In the fast paced and aggressive world of business, developing a sustainable competitive advantage can play a vital role in the long-term success and viability of your company. From building an emotional connection with your customers to developing a comprehensive understanding of your target market, there are many ways to give your business an edge over competing companies.
But one of the most effective means of gaining a sustainable competitive advantage is also one of the most overlooked. A carefully executed payments strategy can be a great way to start building a sustainable competitive advantage and locking your customers in for the long haul. Find out more about building and sustaining competitive advantage through an optimized payments strategy.
Why is the payments process so important?
Overlooking the payments process as just another “box to tick” could have serious consequences on your company’s ability to compete. Offering a simple, intuitive payment process can convince customers to go with your brand over the competitors, while a clunky, error-strewn process is likely to drive them away (either before you make the sale, or as churn after the fact).
To see how this works in the real world, let’s look at lending products. We surveyed 400 borrowers and found that a good payment experience can have a significant effect on brand perception. For example, 78% of respondents were more likely to choose a brand that offered their preferred payment method, while 79% would be more likely to use a lender that allowed them to make and manage payments online.
So, what’s the best way to start building a sustainable competitive advantage through your brand’s payments strategy? We’ve put together a list of five tips for staying ahead of the competition.
1. Keep an eye on your customers’ preferred payment methods
If you’re not offering potential customers the payment method that they prefer, you run the risk of losing them to your competitors, crippling your ability to build a sustainable competitive advantage. Our research into consumer payment preferences in the US in 2019 shows that US consumers tend to have a stronger preference for paying by credit and debit cards, and lesser preference for ACH payments and digital wallets like PayPal. However, ACH Debit was preferred for paying household bills, so utilities companies may want to consider offering this payment method to their customers.
2. Be wary of taking a one-size-fits-all approach to global markets
Of course, relying on a single payment method is also likely to hold your business back, particularly if you’re trying to reach customers in a range of different global markets. We found that preferred payments can vary significantly between different countries. For example, German consumers are relatively credit card-phobic, with around 40% being unlikely to use credit cards, while consumers in the UK prefer to use bank debit to make recurring payments. Bottom line: offer a variety of different payment methods to ensure that you’re catering to all potential customers, wherever they are in the world.
3. Don’t underestimate the appetite for paying by bank debit
Although there is a serious appetite for paying with bank debit, many businesses are missing an opportunity by simply not offering it as a payment method. We found that in 9 out of 10 markets around the globe, about a third of consumers were likely to choose bank debit to pay for online subscriptions. But of the 44 leading global subscription websites, only one offered bank debit as a payment option. Offering bank debit as a payment method can help your business with developing a sustainable competitive advantage, simply by catering to your customers preferences.
4. Optimize the billing process to reduce customer churn
Part of developing a sustainable competitive advantage includes finding a way to reduce churn, which can be a serious thorn in the side of subscription-based businesses. By identifying what’s causing payments to fail – whether it’s insufficient funds in your customer’s account or cancelled/expired cards – you can take steps to address the issue. Offering bank debit can be an effective way to cut down on churn, as bank-to-bank payments are much less likely to fail than payments by credit or debit card.
5. Start taking payments through GoCardless
Ultimately, delivering an exceptional payment experience to your customers has a key role to play in building and sustaining your competitive advantage. GoCardless offers a fully-automated payments process that can remove the risk of human error and streamline your customers’ experience. Minimizing failed payments and offering real-time notifications and alerts, GoCardless delivers the type of simple, intuitive payment experience that can help your business build a sustainable competitive advantage.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.
GoCardless is used by over 55,000 businesses around the world. Learn more about how you can improve payment processing at your business today.