3 Practical Questions To Consider For Subscription & Recurring Payments
From well-loved streaming services to direct-to-consumer ecommerce businesses offering beauty products, boxed dinners, and baby toys — recurring billing has disrupted the payments model in a big way. Research shows that Australians and New Zealanders spend on average AU$660 per month on subscriptions for recurring goods and services.
If your business is considering implementing recurring or subscription-based payments, you want to get it right.
After all, recurring or subscription-based billing has the potential to drive revenue growth, reduce customer acquisition costs over time, and strengthen customer relationships.
Let’s dive into the details so you can see how you can optimise the overall value of your business and your offering to customers. Here are the top factors every business should consider when implementing recurring or subscription-based payments.
1. Will recurring or subscription-based billing be a good fit for my business?
Recurring payments and subscription-based payments both offer hassle-free purchasing options for customers. While they are very similar in nature, there are slight differences in timing and payment options. Let’s take a look so you can easily determine what type of billing will best serve your business goals.
Recurring payments have been used for years for things like gym memberships, loan payments, and utility bills.
- How they work: Customers share their billing information and give you permission to charge their account at set intervals determined by your business.
- Benefits: The key benefit is time. As payments are made automatically, customers don’t have to spend time – or even remember – to make a payment to continue receiving your services or products. And, you don’t have to spend resources chasing missed payments.
Subscription payments work well for a range of industries – from major global streaming brands like Netflix and Spotify to popular SaaS companies such as HubSpot and Canva, as well as a variety of subscription box services for consumer products ranging from craft beer to essential oils.
- How they work: With subscriptions, you charge a fee, and customers receive a product or service periodically (weekly, fortnightly, monthly etc). They are distinct from recurring payments in that you can give customers the option to purchase from varied subscription tiers or programs. They can choose to automatically renew a subscription or make manual changes such as pausing, skipping or cancelling their subscription.
- Benefits: The key benefit is customer retention. A subscription-based payment model is very customer-friendly as it offers flexibility and convenience. But it also has a set-and-forget nature, which means once a customer signs up, they are likely to keep paying, unless something makes them want to cancel.
2. How will recurring or subscription payments help me offer value to customers?
An advanced payments provider enables businesses to add value to their customer experience, which drives growth. Here are some of the customer-focused business objectives these payments models can help with:
- Boost conversions – You can create and change different subscription tiers in a few clicks, so it’s easy to shape a subscription-based model around current customer preferences (and adapt as those preferences evolve). You can experiment with delivery schedules, product batch sizes, and pricing.
- Build customer loyalty – With recurring and subscription-based models, you have more tools for strengthening long-term customer relationships. For example, you can ensure loyal subscribers are the first to gain access to special deals, discounts, and new product offers.
- Enhance customer experience – Recurring billing simplifies life for your customers. For both B2B and B2C customers, budgeting is easier with predictable costs. By automating billing, you’ll also benefit from regular cash flow and on-time payments.
3. What should you look for in a recurring billing platform?
A third consideration is the actual platform and provider you choose. When comparing your options, look for ease-of-use, reliable customer support, and the ability to integrate with your ecommerce platform, Customer Relationship Management (CRM) software, and other business software you rely on.
Security is also critical, both for compliance reasons and to offer peace of mind to your customers. Your provider should meet level 1 Payment Card Industry Data Security Standards (PCI-DSS) requirements – this is the highest level of security.
This article has been republished with permission from Eway.
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Getting started with subscription payments
Are you ready to join the ranks of successful subscription-based businesses?
There are plenty of successful subscription-based business examples to inspire your journey. Birchbox, Adobe Cloud, and Amazon Prime Video are big names, but hundreds of smaller to medium-sized brands take advantage of advanced payment options.
At Eway, the priority is delivering frictionless online payments solutions for customers. They believe a reliable and secure solution empowers merchants to put more energy into what matters most – growing their business. If you’re considering recurring or subscription-based billing, Eway can help. Eway can set up your payments solution so you can accept both subscription and one-off payments. You’ll also benefit from their complimentary fraud prevention plan, a secure and robust API, and 24/7 support. Get in touch with Eway today to learn more.