Effective value creation, delivery and capture for consumer subscription apps with Phil Carter

Consumer subscription apps in 2025

Consumer subscription apps face massive challenges in today’s climate: 

• Finding users: Turning downloads into active subscribers is a steep climb, with only 6% of installs converting into paid subscriptions for the top 25% of apps.
• Keeping users: Subscriber churn remains a persistent issue, with half of annual subscribers leaving within a year in that top 25%.
• Monetizing users: Achieving the right balance between pricing, acquisition costs, and lifetime value requires continuous iteration.

95th percentile apps outperform the rest by a significant margin, with metrics that provide a strong foundation for growth.

So what are they doing differently?

In short, the best consumer subscription apps build a sustainable and compounding engine for user, subscriber and revenue growth through two components. The first is having a unique and enduring core value promise, and the second is generating a compounding Subscription Value Loop in 3 steps.

1. Value creation: Developing a product that delivers long-term, meaningful benefits.
2. Value delivery: Acquiring users efficiently and helping them adopt the product quickly.
3. Value capture: Converting users into paying subscribers and maximizing LTV.

This cyclical framework creates a compounding growth engine where each stage reinforces the others.

1. Value creation: Designing products that truly resonate

Value creation starts with crafting an experience that users will return to—not out of habit, but because it provides enduring, tangible benefits.

What makes value creation effective?

• A clear core benefit: What problem are you solving, or what aspiration are you enabling?
• Evolving relevance: Iterative updates that align with your users’ changing needs.

Case studies in value creation

• Duolingo leverages gamification to drive daily engagement, fostering both learning and a sense of achievement.
• Strava goes beyond functionality, building a social ecosystem where users challenge and inspire each other.

Actionable tactics

• Identify early moments of success, such as logging a first workout or completing a lesson, that signal future engagement.
• Use in-app prompts to guide users toward these milestones, reinforcing the value they’re gaining.

In the video below, Phil Carter takes a closer look at Duolingo’s value creation:

2. Value delivery: Streamlining the path to engagement

It’s not enough to attract users. You need to ensure they immediately see your product’s value. That’s the essence of effective value delivery.

Barriers to successful value delivery

• Cost Pressure: Acquisition expenses can outpace growth if campaigns aren’t highly efficient.
• Unclear Onboarding: Users who can’t grasp your product quickly often disengage entirely.

Brands that excel

• Spotify reduces cognitive load during onboarding by curating playlists from the outset, creating a personalized experience from the first interaction.
• Strava stands out by creating an engaging onboarding experience tailored to individual goals. It allows users to input their fitness objectives and instantly provides personalized training plans and challenges, helping them see immediate value. 

What you can do

• Optimize onboarding workflows to reduce drop-off rates—use A/B testing to find the approaches that resonate most.
• Introduce simple, frictionless referral programs that turn satisfied users into ambassadors. 

3. Value capture: Converting interest into revenue

Once users see value in your product, the next step is encouraging them to invest—both financially and emotionally.

Common pitfalls

• Ill-suited pricing models: Pricing too high or low can alienate users or undervalue your offering.
• Churn, especially involuntary: Missed payments or unclear subscription terms drive unnecessary losses.

Real-world applications

• Tinder successfully monetized its free user base by introducing premium subscription tiers like Tinder Plus and Tinder Gold, offering features such as unlimited swipes, profile boosts, and the ability to see who liked you. These upgrades created a compelling value proposition, tailored to user needs and behaviors. 
• Calm upsells annual plans by highlighting savings and long-term benefits, which also improve cash flow predictability.

Focused tactics

1. Use tools like Conjoint Analysis to fine-tune pricing tiers based on what customers value most.
2. Minimize churn by introducing pre-dunning reminders and offering flexible options, such as pauses instead of cancellations.

Uncover your metrics with the Subscription Value Loop Calculator 

You can use the Subscription Value Loop Calculator to quantify your companyʼs performance in five steps.

Head to Phil’s Substack for detailed step-by-step instructions on how to use this tool for your company!

How the Subscription Value Loop fuels growth

The Subscription Value Loop doesn’t just connect three stages—it creates a feedback loop where success in one area amplifies progress in the others. For example:

• Product improvements (value creation) lead to better retention.
• Better retention supports reinvestment in user acquisition (value delivery).
• Improved revenue streams (value capture) allow for even greater product innovation.

Proven tactics to accelerate growth further 

Define activation metrics:

• Choose metrics predictive of retention, like “logging the first workout” or “completing the first lesson.”
• Optimize onboarding to prioritize these actions.

Boost virality:

• Encourage users to share through referral programs or social incentives.
• Use WoMCo to measure the effectiveness of your virality efforts.

Optimize pricing and packaging :

• Use Van Westendorp Analysis for broad pricing strategy.
• Employ Conjoint Analysis to fine-tune premium tiers or add-ons.

Reduce churn:

• Pre-dunning messages remind users to update payment details.
• Off-boarding flows offer alternatives to cancellation, such as discounts or pauses.

Value creation, delivery and capture for consumer apps with Phil Carter

The Subscription Value Loop aligns every part of your consumer subscription business toward sustainable results. 

By focusing on delivering real value, engaging users thoughtfully, and maximizing their investment, you’re building more than just a subscription service—you’re creating a product people want to keep coming back to.