Recurring payments are good for business because it helps increase revenue. The number of services available through online subscriptions is exploding and just now gaining momentum. Companies want to turn a one-time purchase into a regular recurring subscription or membership. They want to win a subscriber or member and sit back, reaping the benefits. However, too often, subscription models don’t generate the expected revenue stream.
Here are a few things you can do to help increase revenue with recurring payments.
1. Provide Flexible Subscription Options
Whether you have a core or hybrid subscription business model, being flexible provides opportunities to increase revenue. Offering different types of subscriptions, such as freemium, box, pay-per-access, mixed term, or seasonal, provides various options for customers. Allowing customers to select their subscription frequency makes them feel in control and more satisfied with their commitment.
Harry’s online service delivers blades and shaving cream to subscribers every two, three, or five months. But for, customers who keep track of how rapidly they use up those products, they can set their own quantities and delivery schedule.
These are flexible options that accommodate the consumer.
Subscriptions that come with a reward are another incentive you can offer as an option too. You can reward those who commit to longer or more frequent term subscriptions with lower or discounted costs, exclusive promotional discounts, and loyalty incentives.
Accepting a variety of payment gateways is another option to offer. Customers’ payment preferences are changing, and they seek a spectrum of available payment types. They are less inclined to put their banking information online, which opens sensitive information up to hackers.
With over 90 payment method options, you need to accept the popular methods in your target regions. Especially when conducting business internationally. To thrive globally, you should receive all regionally popular payment methods. You should also be able to do transactions in local currencies and languages too.
2. Use Strategic Billing Practices to Directly Impact Revenue and Subscriber Growth.
You can add revenue using hybrid business models frees your monetization strategy from limits set by necessary billing. Mixing and matching business models allows you to blend traditional subscriptions with options like metered usage, microtransactions, recurring donations, and limited-time upgrades. This all depends on the products and services you provide.
Optimizing pricing can make a big difference in your revenue. You can make small price increases annually and be satisfied with an equally small jump in revenue.
Make sure your payment platform offers benchmarking data that targets similar businesses. This data can be used to get updated pricing analysis making sure you are pricing your goods or services right. Essential billing solutions don’t offer analysis-based insights you would get from benchmarking data.
3. Customer Retention
The smallest increase in customer retention can result in significant subscription revenue increases due to the inherent power of the ACLV (Average Customer Life Value). Resolving subscriber billing issues can increase revenue by retaining customers by as much as 5%. Analysis and optimization can reduce passive churn by as much as 25%, increasing revenue and retention.
On a grand scale, involuntary churn can cause a business to fall short of estimated growth and profits. When subscriptions are canceled without action from the customer, it severely impacts revenue projections.
28% of subscriptions are canceled after customers receive new cards and fail to update their information
Consider what happened to Netflix in 2015 as the U.S. switched to EMV cards. According to Bloomberg, the company claimed its stunted growth in the 3rd quarter of 2015 was a result of massive involuntary churn. As subscribers received new EMV cards, their old ones were automatically deactivated. When customers didn’t update their information on Netflix, their payments couldn’t go through, and subscriptions were canceled. The transition also caused an issue with Netflix’s payment processor.
The resulting involuntary churn left Netflix with 880,000 new U.S. subscribers, which were far below the $1.3 million Wall Street expected. As a result, Netflix shares fell nearly 7%. This situation can happen to subscription billing businesses in any industry.
Retention via Email
It’s the world’s most popular service. A joint research project from Emarsys and WBR Digital found that email marketing drives customer retention. Which is why it should be the primary choice for companies using subscription business models.
(Google alone has 1 billion active users monthly)
Email marketing’s a valuable tool for enhancing the experience of existing customers. This, coupled with an active online marketing strategy, is another excellent way to reduce subscriber churn and maintain revenue streams.
Email is also used to engage current subscribers for their opinions. This information gives insight into what they want and how to improve the customer experience to reduce future churn. Communicating at the right time can significantly influence subscribers’ decisions to stay keep them engaged with your products/services.
Flexibility, communication, incentives, creativity, and easy-to-buy products and services. These are all essential factors to increase revenue, retain subscribers, and stay competitive in the subscription business world.
Make sure your online payment solution platform provider offers the tools for your business to be successful and profitable.
PayWhirl does so come to check them out and see what they can do for you.