January 25, 2017 | Authored by: Vindicia Team Blogs
Will your business benefit from subscription billing? Questions to ask, data to look for
More and more entrepreneurs are taking advantage of subscription billing to increase customer satisfaction and, as Business Insider pointed out, delight investors by offering predictability and profit. You've no doubt heard of multi-million dollar subscription startups and are wondering if this business model could work for your organization. Here's what to look at - which questions to ask and data to observe - to answer whether subscription management i s right for your product:
Questions to ask
The first question to ask is whether your product can be tailored for a subscription business model in the first place. The answer might surprise you - as Kissmetrics noted, there are a lot of unconventional products using subscription management. Surf Air, for example, is a California-based airline that that provides unlimited flights for a fixed monthly fee. ThriveWorks applies the same idea to counseling. People usually attend therapy more than once, making subscription billing the perfect, seamless way for them to pay.
You should also check to see if you have the time and budget to transition to subscriptions. Partnering with asubscription billing serviceis more cost-effective than building your own solution, but you also have to consider the cost of marketing and client communications. How will you announce this change: with a press release and news articles, through mass emails sent to current customers, with a mix of the two or some other approach? How will your customer acquisition and retention methods change? What effect will subscriptions have on your prices?
Data to look for
Take a look at your customer retention rate over the past few months. Subscription management solutions are excellent for combating high churn - they eliminate friction in the payment process, keeping customer retention efforts to a minimum while still maintaining revenue. They present their own churn problems, however. Namely, businesses that use subscriptions can easily suffer a high rate of payment failures due to out-of-date information or server issues. The best way to combat this problem is to use a subscription management service that automatically retries failed payments and integrates with a card provider's Account Updater service.
"The average person owns three or four internet-connected devices."
The second piece of data to look for is how your customers interact with your business. Keep an eye on the devices your customers use to access your content and the number of subscribers who use more than one. According to GlobalWebIndex, the average person owns three or four internet-connected devices - such as laptops, desktops, tablets, smartphones, smartwatches, TVs, game systems or other devices. Check your usage rates and see which ones your customers prefer - hopefully you won't find one device dominates over the others. You should also research what percentage of your customers access your products on more than one device.
If you observe a lot of cross-device use, this indicates your customers place high value on convenience. To get even more specific, if a significant portion of your customers use mobile devices, it indicates they want as few barriers to your product as possible. Subscription management offers these individuals even more convenience by removing the friction between paying for and accessing your product.
Which billing platform is right for B2C subscriptions?Download