Last editedMar 20232 min read
A recent survey found that 78% of Australian adults currently have at least one subscription service, compared to 67% in 2018. From streaming services like Netflix to SaaS subscriptions and beauty boxes, subscriptions and recurring payments are on the rise. This sales strategy makes sense for many businesses, but it does require some advance planning for success. If you’re thinking about trying out subscription recurring payments as a pricing strategy, here are a few questions to ask yourself first.
1. Are recurring subscription payments right for your business?
To begin with, you should think about whether the subscription model suits your industry, products, and services. This all depends on the nature of your business. Recurring payments make sense for gym owners and content producers, but might not be as suitable for restaurants that take one-off payments. Does your business sell goods like health and beauty products, pet food, or household essentials? These are all good candidates for the subscription model. Essentially, you should provide a product or service that customers want to receive on an ongoing basis, necessitating recurring payment.
2. Will subscription recurring payments improve the customer experience?
How does the recurring payments model benefit your customers? Think about how you can use this type of payments system to add value to your user experience. If your product or service lends itself well to different pricing tiers, it’s easy to boost conversions by allowing customers to shift from one tier to another with a single click. You’ll need to think about how to keep the service fresh for your subscription customers with special deals, new products, and giveaways.
At the same time, consider automating your billing system to make the recurring payments process more convenient. Ideally, customers won’t need to log in and make a payment each month – this should be handled automatically to avoid late or missing payments.
3. Are you prepared for the challenges of subscriptions and recurring payments?
While there are numerous benefits associated with subscriptions and recurring payments, they do also come with unique challenges to overcome. If customer card details expire or a card is cancelled, this can cause failed payments and corresponding customer churn. You’ll need to put proper support in place with tools like automated retry, emailed payment reminders, and a good client communication system. Another issue to consider is PCI compliance. When taking payments, you’re required to ensure your customers’ financial data is safely stored and transported with tools like encryption.
4. What should you look for in a recurring subscription payments platform?
The final question to ask is how you will choose a payment platform that can best handle the challenges of recurring subscription payments. In addition to issues like PCI compliance and data security, you should also think about integration. How well does the platform integrate with your existing accounting software and Customer Relationship Management (CRM) systems? Does it offer customisation potential? What are the processing fees like? How user-friendly is it for both customers and internal users? These are just a few factors to consider when you’re comparing your options.
GoCardless offers an ideal solution for recurring subscription payments. It enables businesses to automatically collect recurring payments directly from customer bank accounts, using the pull-based direct debit method for subscription billing. This means you control the payment amount and date, giving customers advance notice and preventing any surprises. It’s easy for small businesses to get started, with hosted checkout flows allowing you to sign new customers up for your subscription service. A user-friendly dashboard gives full visibility over payment statuses, and built-in FX enables global payment processing as needed.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.