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How businesses can optimize subscription payments
In recent years a wide spectrum of business verticals have turned to a subscriptions as a source of valuable revenue; but how can these payments be implemented successfully?
Payment by subscription is becoming an increasingly attractive and habitual method for both brands and consumers across a wide range of sectors. Once resigned to simply being the lifeblood of the periodical publishing industry, subscription services such as Netflix, Spotify, and Apple Music are now mainstream; an identifiable component in many consumers’ monthly payment habits.
But it’s not just the entertainment industry that is recognising the benefits of a payments by subscription model. In recent years a wide spectrum of business verticals have turned to a subscriptions as a source of valuable revenue; 2018 has even seen the introduction of a subscription service in the car industry.
As this business model continues to grow, we will hear more and more corporate leaders refer to the ‘subscription economy’ and its potential to change the way consumers buy and ultimately own goods and services.
Businesses have recognised that consumers are demanding these subscriptions services due to their customer-friendly approach to billing through a pay-as-you-go agreement. With disposable income increasingly varying month-on-month due to factors including the growth of the gig economy, this flexible approach to customer loyalty will continue to be embraced by forward-thinking global brands, but will need implemented carefully to ensure success.
Subscription pain points: Tackling the issue of high decline rates
Improving customer retention is just one incentive for companies to introduce subscription services. Not only do they help businesses acquire more consumers that do not want to be tied into a lease contract or buy outright, they also allow them to expand recurring revenue streams.
However, introducing a subscription-based model is not without its challenges. Businesses that use subscriptions must address issues such as high decline rates, customer onboarding, security and integration with existing systems. Transaction failure on recurring payments can also have a devastating effect on a business.
Supporting subscription services: Four questions to consider
Implementing a subscription payment solution also presents challenges for merchants in that it requires a network of support services to ensure operational success. So, it is imperative businesses partner with a Payment Service Provider (PSP) that offers the appropriate support for subscription services.
So, what do you need to look out for from your PSP and its products to ensure your new subscription service is a success? Here are four questions to consider:
- PCI compliance – does your PSP’s subscription solution have an appropriate certificate?
- Can the PSP support you in keeping your customers’ payment data secure?
- Does it support you in minimising your failed authorisation rate?
- Does it provide technical support tailored to the needs of your business and the sector you operate in (particularly important in regulated industries, such as insurance)?
From cars to grooming: the breadth of subscription success stories
One of the most recent companies to introduce a subscription service is Jaguar Land Rover, which now allows customers to drive the latest model off the forecourt and have all repair and maintenance costs covered under a monthly subscription.
At the other end of the cost spectrum, even the male grooming sector is getting in on the act by giving men the opportunity to purchase shaving equipment via a subscription model – something the company Harry’s has recently undertaken.
Both examples show that the subscription model is shaping the operations of businesses globally, regardless of their size, sector and time in the market. It’s in the interests of merchants and retailers to provide customers with a subscription option. As a result, they need to talk to their PSP today to find out how they can support them in implementing a great subscription solution.
To find out about Paysafe’s subscription support visit www.paysafe.com