July 20, 2016 | Authored by: Vindicia Team Blogs
Value and convenience are a priority for customers
Customer retention is critical for businesses operating on a subscription billing model. Many businesses assume the key to customer retention is an attractive, competitive price, but that's no longer the case. As The Global Marketing Alliance noted, consumers in a world of Amazon, couponing and fast fashion expect low prices as the standard, not a bonus.
When low pricing simply becomes a part of doing business, how do companies stand out among the competition? The answer, argued the GMA, is to provide a combination of value and convenience that customers can't get anywhere else.
"Shoppers are pickier than ever about what they spend their money on."
In a world of innumerable options, shoppers are pickier than ever about what they spend their money on. This comes from a fear of missing out on the best - customers don't want to select a particular service only to find a competitor provides something better. This makes it important for subscription-based businesses to understand what their customers want and provide that value consistently.
The concept of value varies among industries, products and demographics. To understand what customers find valuable, companies need to do a bit of basic market research. They should explore the wants of demographics that match their buyer persona and incorporate these desires into their product. In addition, businesses can survey their current customers to see what attracts them to a particular product or service. This can be very helpful for businesses that sell services on a tiered system - for example, a software as a service provider that offers basic and premium options. Such companies can survey people who purchased a lower tier of service and understand what offers they can live without - that is, what they don't find valuable. They can also come to understand what attracts paying customers to the higher tiers.
Once a business identifies what its existing and potential customers find valuable, it can begin emphasizing these elements in free trials and marketing. This helps with customer acquisition; bringing in new subscribers who are attracted to this unique offer they can't get anywhere else. To retain customers, however, businesses must make sure the value they provide constantly aligns with what their customers want. Priorities shift as people grow older, move to new locations or otherwise change demographics. In addition, what was once a valuable perk eventually becomes the industry standard over time as competing businesses incorporate it into their product. Companies on a subscription platform must constantly monitor the needs of their consumers so they can always provide the best, most valuable offer.
There are multiple ways businesses provide convenience to customers - through home delivery, personalization and more. However, one of the most essential ways is to make the payment process as smooth and efficient as possible. To understand this point, simply think about the evolution of payments over time. Society has gone from having to carry an excess of cash at all times to paying for groceries with a tap of a smartphone - from something cumbersome and inconvenient to a simple payment method that meshes with how people act naturally.
"Businesses should partner with a billing provider that automatically retries failed payments."
Businesses that receive subscription payments can simplify this process even further. Instead of requiring the customer to take any sort of action, a recurring subscription management service can charge a customer's card automatically during every billing cycle. The customer is free to enjoy the product at hand uninterrupted without having to remember to log in and type their payment information every month.
In addition, businesses should partner with a billing provider that automatically retries failed payments as opposed to immediately cancelling the service. Doing so eliminates the accidental customer churn that occurs when a payment doesn't go through. Most customers don't intend to let their subscriptions lapse this way, and it's up to businesses to help make sure such churn is kept to a minimum.
Businesses can't rely on the same old techniques to guarantee sales anymore. They need to focus on providing a combination of convenience and value to both attract and retain customers.
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