September 19, 2017
Recurring billing is getting more popular and we can see the rapid growth of this so-called subscription economy. It’s a huge chance for merchants and, with the right payment solution, they can turn their customers into valuable, ideal consumers.
A recent Accenture report shows that millennials are expected to spend $1.4 trillion annually by 2020, which will represent 30% of total retail sales. They are a hot target for lots of businesses now and, according to many studies, they are more willing to try subscription-based services than other groups. They seek convenience, so signing up once and receiving goods or services on a regular basis highly meet their needs.
The way how recurring payments work is simple: A consumer clicks the ‘Buy’ button once and gets the product every week or month without any further action.
While previous generations don’t understand the need of using recurring payments that much, millennials are much more willing to use subscription-based services than their older counterparts. They perceive it as an opportunity to keep their cash flow on the right track. Subscriptions keep them feeling like they stay up-to-date and have their expenses under control. Bearing this in mind, this solution seems to be more affordable than a one-time payment that can make a dent in their savings.
Reports show that people are open to trialing new products to find out if they fit them. Running recurring payments with free trials and automatic renewals is one of the ways to attract new customers and make them stay longer. Merchants can simply build customer relationships this way and customer lifetime value goes up, says SecurionPay CEO Lucas Jankowiak.
Not only are millennials exploring new ways to purchase. In today’s fast-paced world, people like to use solutions that help them keep financial health, especially when it gives them access to lots of services at the tap of the button.
Younger generations used to shop online and they are seeking the best deals over the internet. They are also part of the ‘demand’ society — they tend to have all they want and they need to have it now. But, their purchasing decisions are usually based on the price so when they can have the service (and/or object) they want at a lower price, instead of spending a massive amount of money at a time, the choice is obvious.
With recurring billing, expensive purchases can be split into smaller ones. This gives consumers the possibility for using the product or service just right where they are needed, without spending a massive amount at once for unlimited or, say, yearly use of them.
Moreover, today’s customers like to experiment with new ways of using technology to make their lives easier. So, it shouldn’t be surprising that, as Gartner study says, by 2020 more than 80% of software providers will shift their traditional business model to subscription-based business.
As merchants are getting creative with their subscription business models, they need a payment solution that will make it possible to set up various scenarios to expand their businesses. It’s also good to have the possibility of modifying the billing frequency and to update the subscription amount.
Understanding the need to provide a solution that will completely meet today’s consumers’ expectations, the SecurionPay payment platform enables merchants to set up any payment scenario they want. For instance, merchants can run recurring payments and provide their customers with some extra offers at the same time. And with just a click they can pay for that.
SecurionPay helps merchants to unlock the potential of the most popular payment models. They can not only automatically bill subscribers at regular intervals, but also use cross-sales with one-click payments. They can also let customers pay in their preferred currency. It gives them and their customers a huge convenience — the thing everyone is looking for today, explains Jankowiak.
SecurionPay’s API gives merchants the flexibility and the freedom of setting up payment scenarios on their websites and they can implement it in hours. It’s up to them how often their clients will be charged, or whether they will offer free trials or not. They can run as many flexible subscription plans as they want and a variety of billing cycles or pricing tiers. Everything to provide the best choice for customers is at their fingertips.
Businesses need to remember there are a few major things to consider before finding the right payment provider, such as the possibility to set various plans or a hybrid plan to make their service more convenient for customers. Also, it’s good when customers can make upgrades or downgrades of their plans in a simple way, as people like to feel like they have control over what they do. It’s all about the experience.
To give customers quick access to the services, merchants need to optimize their signup and payment process with UX in mind. The key point is asking for as little data as possible.
Moreover, customers should have the possibility to cancel at any time, without going through a complicated process. The more difficulties they tackle, the bigger the chance of them requesting a chargeback. That’s why merchants should do thorough research before they choose the right solution for their business.
Needless to say, consumers can benefit from subscription-based purchases, but what about merchants?
Recurring billing gives businesses a chance for regular sales. Payments are automatically charged, customers receive their goods or services without any extra activities, so it’s a win-win. It also comes with higher customer retention, predictable cash flow and operational efficiency, to just name a few.
But, there are also drawbacks, such card's expiration, declined authorization or hitting spending limits. If a customer doesn’t take any further action, the transaction will be declined, which is nothing like a lost sale. These situations can also lead to customer’s frustration and even chargeback request.
It’s crucial to work with a payment provider that will keep merchant’s recurring payments running smoothly, without interruptions and revenue loss due to payment failures. And that’s what we, at SecurionPay, do, emphasizes Jankowiak.
For a few years now, recurring billing is perceived as a game changer in the online business market. It could be a huge chance for merchants to move fast, but only if they choose a payment solution wisely.
If you’re looking for more information about accepting recurring payments, visit SecurionPay website.