market
The first step in building a successful subscription model is to identify an unmet need. Conduct thorough market research to find pain points that your product or service can solve. One way to validate your idea is through The MOM Test—a technique where you ask potential customers the right questions to understand whether your product idea resonates with them without leading them to biased answers. Its called a Mom test because you know your survey takers may lie to you and so you need to ask questions in different ways to ensure they are not.
Major insight: Focus your research on understanding real problems, not just product features.
What is the MOM Test?
The MOM Test, from the book The Mom Test by Rob Fitzpatrick, offers a practical framework to help entrepreneurs ask better questions during customer interviews and validate their business ideas more effectively. The idea is based on the premise that when speaking with potential customers—especially friends or family—people tend to give polite, biased feedback. They might say things you want to hear rather than offering honest insights, especially if they don’t want to hurt your feelings.
The name “MOM Test” comes from the idea that if your mom would lie to you to avoid being discouraging, you need to ask questions in a way that even she would provide useful, unbiased feedback.
Core Principles of the MOM Test
1. Ask about their life, not your idea.
• Rather than asking directly, “Would you use my product?” focus on understanding the customer’s experiences, frustrations, and behaviors.
• Example: Instead of “Would you buy a time-tracking app?” ask, “How do you currently manage your time and stay organized?”
2. Focus on facts, not opinions or hypotheticals.
• Avoid questions that start with “Would you…?” or “Do you think…?” Instead, explore what they are already doing. People’s behavior reveals more than their opinions about a hypothetical product.
• Example: Instead of “Would this feature be useful?” ask, “When was the last time you tried to solve [specific problem]?”
3. Listen for specific problems, not compliments.
• If customers tell you your idea sounds great or offer vague compliments, it’s not actionable. Instead, dive deeper into their struggles to identify real pain points.
• Example: If someone says, “That sounds cool,” ask, “When was the last time you faced an issue that this solution could fix?”
How to Apply the MOM Test in Practice
1. Talk to your target customers regularly:
Conduct customer discovery interviews with potential users to understand how they currently solve problems and what frustrates them about existing solutions.
2. Analyze recurring themes:
Look for patterns across multiple conversations. If multiple people mention similar problems, you’re likely on to something real.
3. Avoid pitching your product prematurely:
The goal is to validate the problem, not the solution. Jumping to your product idea too early may bias the conversation.
MOM Test Example in Action
Imagine you’re building an app for freelancers to track their work hours. A poor approach would be to ask, “Would you use an app that tracks your hours?” Instead, apply the MOM Test:
• Better Question: “How do you currently track your work hours?”
• Follow-Up: “What frustrates you about that process?”
• Insight: If several freelancers say they use spreadsheets and often forget to log their hours, that gives you valuable data for your product design.
Major Takeaways from the MOM Test
• Fact-based conversations lead to actionable insights.
• User behavior is more reliable than opinions about what they might do in the future.
• Your goal is to uncover real pain points and validate problems, not to seek compliments or approval.
When is the Right Time to Develop an App?
Timing is critical when launching your subscription service. It’s essential to have basic market validation and know what problem you’re solving before diving into full development. Utilize cost-effective tools like no-code platforms and MVP frameworks to get your product to market faster without breaking the bank.
Tip: Like my last article: Start small, test assumptions, and iterate based on user feedback.
Product-Market Fit (PMF) and AARRR Framework
Achieving Product-Market Fit (PMF) means your product solves a clear need, and users would feel frustrated if they could no longer use it. Use tools like this PMF Survey to measure how well your product fits the market. This PMF Survey was developed by the folks at Superhuman. Very cool article check it out.
Additionally, apply the AARRR framework—Acquisition, Activation, Retention, Revenue, and Referral—to analyze your funnel and identify areas of improvement.
The AARRR Framework Explained
The AARRR framework, also known as the Pirate Metrics, is a model designed to track and optimize the customer lifecycle. Created by Dave McClure, it provides a structured way to analyze user behavior across five key stages: Acquisition, Activation, Retention, Revenue, and Referral. Each metric helps you monitor your users and optimize their journey from discovering your product to becoming loyal advocates.
1. Acquisition: How do users find you?
This metric focuses on the channels through which users discover your product. It measures traffic and user acquisition efforts to determine how effectively you’re reaching new audiences.
• Examples: Organic search, paid ads, social media campaigns, referrals, email marketing, etc.
• Key Metrics:
• Website visits or app downloads
• Click-through rates (CTR) from campaigns
• Cost per acquisition (CPA)
Goal: Understand which acquisition channels bring the most valuable users.
2. Activation: Are users having a great first experience?
Activation tracks how well your product delivers a positive first experience. This stage focuses on the “Aha! moment,” when the user realizes your product’s value.
• Examples:
• Completing onboarding
• Creating an account or profile
• Using a core feature (e.g., sending the first message, completing a task)
• Key Metrics:
• Onboarding completion rate
• Time-to-value (how long it takes for a user to reach the “Aha” moment)
• User engagement during the first session
Goal: Ensure users see the value of your product quickly to prevent early churn.
3. Retention: Are users coming back?
Retention measures how often users return and engage with your product over time. This is one of the most critical metrics, as retaining users is far more cost-effective than acquiring new ones.
• Examples:
• Push notifications, newsletters, and reminders
• Gamification or loyalty programs
• Re-engagement campaigns
• Key Metrics:
• Daily or monthly active users (DAU/MAU)
• Churn rate (how many users leave)
• Retention cohorts (how different user groups behave over time)
Goal: Keep users engaged and ensure they derive continuous value from the product.
4. Revenue: Are users converting into paying customers?
Revenue measures how well your product is monetized. It tracks whether users convert into paying customers and how much value they generate over time.
• Examples:
• Subscription conversions
• In-app purchases or upgrades
• Tiered pricing plans
• Key Metrics:
• Average Revenue Per User (ARPU)
• Customer Lifetime Value (CLV)
• Conversion rate (free to paid)
Goal: Maximize revenue by optimizing the product’s monetization strategy.
5. Referral: Are users spreading the word?
Referral focuses on word-of-mouth marketing. This stage measures how often existing users recommend your product to others, driving organic growth.
• Examples:
• Referral programs with incentives
• User-generated content or reviews
• Viral campaigns
• Key Metrics:
• Net Promoter Score (NPS)
• Referral rate (how many users refer others)
• Virality coefficient (how many new users one existing user brings)
Goal: Turn satisfied users into advocates who promote the product.
How to Use the AARRR Framework Effectively
To make the most of AARRR metrics:
1. Identify bottlenecks: Track where users drop off (e.g., poor retention or activation).
2. Optimize funnel stages: Focus on the area that needs the most improvement—whether it’s acquisition, onboarding, or monetization.
3. Run experiments: Continuously test and iterate your strategies to improve each stage.
4. Cohort analysis: Use cohort metrics to see how user behavior changes over time.
Building and Retaining a User Base
Growth starts with user acquisition, but long-term success comes from retention. Use two primary strategies:
1. Feature-Based Retention: Introduce features that keep customers engaged.
2. Communication-Based Retention: Stay connected through emails, notifications, and newsletters.
Identify your **“Aha moment”—the instant your product’s value becomes obvious to users—and optimize your onboarding process to help users reach that point quickly.
Leveraging Content and Referrals
Content marketing is powerful for organic growth. Tapping into both identified and unidentified market segments allows you to broaden your reach. YouTube marketing, product tutorials, and newsletters are cost-effective ways to showcase value and build trust.
Incentivize referrals through reward programs to encourage users to spread the word. Referrals not only bring new users but also lower customer acquisition costs.
Global Expansion: Pricing and ASO
Global markets bring both opportunities and challenges. Use pricing surveys like this pricing tool to align pricing with customer expectations in different regions. Focus on App Store Optimization (ASO) to improve visibility and downloads across app stores.
Here are some quick tips for App Store Optimization (ASO) to help your app get discovered and drive more downloads:
1. Optimize Your App Title and Subtitle
• Use relevant keywords in the title and subtitle to improve searchability.
• Keep it short and memorable, while reflecting your app’s core purpose.
2. Research Keywords Effectively
• Use tools like Sensor Tower, App Radar, or Ubersuggest to find high-ranking keywords.
• Focus on keywords with high search volume but low competition.
3. Write a Compelling App Description
• Highlight the core features and benefits in the first three lines (only the first few lines are visible without expanding).
• Include primary keywords naturally but avoid keyword stuffing.
4. Use Eye-Catching Icons and Screenshots
• Design an attractive app icon that stands out among competitors.
• Add screenshots and videos demonstrating the app’s features and user experience. Show the “Aha Moment” that makes your app valuable.
5. Get Positive Reviews and Ratings
• Encourage happy users to leave reviews via in-app prompts.
• Respond to reviews promptly to build trust and improve your app’s rating.
6. Optimize for Localization
• Adapt your app listing (description, keywords, and screenshots) for different languages and regions to attract a global audience.
7. Focus on App Store Page Conversion Rates
• Track metrics like click-through rate (CTR) and conversion rates from views to downloads.
• Experiment with A/B testing for icons, descriptions, and screenshots to find the most effective version.
8. Keep Your App Updated
• Regular updates improve app visibility and signal to users and app stores that the app is actively maintained.
• Include “What’s New” notes to inform users about updates and encourage downloads.
9. Leverage External Traffic Sources
• Promote your app via social media, YouTube videos, newsletters, or blogs to boost downloads and drive external traffic to the app store page.
10. Monitor and Adapt Using Analytics
• Track performance using app analytics tools to measure downloads, CTR, keyword rankings, and user feedback.
• Iterate regularly based on the data to continuously improve your app’s visibility and performance.
Benchmark testing can help track performance metrics and optimize your subscription funnels for different markets.
Prioritizing as a Founder: The RICE Method
Managing priorities can be tough when building a global subscription model. The RICE framework—Reach, Impact, Confidence, and Effort—provides a structured way to prioritize initiatives and projects effectively. Check out this RICE template to get started.
How to Use the RICE Framework with Formula and Example
The RICE framework is a prioritization tool used to assess which projects or features will provide the most value. The framework evaluates initiatives based on four key factors: Reach, Impact, Confidence, and Effort. Using this method ensures that you focus on tasks that deliver the highest value relative to the effort required.
The RICE Formula
RICE Score = (Reach x Impact x Confidence) / {Effort}
• Reach: How many people or users will this initiative impact?
Measured in a specific time period (e.g., users/month).
• Impact: How much value or benefit will this initiative deliver to each user?
Use a qualitative scale such as: 3 (massive), 2 (high), 1 (medium), 0.5 (low), or 0.25 (minimal).
• Confidence: How confident are you in the estimates for Reach and Impact?
Measured as a percentage (e.g., 80%, 90%, etc.). Use decimals in the formula (e.g., 80% = 0.8).
• Effort: How much time and resources will this project require?
Measured in “person-months” (the amount of work one person can do in a month).
Example of Using the RICE Framework
Let’s say you’re deciding between two features to develop for your app:
1. Feature A: A referral program to encourage user growth.
2. Feature B: An in-app notification system to boost engagement.
You will score both using the RICE framework.
Scoring Feature A (Referral Program)
• Reach: 1,000 users in 3 months.
• Impact: 2 (high).
• Confidence: 70% (0.7).
• Effort: 2 person-months.
RICE Score = (1,000 x 2 x 0.7) / {2} = 700
Scoring Feature B (In-App Notifications)
• Reach: 500 users in 3 months.
• Impact: 1.5 (medium-high).
• Confidence: 90% (0.9).
• Effort: 1.5 person-months.
RICE Score = (500 x 1.5 x 0.9) / {1.5} = 450
Comparing Results
• Feature A (Referral Program): RICE Score = 700
• Feature B (In-App Notifications): RICE Score = 450
Based on the RICE framework, Feature A (Referral Program) has a higher score, meaning it is expected to deliver more value relative to the effort required. Therefore, you should prioritize working on the referral program first.
Final Thoughts: Focus on Traction Market Fit
To scale globally, you need to achieve Traction Market Fit—the point where your product finds continuous and sustainable growth. Keep iterating based on real-time data, user feedback, and performance metrics to ensure you stay aligned with customer needs.
By starting small, achieving Product-Market Fit, and retaining users through value and engagement, you can build a profitable global subscription business. With consistent focus on customer experience, smart pricing strategies, and optimized growth channels, your business can thrive and scale to new markets.
Sources / Study Resources:
Sprint Plan: Building a Profitable Global Subscription Model
Sprint 1: Market Research and Identifying the Gap (2 weeks)
Goal: Conduct research to find a market gap and validate the business idea.
• Tasks:
• Identify potential customer pain points through customer interviews.
• Apply The MOM Test to get unbiased feedback from target customers.
• Perform competitor analysis to find areas where existing solutions fall short.
• Validate the idea with early surveys and market trends data.
• Deliverable: A market gap analysis report and a refined problem statement.
Sprint 2: Product-Market Fit (PMF) and MVP Definition (2 weeks)
Goal: Define the product’s MVP and evaluate how well it fits the market.
• Tasks:
• Use tools like the PMF survey to gather user insights.
• Define the core features for the MVP that solve essential pain points.
• Use the RICE framework to prioritize MVP features.
• Plan the initial feature rollout based on user demand and ease of development.
• Deliverable: A list of prioritized MVP features and a timeline for development.
Sprint 3: Building and Testing the MVP (4-6 weeks)
Goal: Develop and launch a working MVP to collect early user feedback.
• Tasks:
• Set up the technical environment using cost-effective development tools.
• Build core functionality (authentication, onboarding, payment system).
• Test the MVP with early adopters and gather feedback.
• Perform benchmark tests to measure product performance.
• Deliverable: A fully functional MVP ready for limited release.
Sprint 4: Growth through ASO and User Acquisition (3 weeks)
Goal: Optimize the app for visibility and launch user acquisition campaigns.
• Tasks:
• Apply ASO strategies: Optimize the title, subtitle, and metadata.
• Create compelling descriptions and screenshots for app stores.
• Run A/B tests on icons and store listings to optimize conversion.
• Launch social media campaigns and collect traffic analytics.
• Deliverable: Optimized app store listings and initial traffic reports.
Sprint 5: Building Retention through Engagement Strategies (3 weeks)
Goal: Establish user retention mechanisms and create an engaging user experience.
• Tasks:
• Identify the “Aha Moment” for users and streamline onboarding toward it.
• Implement feature-based retention tools like reminders or gamification.
• Design communication-based retention strategies (emails, push notifications).
• Track user engagement metrics (DAU/MAU) to identify drop-off points.
• Deliverable: A retention strategy report and improved onboarding process.
Sprint 6: Monetization Strategy and Pricing Model (2 weeks)
Goal: Finalize and implement a pricing model that aligns with user expectations.
• Tasks:
• Use pricing surveys like this one to understand user willingness to pay.
• Define subscription tiers with clear value propositions.
• Implement a subscription system and monitor payment analytics.
• Optimize free-to-paid conversion strategies.
• Deliverable: A monetization model with active subscriptions.
Sprint 7: Referral Programs and Viral Growth (3 weeks)
Goal: Catalyze user growth through referrals and content marketing.
• Tasks:
• Design referral programs with rewards or discounts.
• Create content marketing campaigns for YouTube and social media.
• Track referral metrics (virality coefficient) and optimize campaigns.
• Set up email newsletters to keep users engaged and promote the product.
• Deliverable: An active referral program and content marketing campaigns in place.
Sprint 8: Global Expansion and Localization (4 weeks)
Goal: Expand the product to global markets with appropriate localization.
• Tasks:
• Adapt the app description and content for multiple languages.
• Test localized pricing strategies based on regional surveys.
• Implement App Store Optimization (ASO) strategies for each target region.
• Monitor app performance and feedback in international markets.
• Deliverable: A localized version of the app available in target markets.
Sprint 9: Analytics and Continuous Improvement (Ongoing)
Goal: Use analytics to track performance and continuously improve the product.
• Tasks:
• Set up performance dashboards to track AARRR metrics (Acquisition, Activation, Retention, Revenue, Referral).
• Use cohort analysis to identify user behavior trends.
• Optimize based on data-driven decisions and user feedback.
• Continuously release updates and improvements to address pain points.
• Deliverable: Monthly reports on key metrics and continuous product enhancements.
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