From Device Purchases to a Recurring Revenue Engine

The 81% LTV opportunity: How connected devices are leading the digital subscription migration to eCommerce platforms

The subscription economy has reached a tipping point for digital products. While some companies still use legacy billing systems, other leaders across eLearning, content, and connected devices are migrating to eCommerce platforms and seeing transformational results.

Connected device companies are leading this migration. 46% of them have already moved to eCommerce platforms, leading a broader, accelerating shift that now encompasses 17% of all digital product subscriptions. While this connected device-focused report is the first in our series, their playbook applies to every digital subscription business.

For connected device companies, hardware isn’t the core product anymore. It’s the gateway to 81% higher customer lifetime value through subscription relationships. Our analysis of 500 consumers and 650 digital subscription businesses (including over 100 connected device companies) reveals major opportunities to drive profitable growth.

This white paper will focus specifically on two transformational opportunities for connected device companies:

1. Poor subscriber experiences hurt recurring revenue: 57% of connected device companies don’t offer subscription sign-up at the point of purchase, missing a key opportunity to gain subscribers that are 2-5X more valuable than hardware-only customers. Meanwhile, siloed systems and disjointed experiences drive churn and suppress LTV.
2. High Total Cost of Ownership slows growth and innovation: homegrown systems and legacy platforms slow innovation and drive up Total Cost of Ownership (TCO) by an average of 31%, amounting to $48.8M in wasted spend over five years for a $500M business.

With hardware margins remaining razor-thin, connected device leaders have transformed this challenge into an opportunity: they treat hardware as the gateway to high-margin subscription relationships. Differentiation is not being found in marginal hardware enhancements, but in innovative and value-packed software products.

Leaders are reimagining the entire customer journey, from acquisition through retention, with recurring revenue at the core. To maximize the impact of this strategy, connected device leaders are moving away from homegrown systems and billing apps and adopting eCommerce platforms to access the world’s best checkout, new growth levers, and increased flexibility to deliver a superior customer experience. These are competitive advantages applicable not only to connected device businesses, but all digital subscription companies.

This technical advantage is the catalyst for reshaping the entire digital subscriptions marketplace. Already, 46%of connected device companies have made the shift to eCommerce platforms, leading the broader accelerating trend that now includes 17% of all digital goods subscriptions.

The question isn’t whether to make this transition. It’s how quickly you can execute it.

Before diving into how to capture this opportunity, let’s look at the upside of improving subscription attachment rates. Consider this illustrative example business, SecureCam, with the following unit economic makeup:

Given their customer mix of 80% hardware-only and 20% subscribers, the brand is still profitable overall but with thin margins, only seeing $41 of post-marketing LTV per customer on average. They are leaving significant opportunity on the table and extending payback periods.

The Solution: Deeply integrate subscriptions into eCommerce

Deeply integrating subscriptions into their eCommerce platform enables SecureCam with essential new functionality:

• Integrated Subscriptions: Embed subscription enrollment seamlessly into product discovery and checkout
across channels to increase enrollment with more places to opt in.
• Bundled Incentives: Offer attractive hardware-plus-subscription bundles to incentivize combined purchases.
• Frictionless Experiences: 1-click experiences, single passwordless login for all ‘my account’ experiences gives customers easy access to order history, plan upgrades, content and premium features, and more.

Even in a Good, Better, Best model the impact is impressive across the board. At 60% subscription attachment rate, SecureCam raises LTV to $256 on average and generates $156 in profit per customer; translating to an 81% increase in LTV and 276% improvement in LTV-to-CAC efficiency. Best-in-class businesses may be able to improve to 80% attachment rate or more thanks to powerful functionality unlocked on eCommerce platforms.

What’s stopping businesses from achieving outcomes like the example described above? Two core challenges, or as we see them, opportunities, can unlock the next era of profitable growth in the industry.

Opportunity One – Subscription performance breaks down across the customer lifecycle

Acquisition: Disjointed customer experiences suppress subscription attachment rate

Most connected device brands fail to offer subscription sign-up on the same product detail page (PDP) as the hardware due to legacy tech constraints. This is a missed opportunity, given that subscribers deliver 2–5x the LTV of hardware-only customers. In fact, only 29% are offering a way to sign up from the PDP of hardware. And many of these are only free trials, not paid subscriptions. Furthermore, silos created by billing solutions only allow brands to offer free trials that can’t auto-convert to a paid subscription without going through another checkout process.

Too often, brands lose subscribers before they even start because of friction-filled paths like:

• Forcing users to subscribe later via the app
• Redirecting them to a separate subscription PDP
• Requiring a second checkout to convert free trials. Even if you choose to offer a free trial, be aware, research shows opt-out free trials have 2-3X better conversion than opt-in free trials, yet legacy tech stacks can’t support this functionality

Many brands also see low checkout rates when they are not on a best-in-class eCommerce platform. Whether building custom or on Content Management Systems (CMS), putting the same level of resources and investment into research and development as a leading eCommerce platform like Shopify is essentially impossible. The result? Shopify’s overall purchase conversion rate outpaces the competition by up to 36% and by an average of 15%.

Retention: Disjointed systems drive churn and low LTV

Retention challenges also stem directly from the friction created by disconnected systems. When customers must navigate multiple accounts and interfaces to manage their subscriptions, every interaction becomes a potential breaking point in the relationship.

Common pitfalls include:

• Separate logins for product and subscription management
• Inability to cross-sell new products due to siloed customer data
• Customer Support Agents required for account management
• Delayed activation processes that frustrate users

Disconnected systems create friction-filled subscriptions

When eCommerce and subscriptions aren’t integrated, the onus falls on customers to cover the gaps.

Solution – Optimize subscriber experience across the customer lifecycle

Make the subscriber experience your top priority and focus on optimizing attachment rate and retention.
Organize your offering, tech stack, and resources to optimize this strategy.

Maximize attachment rates to turn hardware buyers into subscribers

Improving performance starts with frictionless customer experiences and deeply integrating subscriptions into your eCommerce platform to unlock several powerful levers:

• Bundled incentives that make subscribing at purchase compelling
• Auto-converting free trials that eliminate drop-off between trial and paid
• Integrated subscription manager with one login for all customer needs
• Upsells/Cross-sells based on unified customer data

When subscription economics work, the entire business model transforms. Leading connected device companies even discount hardware —or give it away for free—because they understand the subscriber lifetime value equation. HP’s Instant Ink, one of the pioneers of this model, gives
 away printers to drive subscription adoption. The math is simple: when subscribers are worth 5X more than hardware-only customers, you can afford to rethink everything. Despite this, only 6% of connected device subscription companies are currently utilizing this powerful and innovative strategy.

But executing these strategies requires deeply integrated commerce and subscription technology. Your subscription platform either unleashes or limits your ability to execute strategy, deliver seamless experiences, and ultimately grow profitably.

Maximize conversion rates with the world’s best checkout

Conversion rates are another important piece of the puzzle. If you’re not already on an eCommerce platform, this is the best way to improve quickly. On top of leading the market with the highest-converting checkout experience, ShopPay offers one-tap checkout that is 4x faster than standard flows.

Additionally, Ordergroove found that 91% of brands aren’t testing subscription incentives—even though it’s one of the most powerful levers available to increase recurring revenue, with the power to drive gains of 9% on average. Legacy billing and SMB platforms offer limited support for subscription-specific promotion testing, leaving a significant opportunity untapped.

Improve Retention: Create frictionless subscriber experiences

The most impactful way to remove friction for subscribers is to offer an integrated subscription manager that unifies the customer experience across all touchpoint—eliminating the frustration of juggling multiple logins and disconnected interfaces. Customers can seamlessly move between purchasing products, managing subscriptions, and accessing support without the constant friction of re-authentication and context switching.

This unlocks new growth levers and avenues to increase AOV and LTV for the business as well. Simple, yet powerful use cases, like cross selling additional hardware from the subscription manager are only possible when eCommerce and subscriptions are deeply integrated. Furthermore, marketing campaigns are more effective at increasing AOV and LTV when 1-Click experiences make accepting offers easy.

Give customers one login to manage their relationship with your brand.

Opportunity Two – High Total Cost of Ownership slows growth and innovation

Even companies that recognize the subscription opportunity often stumble on execution. The culprit: fragmented infrastructure that multiplies costs while crippling performance.

According to research from a leading independent consulting company, patchwork solutions can drive TCO up by 31% compared to best-in-class eCommerce ecosystems like Shopify. For a $500M business, that’s nearly $49M in wasted spend over five years, resources that could be fueling growth instead of maintaining infrastructure.

This fragmentation manifests in three scenarios:

1. CMS with bolted-on billing: Content Management Systems, originally designed for free content hosting, become unwieldy when retrofitted with billing apps, creating disconnected systems, clunky experiences, low conversion, and slow innovation. These businesses stand the most to gain by benefitting from both eCommerce and modern subscription technology.
2. eCommerce with hijacked subscriptions: many brands that have already transitioned to eCommerce platforms still maintain hijacked subscription offerings, unnecessarily complicating their tech stack by running multiple subscription systems across DTC, web app, and native app channels.
3. Homegrown systems: some businesses mistakenly believe the only way around all the pitfalls of billing platforms and other legacy tech is to build it all themselves. But custom solutions become expensive anchors, either innovation stalls as resources go to maintenance, or costs balloon trying to keep pace with evolving consumer expectations.

Optimize one integrated subscription solution for all channels

Brands need a single pane of glass for subscriptions.

Regardless of the cause, the operational impact of disconnected systems is severe:

• One customer can have up to four different IDs across siloed systems
• Finance teams waste days manually reconciling duplicate records
• Marketing teams can’t execute unified campaigns
• Basic reporting requires extensive data manipulation

Solution – Adopt a tech stack that reduces Total Cost of Ownership and accelerates growth

The technology decisions you make today determine your ability to compete tomorrow. For companies currently on legacy billing systems, the path forward involves consolidation. Instead of managing multiple systems, you get:

• One subscription engine powering all channels (DTC, web app, native app)
• Unified customer data enabling a single source of truth for Finance, Marketing, and Customer teams
• Pre-built ecosystem of thousands of integrations ready to deploy

For companies on custom or homegrown systems, the imperative is even clearer: get off custom as soon as possible. Modern platforms provide ecosystem value through best in class integrations and apps that would take years to develop internally.

A lower total cost of ownership also creates a compounding advantage. Resources previously consumed by maintenance can be redirected toward growth initiatives.

Ordergroove research shows selecting a best-in-class subscription platform for foundational architecture and allows teams to focus on building differentiated experiences on top can drive an additional 10% in revenue each year. This is driven by eliminating opportunity costs, more efficient resource allocation, and prioritizing growth over infrastructure.

Ordergroove research shows in 2024, 68% of digital subscriptions came through app stores, where businesses sacrifice 15–30% of revenue and control.

But now, times are changing. The Epic Games vs. Apple ruling is building momentum for app-based businesses to direct users to their websites so they can bypass fees, regain control over their margins, customer data, and the experience offered to subscribers.

Consider this: For a $20/month subscription, shifting subscriber acquisition from the App Store to your website can drive up to 9.4% more revenue per subscriber. No price hikes or extra marketing budget is required.

If you’re not already on eCommerce, this becomes even more important as you now need to master conversion rates outside of app store environments.

Drive higher LTV, faster conversion, and seamless experiences across every touchpoint.

The world’s best checkout — and ecosystem:

Shopify’s conversion rates outpace competitors by up to 36%, with Shop Pay delivering 4x faster checkout and 91% higher mobile conversion. Couple this with Ordergroove, the world’s leading subscription platform, and you’ve built a recurring revenue engine.

Profitable growth levers:

Sell subscriptions from anywhere and boost attachment rates to drive up to 81% higher LTV. Offer opt-out free trials to boost conversion rate 2-3X. Implement cancel flows that save 35% of cancellations, while involuntary churn prevention collects up to 97% of scheduled revenue. The tools at your disposal go on and on with a profitable growth engine.

Unmatched flexibility:

Your growth strategy is only as strong as your ability to execute it. Ordergroove and Shopify optimize resources and maximize returns, keeping you ahead of shifting customer needs, amplifying your development team’s impact, and helping you outsmart competitors instead of outspending them.

Designed for growth, built for every team

• Product & Marketing: Accelerate subscriber growth and increase attachment rates without technical bottlenecks
• Finance & Operations: Gain complete visibility into subscriber economics and make faster, data-driven decisions
• Engineering: Ship differentiated experiences that drive competitive advantage instead of maintaining infrastructure

Ready to transform your connected device business? Ordergroove and Shopify can help you turn hardware buyers into high-value subscribers and scale that growth efficiently. Schedule a Demo.