July 10, 2016
Money, and the idea of its exchange through payments, has evolved a lot from the time of its inception.
From goods to grains, from metal coins to paper, from bank accounts to e-wallets, money has taken various shapes, sizes, and forms. Think about how we evolved from a barter system (exchange goods for grains), to the token system (exchange of coins and cash on paper) to cash pooling (bank accounts and deposits) to cashless payments (credit cards, cheques, e-wallets).
Over the last decade or so, payment technologies have grown at a dizzying pace.
Today, you can book your Uber at the click of a button and this transaction becomes part of the customer experience. You can transfer money at the click of a button. You can pay bills at the click of a button. You can even watch your favorite show, eat your favorite meal at your favorite restaurant, go to your favorite destination – all through the click of a button.
And in all this, you will not experience the physical trouble of making payments. The next big thing is bots managing payments. (Okay, it’s not the ‘next best thing’ anymore. It’s already happening. Check out Lydia, a popular payment bot, that allows users to exchange money on Slack). That’ll be a whole new topic, one that we will reserve for later.
And on the other end of the spectrum, we have businesses moving from one-time transaction to a recurring revenue relationship. The shift is from CAPEX to OPEX model. Businesses want sustained usage of their products and services over a period of time, and hence, it's safe to say they are moving from product ROI to customer ROI.
In Recurring Revenue Relationship, the focus on Customer ROI is more pronounced as the value needs to be delivered consistently throughout the duration of the customer relationship. And this has resulted in industry buzzwords like customer success, which has become a category by itself.
So what role do payments play in this?
Payments have evolved now to connect millions of such businesses together. We are standing on the verge of the next big change in the payments space – customer experience and customer success. And it’s even more applicable in recurring revenue business.
Not buying it? Here's why.
Very few businesses get the pricing right the first time. Price too high, you risk losing out on potential customers. Price too low and you risk losing out on revenues.
What is the right price for your service then?
The right price is subjective. Services and products draw customers on how they are priced. For instance, in billing, the expenses are on the operational side such as subscription management and billing (adding credits, extending the trial period, changing the billing date, offering a discount, activating/canceling a subscription, etc.). These are usually carried out by the sales/marketing/customer support team and are pivotal in managing your customer relationships. This, in turn, is used to determine the pricing and how customers are acquired.
Once they have considered your product and landed themselves on buying a plan after evaluating the pricing page, they proceed to checkout, and this is a significant touch point which decides whether a customer will stay or prefer to drop out.
There’s just one conclusion.
Businesses must be able to collect payments from their customers, through a flexible range of payment options. One size does not fit all. Payment preferences vary with geography. India may not be dominant in credit card collection, or Canada may not be big on PayPal. It could be credit cards, debit cards, ACH, Wire Transfer, Cash, Cheques, Direct Debits, PayPal, Amazon Payments, ACH, etc. This should be made possible, frictionless and automatic. And there is no question of compromise here, as any friction will lead to customer churn.
Customer experience needs to be looked at holistically all the way from the first touch point through product experience, billing and customer support experience.
Building an experience that involves frictionless checkout and easier transactions are the perfect ingredients of a customer-centric strategy for payments businesses.
Chargebee spoke on the topic at Worldpay’s Rethink Workshop on May 18, 2016. This post is an extension of the presentation. You can check out the SlideShare here.