Recurring Payments provide new business models that allow companies to accelerate sales, gain operational efficiencies, and create customer loyalty. They are the foundation of the subscription solution that is taking the business world by storm.
Companies based on the subscription model need a recurring payments solution
We all know (and probably shop at) subscription model companies such as Netflix or Spotify. These companies were born under the sign of subscription sales. But the big news is when companies that sell products pivot from traditional sales to subscription revenues.
This was the case with Cornerstone, an English shaving products company, which transformed the sale of its product into the sale of a service. Customers wanted razors regularly delivered at home because without having to worry about the day they would eventually run out. This customer need inspired Cornerstone to adopt a subscription-based business model. A new service was born, that allows the customer to receive blades at home, as well as a set of other products (creams, gels, etc.) that enhance the brand and promote customer satisfaction and loyalty.
HP also got on board the subscription train. With the HP Instant INK Service, with five possible subscription plans, customers can receive ink cartridges at home before their printer runs out of ink.
Both companies had one thing in common: they needed a reliable partner to handle recurring payments.
Recurring payments: the future of the everything-as-a-service business model
A multitude of payment options are available to most customers: one-off payments, frequent payments, and subscriptions. Subscriptions are also referred to as recurring payments. These differ from frequent payments, as customer and seller agree on payment periodicity in advance.
The increase in payment options provides customers with additional choices. And, in the case of recurring payments, ecommerce managers need to contemplate several use cases: customers might need to cancel, suspend, change the plan or upgrade.
For subscriptions to work, it is essential to have an adequate Recurring Payments Management system. This system comprises both tools and processes that provide the information that companies need to manage their business at all time.
What does a Recurring Payments system look like?
At easypay, for example, the subscription service allows the customer to suspend, change the amount, the date and the frequency of charges. It even allows users to set and change the payment instrument used. For example, it is possible to exchange Direct Debit for Visa & Mastercard.
In addition, if a specific subscription charge is unsuccessful, the system automatically activates a second attempt (and even a third, if necessary). If it still fails, we still send a message to the customer informing that we could not confirm the payment, proposing an alternative cash method.
In this manner, a good subscription management system allows businesses to minimize unsuccessful transfers. In short, businesses looking to beat the competition should put the customers at the center of the process by giving them the power to decide how they want to be charged.
Why should businesses consider this payment model?
Foremost, businesses will have a much happier client following, without the friction of having to handle payments directly.
In the same way, companies that adhere to recurring payments improve their cash flow management, knowing in advance how much they will receive.
Customer loyalty is also more likely. Thanks to the flexibility of adapting the price and the existence of promotions and products and services associated with the subscription plans, customers feel in control.
Source: Jornal Económico