In 1973 Peter Drucker wrote, “The purpose of a company is to create a customer”. After all these years the only thing other analysts have really added to this definition is that “The purpose of a business is to create AND KEEP a customer.” Part of keeping a consumer is by making paying for the service or good, as Bernard Marr wrote in Forbes last December 30th, “instant, invisible, and free”. That is definitely what consumers want, and companies are really trying to deliver this level of services to keep customers. Instead of owning music tracks, cars, bikes, etc., they are paying a (typically) monthly subscription (recurring payment). Clearly, this then makes the payment systems and services that collect the monthly payments absolutely vital. Any declines in monthly payment collection efficiency can spoil the profitability of the whole business model.
Understanding subscribers and optimising revenue
In 2018, see, we wrote that:
Understanding the ebbs and flows of subscribers behaviour is complex. Not surprisingly, as with other areas of payment collections, service supplier platforms are turning to artificial intelligence machine learning technologies to improve efficiency, e.g. reduce declines.
Recurly, a leading subscription platform, has developed a Revenue Optimization Engine which “takes a highly tailored approach to each invoice, using statistical models and machine learning to improve collections—increasing their customers’ monthly revenue by an average of 9%.
Recurring payments from businesses
Any long term business customer has recurring payments, even it just one annual payment or a payment every now and then. Would your customer be attracted to paying monthly or quarterly? What additional services could you offer? For example, Peter Drucker used the example of a company that provided annual maintenance services which he broke down into various types of monthly service which companies could sign up for. Turnover trebled immediately.
Recurring revenues directly linked to subscriptions and add real value to your company’s bottom line.
Subscription service providers
- Some of the key differentiators between recurring payment service providers include:
- Ease of use and setup, and how long to go live
- Validate card details at signup
- Keeping subscriber details up-to-date in real-time
- Recovering lost revenue from card expiry or cancellations by optimizing your billing and retrying strategies
- Maximizing payment success rates with data and machine learning.
(More to come in our survey of subscription service providers to be published later this year,)
CTMfile take: A radical change in companies business models is occurring. Are you MISSING OUT on converting much of your B2B sales into recurring payments?
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