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, flexibility provides opportunities to increase revenue. Offering different types of subscriptions such as: freemium, box, pay per access, mixed term, or seasonal, provides a variety of options customers can choose from. By allowing customer’s to choose their subscription frequency they feel in control and more satisfied with their commitment.
Harry’s is an online service that 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 is another incentive you can offer as an option too. You can reward those who choose to commit to longer or more frequent term subscriptions with things like: lower or discounted costs, exclusive promotional discounts, and loyalty incentives.
Accepting a variety of payment gateways for subscriptions is another attractive 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 make sure you’re accepting the methods popular in your target regions. Especially when conducting business internationally. To thrive internationally you should accept all regionally popular payment methods. You should also be able to conduct 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 basic billing. Being able to mix and match business models allows you to blend traditional subscriptions with options like: metered usage, micro transactions, recurring donations, and limited time upgrades. This all depends on the products and services you provides.
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 bench marking 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. Basic billing solutions don’t offer analysis based insights you would get from bench marking data.
3. Customer Retention
The smallest increase in customer retention can result in large subscription revenue increases due to the inherent power of the ACLV (Average Customer Life Value). Resolving subscriber billing issues can increase revenue via retaining customers by as much as 5%. Analysis and optimization can reduce passive churn by as much as 25% leading to increased in 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 cancelled after customers receive new cards and fail to update their information
Consider what happened to Netflix in 2015 as the U.S. switch 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 payment couldn’t go through and subscriptions were canceled. The transition also caused issue with Netflix’s payment processor.
The resulting involuntary churn left Netflix with 880,000 new U.S. subscribers which was 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
A joint research project from Emarsys and WBR Digital found that email marketing is the driving force of customer retention. It’s the world’s most popular service. Which is why it should be the primary choice for companies using a 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 effective online marketing strategy is another great 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 greatly 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 important 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 check them out and see what they can do for you.