Businesses are set up by their owners for two principal reasons. To maximize wealth and profit at the same time. Shareholders want to earn a profit from their products, and they also want to see the value of their business increase. However, lofty these aims may be, achieving them is impossible without an effective payment channel. For most parts, the emphasis is placed on the business and not on the customer, and this can be a problem.
This may be one of the reasons why many enterprises don’t reach their full potential, and for the few that do, sustaining growth is not so easy. When choosing a billing model, Progressive companies are not only looking for models that suit their businesses but also one that improves the user experience of their customers. Thanks to technology, subscription billing platforms are becoming quite the norm.
Subscription billing is highly flexible, efficient, and easy to control cost, and these benefits also transmit to customers too. In 2020, if you want to improve customer experience significantly, adopting a subscription billing model holds a lot of promise. Before we highlight the benefits of Subscription Billing, let us first understand what it is all about.
What is a subscription billing?
Subscription billing model is a standard pricing practice by which a service provider charges a user for the consumption of its service or a set of services at a prearranged price and schedule. What this means is that the user (customer) is already aware of the price of the service before he or she uses it. It also means that the cost is based on using percentages and not a one-cap-fits all pricing approach. So before the provider can charge the user, the service has to be used first.
Essentially, subscription billing is mostly adopted by online businesses and telecom companies. Some insurance companies, magazines, and e-commerce websites also adopt this pricing model as well.
Another important thing to note is that this pricing model is heavily reliant on the internet. Before the rise of the internet, companies mailed subscription bills to customers via postal services or private mail delivery companies. While these methods worked well enough, they had their drawbacks such as delayed payments, customers not getting their bills on time, or not at all, amongst other problems. But with the internet, bills are now transmitted to customers online, which is faster and more reliable.
Immediate Customer Benefits of Subscription Billing
Here are some of the immediate benefits your customers stand to gain should you adopt Subscription billing.
This billing model makes spending a lot more predictable for customers. Not knowing how much a service will cost is a huge turn off for customers that may lead to consumer apathy. At the end of a billing cycle and the start of a new one, subscription billing gives customers more control over their expenditure.
Lower penalty fees
If your business charges a penalty fee for whatever reason, this may put more money into your company’s coffers but also take more out of your customer’s pockets against their wish. In the short term, this may mean more profit for your organization, but long term, customers may begin to distrust your service and your brand as a whole. And as you already know, this may likely lead to order discontinuation. With subscription billing, however, there are no late payment fees or any penalties for that matter.
This billing model is by far the most convenient payment method in use today. Companies that use this model report highly satisfactory outcomes. At every level, customers find bills payment to be very convenient since this can be done over the internet in just a few steps. Might we also add that Subscription billing has less of an environmental impact on society? E.g., the use of envelopes, stamps, and traditional mail services to deliver invoices to customers.
General Customer benefits
On a general level, there are so many other benefits subscription billing adds to the experience of customers. We review a few of them below.
The advantage of choice
Subscription billing offers not only businesses but customers the advantage of choice. Today, there are more than a few automated payment platforms that offer payment convenience. Some of them include direct debit from the customer’s bank account, payment via a credit or debit card, or other automated platforms like Skrill, Transferwise, Paypal or Payoneer, etc. Offering your customers multiple payment channels will serve not only your interest but theirs as well.
One of the main reasons why many business enterprises adopt Subscription billing is because they have the comfort of the customer in mind. If customers can control their own billing cycles, they will be in a better position to plan their consumption through budgeting.
The uncertainty associated with other billing models is absent with subscription billing. By offering them better options and more control, they can use your service based on their financial capacity to pay for it. In the long run, this benefits your business as well since late payments and service suspensions will be avoided.
Customer service representatives play a huge role in improving customer experience, but while their service is of the essence for many businesses, they can’t measure up to the level of satisfaction gained from a self-service. By operating a strategic online model that offers customers access to their personal user account along with a self-service portal, the need to contact representatives directly will not be required unless there is a serious need to do so.
Self-service benefits your business as much as it benefits the customer since your expenditure on customer care will be reduced and controlled to favor your Balance Sheet.
Improved communication and customer feedback
Subscription billing leads to improved communication. How? Customers communicate their preferences with their orders. Rather than rely solely on communication channels, they can do so by using more of what they like and less of what they don’t like or not at all. Companies who track the consumption patterns of their customers can gain a healthy insight into their minds regarding what they want in service and why they like or dislike one or more product features.
Enjoy the benefits of an uninterrupted service
For customers, the benefits of an uninterrupted service cannot be overemphasized at this point. This billing model provides auto-renewal opportunities many customers prefer, especially if yours is a service they place a premium value on. They do not have to stop enjoying the service simply because they have not made a down payment for it. By running on a subscription billing model, whatever they use can be charged back to their account at the end of a billing cycle and before the start of a new one. This alone will elicit trust and brand loyalty from customers.
Factors to consider before utilizing a Subscription Billing Software or Platform
There are key factors every business should consider before setting up a subscription billing model for payment collection. This is vital because customers need an avenue to initiate their transactions as well as picking the service(s) they wish to purchase on a regular basis. The entire process may seem straightforward at first glance, but it isn’t for businesses that offer product differentiation.
Before you utilize a subscription billing platform, here are very important questions to ask.
Does the billing platform offer dedicated customer support?
Before you adopt a billing subscription billing platform, you need to make sure that the platform offers a dedicated support system round the clock. Should issues arise along the line, a dedicated support team can save you a lot in lost revenue.
Does the platform offer data security?
Is the platform perfectly encrypted to protect the identity and financial information of your customers? The last thing you want is online identity theft and potential lawsuits initiated by aggrieved customers.
Does the platform offer flexible features?
Feature flexibility is going to be vital if you operate in a highly competitive industry, and there will be a need to change product features and pricing policy from time to time.
How will you access customer data?
Does the platform store data in an in-house data warehouse, or does it transmit to an external databank service for storage? These are vital questions to enquire about before making a final decision. Speed of data access and data accuracy are also questions in need of answers.
Tridens Monetization platform provides businesses with the answers to these questions and lots more.
With Subscription-based billing, you can grant customers unfettered access to your product and also increase your business scope as your customer base grows. Offering your subscribers a variety of choices when it comes to paying for your service is a win-win situation for them and for your brand too. Tridens Monetization offers brands and their customers the best of both worlds. Our service is flexible, cost-effective, and takes into account the individual preference of each and every individual customer.