Recurring payments are good for business because it increases revenue. The number of services available via online subscriptions is exploding and only just now gaining momentum. Companies want to turn one time purchases into regular recurring subscription or memberships. They want to win a subscriber or member and sit back reaping the benefits of an increase in revenue. 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/membership business model, flexibility provides opportunities to increase revenue. Offering different types of subscriptions such as: freemium, box, pay per access, mixed term, or seasonal, for example, provides a variety of options for the customer to choose from. Allowing customer’s to choose the frequency for their subscription also makes them feel in control and satisfied with their commitment.
For example: 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 that can be offered as an option. You can reward those who choose to commit to long or more frequent term subscriptions with lower or discounted costs, exclusive promotional discounts, and loyalty incentives.
Accepting a wide variety of payment gateways for subscription payments is another attractive option to offer. Customers payment preferences are changing and they want a spectrum of available payment types. They are becoming less inclined to put their banking information online opening that sensitive information up to hackers.With over 90 payment method options you need to make sure you are accepting the methods popular in your target regions. Especially if you are conducting business internationally. If you want to thrive internationally you need to accept all regionally popular payment methods and be able to conduct transactions in local currencies and languages as well.
2. Use Strategic Billing Practices to Directly Impact Revenue and Subscriber Growth.
You can add revenue with hybrid business models freeing your monetization strategy from limits set by basic billing. Being able to mix and match business models allow you to blend traditional subscriptions with options like: metered usage, micro transactions, recurring donations, and limited time upgrades. All of this depends on the products and services your company 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 to make 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 subscribers 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% and lead to an increase in revenue and retention.
On a grand scale, involuntary churn causes 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 their 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.
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 and should be the primary choice for companies using subscription and membership business models. (Google alone has 1 billion active users monthly) Email marketing’s a valuable tool for enhancing the experience of existing customers. With that and an effective online marketing strategy is a great way to reduce subscriber churn and maintain revenue streams.
Email can also be 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, and keep them engaged with your products/services.
Flexibility, communication, incentives, creativity, and easy to buy products and services. These are all important driving factors to increase revenue, retain subscribers, and stay competitive in the subscription business world.
So make sure your online payment solution platform provider offers the necessary tools to be successful and profitable.
PayWhirl does so come check them out and see what they can do for you.