Streaming of services, e.g. Spotify, and pay-as-you go services, e.g. SAS model, are changing how we live and work in both our private and business lives. Most consumers and businesses don’t change where they shop/buy very often, most have a limited number of companies they use. Today, the frictionless direct debit specialist Slimpay believe that the use of subscription payments will grow dramatically as consumers focus on reducing the hassle involved in their regular purchases by moving to subscription/recurring payments, see research below:
Source & Copyright©2016 – SlimPay & Innopay
But these new markets will only be opened up IF: the recurring payment services are easy to use (frictionless) and protect the security concerns of both consumers and businesses.
Adopting best practices in recurring and subscription payments
Adyen, the leading omni-channel payment provider, believe that it is crucial to maximize authorization rates for signups and subsequent payments. They talked to some of the world’s leading subscription and recurring companies to find out how they approach payments for maximum growth. The discussion revealed that a carefully planned and executed strategy leads to improved customer experience, increased retention, and, for larger businesses, millions of dollars in revenue uplift.
Based on their findings some the key best practices in collecting recurring payments from consumers are:
- Validate card details at signup
- Reduce churn by optimizing your billing and retrying strategies
- Ensure your customers’ card information is up-to-date, e.g. using Adyen’s Account Updater package to overcome this problem
- Enable recurring and subscription payments with key local payment methods.
These techniques also apply, with minor changes, to B2B payments. The key problem to be overcome in B2B payments is establishing a trading relationship where direct debiting from a card or bank account will be acceptable, this requires analysis of:
- What is basic part of your products or services, and what changes?
- Can you isolate the recurring part(s) from the changeable parts?
- Whether the recurring part of your services/products can packaged, and positioned acceptably for your regular customers?
As Adyen pointed out that for consumers, a carefully planned and executed strategy leads to improved customer experience, and increased retention. The same applies to B2B sales as well.
CTMfile take: Remember many of your business customers are probably using Spotify or Apple Music already, they won’t be as resistant as you think to direct debiting for much of what they buy from you, particularly if you package it sensitively and appropriately.
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