Webinar Recap: How to boost subscription growth with better payment experiences
Apr 20203 min read
The fastest growing businesses in the world are subscription businesses. Having grown by more than 350% over the past seven plus years, the sector shows no signs of slowing, even in the face of the uncertain times with which we’re now confronted. Due to the regrettable challenge the world is now facing, some businesses, due to organic positioning, have seen their growth accelerate (such as streaming services or communications software). At the same time, others like the travel industry have seen slow downs or contractions.
In this new climate, with the subscription model now the norm, and competition heating up, the question now becomes how can you put actionable measures in place so you can grow in the short and long term?
The answer may surprise you...it’s payments.
Many subscription businesses think of recurring payment processes as necessary boxes to check. But the truth is they are the missing piece in your growth engine. To start an open dialogue around this topic, we hosted a webinar featuring Michael Krantz, Head of Global Enterprise Partnerships for US at GoCardless. In it, Michael talked about three strategies for boosting your subscription growth with recurring payments.
Check out the recap below. Or, you can view the webinar here.
Three main strategies to boost subscription growth
Win more customers with payment preference
First off, payment preference is defined as how your customers want to pay you. We surveyed almost 5,000 businesses in nine countries weighing four different payment methods. Here are the three major learnings.
Bank debit, a bank-to-bank payment where the seller pulls funds from their customer’s bank whenever those funds are due, is the preferred method of payment in five of the nine countries we surveyed
In North America, corporate cards are still preferred for paying digital subscriptions. However, in a market where it’s not traditionally used for B2B SaaS purchases, bank debit is gaining momentum as the second most preferred payment method. That’s because businesses are starting to understand the business value of bank debit - lower cost and churn - compared to cards.
Finally, according to Zuora’s Subscription Economy benchmark report, businesses that offer more than 5 payment methods, including bank debit, grow 4% faster than those that accept three or fewer.
Did you know?
-73% of decision makers think their business would be more successful with access to international markets
-39% think the complexity of international payments is holding them back from expansion
The bottom line is that businesses recognize the value of expanding internationally, but the pain of collecting recurring payments is holding them back. There is more than one way to boost your subscription growth and scaling globally is a common initiative among many companies.
Reduce involuntary churn
Involuntary churn happens when customers unintentionally lose access to your services, and this can make up anywhere from 20-40% of overall churn.
When looking at the cause of involuntary churn, it’s mainly tied to payment issues. And these issues aren’t easily addressable by improving your product. Involuntary churn occurs when a customer either forgets to update their card upon expiration, they lose their card, it is stolen or compromised (thus producing a new cc number) or other bank related errors.
So how do you reduce involuntary churn and increase your payment success rates? If your payments are failing, use a payment method with lower failure rates. Bank debit with GoCardless has a failure rate of less than 3% and as low as .5% after retries (compared to cards, which can range anywhere from 5% to as high as 15%).
When processing transactions at scale, reducing involuntary churn potentially leads to massive customer retention and cost savings. Which bring us to the last strategy...
Minimize the cost of recurring payments
When you think of the cost of payments you may only think of the associated transaction fees. And yes, transaction fees are important...but what makes up the total costs of collecting recurring payments?
First, you should also consider operating costs for recurring payments. These can include items like set up costs, payment reconciliation, compliance costs, manual plans and pricing changes, data transfers and more. Second, if you’re talking international payments, you also have complicated foreign exchange fees which come with a variety of hidden costs.
The way to minimize cost is a three-pronged approach:
Select a payment method with lower failure rates - thus giving you fewer payments to rectify
Choose a payment provider that integrates easily with your billing software - so you incur less manual work and time handling data
Select a payment provider that provides real-time reporting on payment status - making it easier to resolve payments that do fail
At GoCardless, we can help you reduce payment operating cost with payment failure rates as low as .5% (after retries), integration with the world’s leading CRMs, and real-time insight across the entire recurring payment process.
In fact, the IDC recently released a whitepaper showing that by using GoCardless for recurring payments, companies saw a 56% lower cost per transaction on average.
Stay tuned for more valuable webinars and upcoming events here on our Resources page.