No other trend has changed how customers shop more than the subscription economy. Once the preserve of newspaper and magazine aficionados, subscriptions are now available for almost everything. Between 2013 and 2020 the subscription economy grew by more than 300%. In 2019, for the first time, more Americans streamed online content than they watched traditional television. Since the start of the COVID-19 pandemic,18% of companies saw their subscription growth rate accelerate. This why it has never been more important to choose the right subscription model: one that supports a seamless payment experience with tailor-made checkout scenarios, de-risks your business by fully outsourcing the card storage and reduces involuntary churn thanks to smart dunning.
By Ray Bak
In Europe too this business model is surging. 31% of Europeans have increased the number of digital subscriptions they hold since the start of the pandemic, and this figure is likely to be even higher among businesses where it is commonplace to use subscription-based software, such as accounting solutions and CRM services.
One of the key benefits making it so popular among consumers is the hassle-free shopping experience. We are all used to having monthly payments for utility bills come out of our accounts without needing to re-enter our payment details. This same convenience of invisible payments can be applied to many other products or services. Additionally, customers can also benefit from free trials and incentives for referrals that can’t be found in one-off payments.
For businesses this model is even more compelling. Having a steady stream of income that doesn’t require constant marketing and sales activity to maintain, allows companies to plan ahead with a transparent revenue forecast. Unlike one-off purchases, where customers might try several providers, those who subscribe to a service are less likely to make the effort to cancel their subscription – only 40% of subscribers end up cancelling their services.
I cannot stress enough that from a merchant’s perspective subscriptions are much more complex than processing a payment for a single purchase. Yet, there are ways to implement recurring payments effectively to minimise churn and maximise the value of customer loyalty. So, let’s explore in detail how you can harness the power of modern day subscription management solutions to boost your revenue.
How do recurring payments work?
Free trials, loyalty rewards and referral bonuses add greater complexity to the payments and accounting process. Even without these incentives, recurring payments aren’t as simple as automatically taking a series of one-off payments.
While companies are able to offer recurring payments through tokenisation and direct debits, this can be time-consuming, complex to maintain and involves storing customer payment details, raising security and regulatory challenges. Companies may not be able to manage this effectively, instead they can rely on out-of-the-box solutions that can increase operational efficiency but also profitability through features such as effective retry, logic to mitigate churn, metrics to measure conversion rates, cross-border payments and multiple payment methods.
To take away the burden of keeping up to date with changing regulations, online merchants can partner with payment processors that hold the highest level of PCI DSS compliance to ensure that customer payment details are stored securely.
Use the latest technology to your advantage
Any online payment should be as frictionless as possible, and the subscription model is no different. Getting it right means having high acceptance rates, fraud protection and the ability to accept a wide range of payment methods.
The same goes for those unforeseen issues that can arise in online payments. Take for example a person who has signed up for a service but changes their billing details or doesn’t have enough funds in their account and their payment is declined. Systems need to be in place to mitigate these issues. ‘Smart dunning’ is one such feature that allows failed payments to be retried at customised frequencies to reduce the chance of another decline and therefore another fee for a rebill.
Today, recurring payments can also be integrated into a company’s wider digital ecosystem to automate steps in the customer experience. Sending email reminders to users to renew their subscriptions if they are about to expire is a clear example of this. Modern marketing tools help merchants increase brand loyalty by creating unique experiences for recurring customers. Whether it be special discounts reserved solely for subscribers or birthday treats, merchants can go beyond the payment step to personalise the consumer journey when it comes to subscription models.
Payment solutions for a new wave of merchants
Having partnered with Chargebee, one of the most innovative companies in the recurring payments space, Worldline offers its customers the possibility to put in place subscription systems that are PSD2 compliant, with all aspects of the process centralised. Its dashboards work with existing CRMs, accounting, ERP and other systems to give companies a 360-degree view of their subscription and non-subscription products as well as recurring and one-off payments.
Iris Hosman – Partner Success Specialist at Chargebee, explains that “Working with Worldline has allowed Chargebee to bring world-class payment execution into our subscription management solution. With Worldline processing and handling the storage of card details, compliance and safety, our clients can concentrate on building their offering and enhancing customer loyalty.”
When speaking with a Worldline merchant who recently implemented this subscription solution, the CTO said: “We get about a million hits per day on our website and still our conversion rate is low. Thanks to the powerful solution offered by Worldline and Chargebee with advanced capabilities like Trials, Reporting, Marketing Automation or Smart Dunning, we are targeting to double our conversion rate.” I think that speaks for itself.
Virtually any frequently-used consumer goods, services or software can be sold under a subscription business model. When companies get this right, they can reap the rewards of increased loyalty, turning the goodwill that a customer feels towards a company into a dependable stream of income. Worldline’s host of payment solutions work together to achieve this, bringing with them international scaling, frictionless payments, first-class security and the kind of customer experiences that create lasting loyalty. And who doesn’t want that?
For more information about our solution, visit our website here.
About the Author
Ray Bak is the Head of Commercial Partnerships & Bid Management at Worldline. He has been at Worldline for over 10 years, having started at Ingenico in 2009, working in various sales and account management roles before progressing to Director of Sales for Northern Europe and into his current role. He brings a mix of payments expertise along with eCommerce experience, having worked with large enterprises as well as small and medium businesses. He completed his studies in General Management at Hoge School, Holland. In his spare time, you can find him doing a tee-refic job on the golf course.
Ray gives us a great tour of the tech platform capabilities now in place for having a subscription relationship with the customer. In our connected, customer centric world for products and services that the customer regularly consumes, getting them to subscribe is a stable, profitable and efficient connection to the enterprise. It strengthens the relationship with a foundation under loyalty.