The e-Commerce subscription model has exploded in popularity in the past few years. So much that Hitwise, an online competitive intelligence service, conducted a study and found that the number of visits to these types of retailers saw an increase of 3,000 percent between the years 2013 and 2016. With staggering numbers like this, it’s no wonder that more businesses are jumping on board into this lucrative market.
It is through the use of recurring billing (or recurring payment) software that allows customers to have the cost of the purchase automatically charged to their account on a predetermined schedule.
What Are Recurring Payments?
Recurrent payments occur when a merchant automatically bills a customer for goods and services based on a predetermined schedule. It requires that the merchant first get the customer’s permission to take their credit card information. After that, the merchant automatically bills the customer every month.
There are many benefits for using recurring payments for your business. First of all, and most importantly, you will not miss a payment. It also helps with your cash flow, reduces collection costs, and it will improve customer satisfaction. The key is to ensure that you implement recurring payments correctly. Take a look at these “Dos and Don’ts” below to ensure you get the best start using recurring payments.
The Dos Of Recurring Payments
- Do carefully examine each recurrent payment platform.
Be on the lookout for a subscription provider that offers the latest in security and full compliance with the Payment Card Industry (PCI) standard criteria for security. Any state of the art fraud protection will be critical to protect your business.
- Do ensure that the payment processor has all the features you need.
Every business is as unique as its needs. If you plan to sell to customers outside the U.S., make sure that your provider has the capability of accepting international currency.
- Do know that recurring billing eliminates bill collection costs.
Recurring billing brings reliable income every month. It also reduces costly staff time or hiring the services of bill collectors to hunt down overdue accounts.
- Do seek a subscription service provider that accepts all the major methods of payments that your customers prefer.
This will do wonders for retaining customers and returning customers. If you accept one of their preferred methods of payments, you are sure to make more customers happy and coming back.
The Don’ts Of Recurring Payments
- Don’t overlook churn rates.
A churn rate is known as the annual percentage rate that your customers typically cease your subscription service. In order to overcome this is simple. Your new customers must surpass those customers terminating service. Therefore your payment processor must help you manage your churn rate.
- Don’t purchase a recurring payment system that demands much for integration or great expense.
Like every good business decision, ensure you are getting the best system for the best price. It should also be quick and simple to use.
- Don’t neglect reports.
Reports reveal the true health of your business. It especially keeps track of your churn rate. A good recurring billing platform should furnish you with relevant reports to help you gauge how your business is growing.
- Don’t disregard the power of customer retention through recurring billing.
Recurring billing is a popular draw for customers because of its convenience. It is convenient for them to have their funds withdrawn at the same time and the same amount each month, without interruption.
Recurrent Payments Are Convenient For Businesses And Customers
As mentioned, if you choose to implement recurring payments as part of your business model, there is much to be gained. Not only will customer loyalty soar but you as a business will have an easy way to collect funds every month without a hitch.