In the world of subscription-based business models, some businesses thrive while others struggle to get past the pilot phase. What separates successful subscription businesses from unsuccessful ones?

Scott Galvao from circuly and Florian Andre from P2S break down what drives success in subscription-based business models and share real-life examples of companies that are getting it right.

About the speaker: Florian Andre

Florian & P2S

Florian is the founder of P2S, a Belgian consulting firm that helps manufacturers shift from traditional sales to subscription models. With over seven years of experience, Florian and his team at P2S have guided more than 35+ companies—including Philips, Hilti, and Schneider Electric—through the transition to product-as-a-service models.

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Florian & Loopz Bikes

Florian is not only running a consultancy for product-as-a-Service business models but is also running a bike subscription business called Loopz Bikes, a B2C bike subscription service. Loopz allows parents to swap bikes as their kids grow, eliminating the hassle of buying and reselling. Powered by the circuly solution, Loopz showcases how a well-structured subscription model can solve real problems efficiently.

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About the speaker: Scott Galvao

Scott is the CEO of circuly, a subscription management platform for physical products. With a background in scaling e-commerce brands on Amazon and eBay, he joined circuly in 2023 to transition circuly from a startup to a scaleup.

Since then, circuly has enabled over 100+ businesses like Buke Club Germany, Riese & Müller, Egret etc. to automate and scale their subscription operations with the circuly solution. Under Scott's leadership, circuly has become a go-to platform for businesses looking to shift to recurring revenue models and positioned circuly as the go-to subscription management platform for physical product subscriptions. 

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In this article: 

• Subscriptions speed up sales cycle: Example from a medical device manufacturer. 
• Subscriptions don't cannibalise sales: Example from an e-bike manufacturer. 
• How to include established dealer and retailer network when moving to subscription-based business model: Example from an e-bike manufacturer. 
• The focus point of the subscription is not the product, but the service: Example of Swapfiets.
• The right infrastructure from the start speeds up ROI: Example of Loopz Bikes
• Subscriptions offer a competitive advantage in a highly saturated market: Example of Philips. 
• The focus in a subscription model is outcomes not the product: Example of Care & Energy Partners
• Subscriptions turn returned products into opportunity: Example of a baby goods tech company. 
• Product gets the job done but bundling maintenance & repair in a subscription model improve customer satisfaction: Example of Hilti’s tooling-as-a-service. 
• Keeping support costs lean should be a priority: Example of myTIER scooter subscription. 

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Subscriptions speed up sales cycle

Most people know the standard perks of subscription-based business models: predictable revenue, better product lifecycle management, and stronger customer retention. But Florian shared a surprising advantage—how subscriptions can supercharge the sales cycle.

The Challenge: Long Sales Cycles

• A medical device manufacturer in Switzerland was selling to big names like GSK, Pfizer, and Roche.
• High-ticket equipment meant dealing with complex approval processes involving multiple decision-makers.
• Even when the budget wasn’t an issue, the sales cycle dragged on due to lengthy approvals.

The Solution: Subscriptions as OpEx, Not CapEx

• By switching to a product-as-a-service model, the manufacturer turned a capital expenditure (CapEx) into an operating expense (OpEx).
• This change made it easier for customers to approve purchases quickly.

The Result: Faster Sales Cycles and Stronger Relationships

• The new model sped up the sales process significantly.
• It also paved the way for long-term customer relationships by reducing friction in the buying process.

Key Takeaway: Subscription models don’t just secure predictable revenue—they can also slash sales cycles by making it easier for customers to buy.

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Subscriptions don’t cannabalise sales

Most businesses fear that offering subscriptions might cannibalise their existing sales. An e-bike manufacturer was particularly concerned that launching a subscription model would eat into their traditional sales. Yet, they clearly saw the growing demand for subscriptions and knew they had to adapt. The challenge was to balance cannibalisation while capturing new customers.

The Challenge: Fear of Cannibalisation

• The manufacturer worried that subscriptions would erode traditional sales by attracting existing customers.
• The risk was that customers who would have bought outright would switch to subscriptions instead.

The Solution: Launching and Measuring

• Despite the risks, they launched a subscription model and closely tracked its impact on traditional sales.
• They found that only 2% of traditional sales were cannibalised by subscriptions.

The Result: Minimal Cannibalisation, Maximum Gain

• The profits from subscriptions far outweighed the minor impact on traditional sales.
• Subscriptions brought in a new customer segment that wouldn’t have purchased due to high upfront costs.

Key Takeaway: The fear of cannibalisation shouldn’t hold you back—data showed only 2% cannibalisation, proving that the potential gains are worth the risk.

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How to include establish dealer and retailer network when moving to subscription-based business model

Most manufacturers worry that launching subscriptions might hurt their retailer and dealer relationships. This e-bike manufacturer tackled that problem head-on by involving dealers in the subscription model rather than bypassing them.

The Challenge: Dealer and Retailer Impact

• Dealers feared losing sales if customers could subscribe directly online.
• The manufacturer needed a way to keep dealers engaged while rolling out subscriptions.

The Solution: Partnering with Dealers

• Bikes could be subscribed online but had to be picked up at local dealers.
• Dealers became the first point of contact for maintenance and repairs, ensuring they benefited from the new model.

The Result: Stronger Dealer Relationships and Customer Loyalty

• Dealers saw increased foot traffic and service revenue, making them more committed to the brand.
• Customers built stronger relationships not just with the brand but also with local dealers, boosting loyalty.

Key Takeaway: Involving dealers in your subscription model isn’t just a way to ease the transition—it can strengthen your entire sales network and build deeper customer loyalty.

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The focus point of the subscription is not the product, but the service

Swapfiets is perhaps the most well-known bike subscription brand, originating from the Netherlands. Their success comes down to solving a specific pain point: people who want to ride a bike but hate the hassle of maintenance and repairs.

The Challenge: Maintenance Hassles

• Traditional bike ownership comes with maintenance, repairs, and the risk of theft.
• Many urban cyclists hesitated to invest in a bike because of these inconveniences.

The Solution: A Bike That Always Works

• Swapfiets offered a simple deal: pay a fixed monthly fee and get a bike that’s always working—maintenance and repairs included.
• If a bike broke down, they’d swap it within 48 hours for free.

The Result: Rapid Growth and High Retention

• Swapfiets quickly expanded across Europe with over 250,000 subscribers.
• Their high retention rates showed that a hassle-free biking experience was exactly what customers wanted.

Key Takeaway: Solving a specific pain point—in this case, maintenance—turned Swapfiets into a subscription success story.

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The right infrastructure from the start speeds up ROI

Loopz, founded by Florian himself, is a bike subscription service designed for kids. What’s impressive about Loopz is how they nailed profitability right from the start by investing in the right tools and infrastructure.

The Challenge: Proving Profitability

• Many subscription businesses struggle with profitability due to high upfront costs and long payback periods.
• Loopz needed to prove that subscriptions could be more profitable than traditional sales.

The Solution: Starting with the Right Tools

• Instead of cutting corners, Loopz invested in dedicated subscription management software and a scalable infrastructure from day one.
• This setup allowed them to optimise subscription billing & invoicing, logistics, and customer management efficiently.

The Result: 2.5x Profit and Sustainable Growth

• After 30 months, Loopz achieved 2.5 times the profit compared to traditional sales, proving the strength of the subscription model.
• The streamlined operations made it easier to scale and manage the business sustainably.

Key Takeaway: Starting with the right tools and infrastructure can turn subscriptions into a profit powerhouse—as Loopz proved with a 2.5x profit increase.

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Subscriptions offer a competitive advantage in a highly saturated market

Philips faced increasing commoditisation pressure in the lighting industry, which threatened to erode margins. Their solution was to pivot from selling light bulbs to offering “Lighting-as-a-Service.” Instead of just delivering bulbs, Philips guaranteed illumination levels and managed everything from installation to maintenance.

The Challenge: A Saturated Market and Commoditisation

• By 2016, the market for light bulbs and LEDs had become highly commoditised, driving margins down.
• Philips needed a way to differentiate itself without competing purely on price.

The Solution: Lighting-as-a-Service

• Philips introduced Lighting-as-a-Service, allowing customers to subscribe to lighting instead of purchasing equipment outright.
• This model turned lighting into an operating expense (OpEx), making it more attractive for both private and public sector clients.
• By retaining ownership of the lighting systems, Philips could offer sustainability benefits like energy efficiency and lower waste.

The Result: New Markets and Long-Term Contracts

• The LaaS model enabled Philips to stand out in a saturated market with a service that solved real problems.
• It also secured long-term contracts with higher margins, reducing reliance on traditional sales.
• The shift to servitisation not only increased recurring revenue but also positioned Philips as a leader in sustainable lighting solutions.

Key Takeaway: Moving to servitisation isn’t just about escaping a saturated market—it’s a strategy for winning contracts and ensuring recurring revenue by aligning with sustainability goals.

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The focus in a subscription model is outcomes not the product

Most companies think of subscriptions as a way to spread out costs for customers, but Care in Singapore and Energy Partners in South Africa took a different approach. They used subscriptions to sell outcomes, not products—in this case, the exact temperature customers needed, rather than the cooling equipment itself.

The Challenge: Complex and Costly Equipment

• Customers didn’t want to deal with the upfront costs of buying cooling equipment, insulation, and consumables.
• Managing and maintaining this equipment was a hassle and an added cost.
• What customers really cared about was getting the right temperature—whether it was -5°C or 21°C—not the equipment itself.

The Solution: Temperature-as-a-Service

• Care and Energy Partners shifted to a subscription model where customers can’t buy the equipment—they can only subscribe to the temperature they need.
• The service includes all equipment, maintenance, and energy management to guarantee the desired temperature.
• This model made it easier and cheaper for customers to get the exact outcome they wanted without the headache of ownership.

The Result: Strong Adoption and Sustainability Wins

• This approach resulted in over €80 million under management as a subscription, proving its effectiveness.
• Care and Energy Partners also won awards for sustainability and innovation by optimising energy use and reducing waste​.

Key Takeaway: Sell the outcome, not the product. By shifting to Temperature-as-a-Service, Care and Energy Partners proved that customers care more about results than ownership.

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Subscriptions turn returned products into opportunity

Returned products are often a cost for companies—something to minimise or eliminate. But one baby goods company flipped the script by using subscriptions to turn returns into a revenue stream. Instead of seeing returned products as a liability, they saw them as an opportunity for subscriptions.

The Challenge: Piling Up Returns with Nowhere to Go

• The company had a corner of their warehouse filled with returned products they couldn’t resell as new.
• Nothing was wrong with these products; they were fully functional but couldn’t be sold as new due to open-box policies.
• This led to wasted inventory and rising storage costs.

The Solution: Subscriptions as an “Open Box” Model

• Instead of writing off these returns, the company introduced a subscription model for them.
• Products that couldn’t be sold as new were offered on a subscription basis as “open box” items.
• As long as the quality was intact, these products could be subscribed out repeatedly, turning a cost center into a profit center.

The Result: From Liability to Opportunity

• The subscription model turned a warehouse full of unsellable products into a steady stream of recurring revenue.
• The company not only cut storage costs but also maximised the lifetime value of each product.
• Customers benefited too, getting high-quality products at lower subscription rates.

Key Takeaway: Subscriptions can turn returns from a cost into a revenue opportunity by repurposing open-box items into valuable subscription products.

Product gets the job done but bundling maintenance & repair in a subscription model improve customer satisfaction

Most companies in construction sell tools outright, but Hilti took a different approach. They introduced a Tool-as-a-Service subscription model that includes maintenance, repairs, and replacements. This shift didn’t just create a new revenue stream—it simplified budgeting for their customers.

The Challenge: High Maintenance Costs

• Construction companies faced unpredictable maintenance costs and downtime.
• Buying tools outright was often a capital-intensive investment.

The Solution: Tool-as-a-Service

• Hilti introduced a subscription covering maintenance, repairs, and replacements.
• Customers paid a fixed fee, turning a capital expense (CapEx) into an operating expense (OpEx).

The Result: Recurring Revenue and Customer Loyalty

• Hilti secured long-term contracts with predictable revenue.
• Customers benefited from lower upfront costs and no maintenance hassles.

Key Takeaway: Turning products into services can transform high-maintenance tools into steady revenue streams.

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Keeping support costs lean should be a priority

​​Many subscription businesses underestimate how quickly support costs can add up. myTIER, a scooter subscription service, recognised this challenge early on and made keeping support costs lean a top priority.

The Challenge: High Support Costs

• Managing a growing fleet of scooters meant potentially needing a large support team to handle maintenance and customer inquiries.
• Without the right strategy, myTIER estimated they would need over 100 support staff to keep up.

The Solution: Self-Service and Automation

• myTIER invested in a self-service portal that allowed customers to resolve common issues themselves.
• They also streamlined support processes with automated troubleshooting guides and easy-to-access FAQs.
• This approach empowered customers to handle minor maintenance and repairs without needing to contact support.

The Result: Lower Costs and Higher Efficiency

• By reducing the need for a large support team, myTIER was able to keep operational costs low.
• Customers appreciated the quick and easy access to self-service options, improving satisfaction.
• The subscription model remained profitable and scalable without the burden of high support costs.

Key Takeaway: Keeping support costs lean isn’t just about saving money—it’s about making sure your subscription model scales sustainably. Empowering customers with self-service tools is a proven way to achieve this.

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What drives success in subscription-based business models

Perhaps the most important factors that influence the success of subscription-based business models are:

• Internal alignment & executive buy in.
• Product-market fit - products or services that make sense as subscriptions.
• Bullet-proof strategy - around planning, execution & pricing. 
• The right operational infrastructure - shop system, payment system etc. 
• The right subscription management infrastructure - recurring billing & invoicing, asset management and product return, customer journey management etc. 
• Buy-in from departments like sales, dealers, accounting etc. 

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1. Internal Alignment & Executive Buy-In

Why it matters:
A successful transition to a subscription-based model requires full commitment from leadership and alignment across all levels of the organisation. Without executive buy-in, securing the necessary resources, making strategic decisions, and driving cultural change becomes difficult. Leadership support also ensures that departments remain focused on long-term recurring revenue goals rather than short-term sales targets.

Key considerations:

• Ensure the leadership understands the long-term financial benefits of subscriptions.
• Align incentives and KPIs to support the subscription strategy.
• Foster a culture that embraces change and innovation.

2. Product-Market Fit - Products or Services That Make Sense as Subscriptions

Why it matters:
Not every product or service is suitable for a subscription model. The most successful subscription-based businesses focus on products that have high durability, require maintenance, or have a recurring need. Understanding the market demand and customer pain points is essential to validate that a subscription offer aligns with what customers truly value.

Key considerations:

• Focus on high-quality, durable products that can withstand multiple subscription cycles.
• Choose products that solve ongoing problems or fulfill a recurring need (e.g., bikes that need maintenance, tech that requires frequent upgrades).
• Test the waters with pilot programs and gather customer feedback early.

Does your product make sense as a subscription product? Ask yourself these key questions to discover if a subscription models works for your product.  

3. Bullet-Proof Strategy - Around Planning, Execution & Pricing

Why it matters:
A well-defined strategy outlines how to acquire, retain, and grow subscribers profitably. This includes a clear value proposition, flexible pricing plans, and a well-thought-out customer journey that reduces churn and maximises lifetime value.

Key considerations:

• Plan a phased approach to transitioning from one-time sales to subscriptions.
• Develop pricing models that reflect both the value delivered and the cost structure (e.g., usage-based, tiered, or flat-rate).
• Define clear KPIs to track success, such as Customer Acquisition Cost (CAC), Customer Lifetime Value (CLTV), and Monthly Recurring Revenue (MRR).

Experienced consultancies like P2S help companies confidently transition to subscription-based models.

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With experience from over 35 projects for companies like Hilti and Philips, P2S brings deep expertise in designing, launching, and scaling subscription offerings. Their strategic guidance helps businesses navigate the complexities of subscription models. 

4. The Right Operational Infrastructure - Shop System, Payment System, etc.

Why it matters:
Seamless operations are critical for managing subscriptions efficiently. This includes a robust e-commerce platform to handle recurring payments, secure customer data, and streamline the purchase process. Ensuring operational efficiency minimises errors and improves customer satisfaction.

Key considerations:

• Choose e-commerce platforms that integrate smoothly with subscription management software.
• Offer a variety of payment options to reduce friction at checkout.
• Ensure compliance with data privacy regulations like GDPR.

Learn more about the tools needed for operating a subscription based business model. 

5. The Right Subscription Management Infrastructure

Why it matters:
Managing subscriptions goes beyond billing. It involves handling recurring invoicing, asset management, product returns, and customer journey management efficiently. A dedicated subscription management system helps automate these tasks, allowing the business to scale without a proportional increase in manual workload.

Key considerations:

• Implement a subscription management platform that supports:
  
  • Recurring billing & invoicing: Automate payments, manage renewals, and handle failed payments gracefully.
  • Asset management: Track product usage, maintenance needs, and returns effectively.
  • Customer journey management: Provide self-service options for upgrades, downgrades, or cancellations to enhance customer experience.
• Leverage data analytics to predict churn and identify upsell opportunities.

Learn more about circuly’s subscription management solution for physical product subscriptions. 

6. Buy-In from Departments Like Sales, Dealers, Accounting, etc.

Why it matters:
For a subscription model to succeed, it needs cross-functional support. Sales teams must adapt to selling subscriptions instead of one-time products. Accounting needs to manage revenue recognition differently, focusing on recurring revenue streams. Dealers or partners must see value in promoting subscriptions to ensure they remain motivated.

Key considerations:

• Train sales teams on subscription-specific selling tactics and adjust commission structures to incentivize recurring revenue.
• Educate dealers and partners on the benefits of subscription models, both for them and the end customers.
• Ensure the finance team has tools to handle subscription-specific accounting practices, such as deferred revenue. 

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Conclusion

The success stories of companies like Philips, Swapfiets, Loopz, and others highlight one clear lesson: subscriptions are not just about offering a different payment model—they're about solving real problems for customers. Whether it’s simplifying maintenance, avoiding high upfront costs, or turning returns into revenue, the subscription model's potential lies in its ability to address specific pain points.

As the demand for subscription-based solutions continues to rise, having the right infrastructure and a clear focus on customer needs will be crucial.