Subscription payments can be a major revenue source for companies everywhere. The trick is having a system that encourages customers to feel comfortable enough to approve recurring payments with your business. Building trust is the first step in encouraging recurring purchases and avoiding customer churn.
Implementing subscription payments can be a golden goose for many businesses. It establishes a regular revenue stream, creates brand loyalty and helps organizations scale rapidly. Unless a customer cancels a subscription, it ensures funds are regularly flowing into your bank accounts. Customers are more likely to keep a subscription that’s already a regular part of their monthly payment schedule.
The key to a successful recurring billing model starts with establishing transparency and trust. Businesses must be clear with what a subscription service offers, how often customers should expect a recurring payment to be made and how they can change the payment process if necessary.
The biggest challenge for businesses is avoiding unnecessary friction with customers that lead to subscription payment churn. Below, we break down how to overcome these hurdles in order to keep customers satisfied with your business.
Be Transparent
No one likes surprise charges on their accounts. A customer who doesn’t know to expect a recurring charge is likely to dispute that charge or cancel the subscription altogether. When establishing a subscription payment with a customer, it’s important to identify when they will expect a charge, what that charge will be, how often it will occur and what the charge will show up as on a billing statement. Disputes can often be proactively avoided if billing descriptors on statements are properly and clearly identified.
Transparency also applies to how you communicate with your customers. Instead of agreeing upon a charge and never communicating again, it’s useful to send a friendly reminder a few days prior to a charge showing up on a bill that the customer will be charged a specific amount for a good/service. This friendly reminder can establish a positive relationship with your customers and avoid unnecessary disputes and payment cancelations. Let them know what to expect when and you’re more likely to retain that customer.
Be Useful
Customers today are getting savvier about what products and services they are using and they can be quick to change to a competitor when that product/service no longer fits their needs. Businesses must constantly evolve their offerings and services to keep customers happy. Whether this means offering promotions to engage customers with new options from your business or offering new features on a regular basis, keeping customers loyal is sometimes simply about evolving with customer demands and market trends. Stay up-to-date with what your customers are asking for, and learn how your product/service can fit the bill. Customers will keep subscriptions they find useful and will be quick to ditch those that aren’t.
Automate Billing Details
One cause of payment churn relates to the ever-changing details of card credentials. Customers frequently move without updating their billing address and cards get issued with new numbers, CVVs and expiration dates. All of this can lead to subscription payment churn as payments get rejected. This alone can cause customer churn as people are likely to forget to update their billing details, or simply let the subscription lapse when details get changed. Avoid this billing problem by using a payment processing partner that has the capability to auto-update these features to avoid chargebacks and customer churn.
Have the Right Processing Partner
Payment processing partners that offer the best recurring business models also have flexible payment method integration. They also allow your customers to provide flexibility in when and how they want to pay for that subscription. Find a payment processing partner that allows for easy sign-up, easy payment terms, and top-notch security. It’s also important to find a payment processor that allows for flexible types of payment installment plans. Flexibility, usability for customers and your business are two features that shouldn’t be negotiable.
As mentioned above, avoiding customer churn starts with having a payment process that is transparent, easy to understand and easy to use. This starts and ends with your payment processing partner who manages the entire process. Implementing recurring billing simplifies your billing and increase cash flow by implementing recurring billing and subscription payment plan provides a consistent monthly collection of fees with real-time authorizations. The key to achieving this goal is the right partner.
