With it being 2017, there are ample ways for consumers to purchase goods from you. Whether it be through their
Or cold hard cash
There are options.
One method of payment that seems to be growing in popularity is that of recurring billing. As consumers, we come across recurring payment methods in a variety of situations; such as,
And our favourite box of the month clubs
…to name a few examples.
Nowadays, we seem to be seeing this recurring billing trend encapsulate businesses outside of “the usual” subscription programs.
Why is this so?
What are the REAL benefits to implementing such a system into your business framework? Well this depends on which standpoint you are asking.
Recurring payments benefit the consumer through avoiding late penalties, saving them time and money, speaking to his or her eco-conscience, and making spending more manageable.
With regards to the business owner’s point of view, not only will all of the customer benefits translate into strengthening the overall customer relationship, but you will also realize a more predictable cash flow, fewer missed payments, reduced processing fees, and higher customer retention rates.
So let’s break this down…
When implementing something new into your business model, the one element you need to make sure it affects positively is your consumer and the influence it has on the buying process.
After all… if you don’t make your consumer’s life easier, you are just making yours harder!
Recurring billing benefits the consumer is a variety of ways.
First, they no longer have to deal with penalty fees if they forget to make a payment on time. Sometimes a reminder is necessary to ensure that you receive a payment, however, this reminder tends to leave a bitter taste in the customer’s mouth because they are getting charged more money for something they may have simply forgotten to pay. This ends up hurting the relationship more than it helps!
This is where recurring billing saves both your customer’s wallet and your relationship.
When you implement a subscription billing program into your business, you have the customer’s credit card information on file as well as their permission to withdraw the payment at the same time every month, quarter, year, etc. This automation eliminates the variable in forgetting to pay and the repercussions it brings about.
Second, if convenience isn’t music to your customer’s ears… then I don’t know what is!
Having as fast paced of a society as we do causes people to be forgetful and lose track of certain obligations.
We can’t help it… we’re only human!
That is why recurring payment schedules are so convenient. Customers no longer have to log into their accounts every time each pay period rolls around and make the designated payment.
Having these payments be automatic allows the customer to focus on the dozens of other obligations that take up their time and giving them one less thing to worry about.
Not only does automation lead to saving your customers’ time, but it also can assist in saving them money in the future.
How many times have you outlined your budget and aligned all of your records at the end of the month, only to realize the various overdraft fees that are still lingering?
With the customer knowing in advance when each payment will be withdrawn, they are able to account for this transaction and will not have to worry about whether or not it has gone through.
So, as you can see, convenience has both short and long term perks!
Third, we all care about the environment.
…We should anyway!
Two words tend to catch consumers’ eye a lot more in the recent years;
Society has finally decided that it is time to take care of the world that we live in, and one way that recurring payments helps you do that is eliminating the use of paper-based invoices.
The increased use of electronic payment technologies adheres to your consumer’s eco-conscience mind and allows them to not only feel good about their purchase plan, but feel as if they are taking the necessary steps to decrease their carbon footprint.
This… not to mention… simultaneously increases your company’s overall corporate image.
Win-win? I think so.
Fourth, recurring payments allow the customer to spread what can be seen as a larger purchase out into multiple smaller purchases.
For instance, some customers prefer to pay for their year-long gym membership up front, while others prefer to distribute the cost throughout the whole year.
By not having to pay the full amount immediately, the customer is able to manage their spending in a more efficient manner while only having to set aside a smaller amount of money each month and still having additional funds for other purchases.
The Business Owner
So, what is your first order of business?
To please the customer.
Now that having recurring payments have already done that… what else is in it for you as the business owner?
First, subscription billing presents you with a more predictable cash flow.
In general, the future of any business will always have some variable of uncertainty; with that said, however, by knowing in advance what revenue is going to be coming in on either a monthly, quarterly, or yearly basis, you are able to make business decisions that are;
This will not only help to lessen any uncertainties for what your company’s future holds, but it will give you the leverage you need to take risks that your competitors aren’t willing to take to get ahead.
Second, with an automated recurring payment system you not only have a predictable cash flow coming in, but you will also see fewer missed payments.
Having a recurring system in place will ensure that every subscription payment will come in at the exact day and time every month, quarter, or year.
Say goodbye to having to track down late payments and hello to punctuality!
Third, the ecological benefits of utilizing online payment methods versus paper invoices has already been touched on.
There is another benefit of not using paper, and that is the reduction of all processing fees associated with paper-based invoices and receipts.
Think about it… every time you send, receive, and process a new invoice there are a lot of hidden costs associated with it that are no longer present when going digital.
Having to pay employees to write out and handle these invoices – GONE!
Reliance on expensive material such as paper, printers, ink, and stamps – GONE!
Allocating additional resources for the actual mailing process – GONE!
If you didn’t see the appeal of saving the environment before before… you will now.
Fourth, you will begin to see an increase in your customer retention numbers not only due to all of the benefits already listed and an improved customer relationship, but also because it takes more effort to actually end the relationship.
Since all recurring payments are automated, customers no longer have to take any action to fulfill the payments.
If they want to end their subscription they have to deliberately take action and opt-out.
Like I mentioned, we live in a world where our daily lives are consumed by so many other obligations that many consumers won’t want to take the extra time to end this relationship.
Of course, you will have the odd customer who will end it if they really want to, but if your product or service is up to par with the benefits that come about through recurring payments, then you’re golden!
AND THERE YOU HAVE IT!
When you implement subscription billing into your business model, you are not just making your customer’s life easier, but you are strengthening your overall relationship with him or her.
Soon enough, this relationship will result in more loyal customers which could then turn into every company’s goal:
Now that you are in the loop – it’s your call as to whether or not you want to start making your life easier as well.
To learn more about recurring billing functionalities, click here