Most sellers understand the importance of choosing a subscription eCommerce platform that can help them grow their online businesses and meet their subscription goals, but getting started can be a challenge.
Nearly every business has some aspect that can be automated and packaged in the form of a subscription or membership. SaaS recurring billing, monthly product boxes, online newsletters, and so many more business models are perfect for automatic recurring billing. We leave no stone unturned as we discuss what recurring billing entails, how to accept recurring billing payments, the advantages of using subscription billing platforms, and tips on how to choose the best recurring payment system for your unique business needs.
In this guide, you'll find examples of must-have capabilities, essential features, and tips and tricks to make the most out of your subscription merchant account.
Recurring billing has increased in popularity over time. A recurring payment is when a customer pays for products and services on a regular and repeating basis. Instead of making a series of one-time payments, recurring billing allows customers to make payments remotely and on schedule.
Recurring billing is a convenient model for both sellers and shoppers. Customers get to continue to enjoy the benefits of their favorite subscriptions with no friction. Merchants also benefit from the consistent business of loyal customers. With recurring billing, merchants can easily predict their cash flow and reduce accounts receivable mistakes and other financial risks.
There are several ways to approach establishing a recurring billing schedule. For customers, the process is simple. They simply choose the recurring payment option that suits them at checkout, accept the terms and conditions, and wait for their authorization. Then the customer can enter their payment information and confirm their payment amount and schedule.
The customer's payment method will be charged on a payment schedule that both the customer and the merchant agree to at the time the initial purchase is made. Payments can occur on a yearly, monthly, weekly, or even daily recurring billing schedule depending on the needs of the customer. Whenever a recurring payment is processed, the customer usually receives a confirmation email.
Organizations will even offer discounted rates at different tiers based on how often users choose to pay. This technique is typically used to incentivize customers to commit to a more long-term payment option such as annually or quarterly. Most recurring billing models continue until the customer requests a cancellation, but recurring payment schedules can also have an expiration date.
In order for a merchant to begin processing recurring payments, they must first have a way of collecting payments. There are a couple of methods that merchants commonly use to accept payments, either through a merchant account or a payment service provider.
A merchant account is a bank account that is set up so that a business can accept and deposit payments directly. In a Merchant of Record model, the merchant outsources back-office and financial operations to their provider (the MoR), which seamlessly handles these areas in full compliance, while also offering added services such as security and anti-fraud tools. On the other hand, a payment service provider can also help with collecting recurring payments, but doesn't offer the full suite of monetization and support tools that an MoR model entails.
Both merchant accounts and payment service providers offer businesses a way of accepting electronic payments, which is crucial for companies that want to start accepting recurring payments. Without one of these accounts, it is impossible to accept recurring electronic payments.
With more and more companies hopping on board, you might be wondering how to accept recurring payments from your customers.
At the end of the day, choosing a payment provider that can assist your business in setting up your subscription management software is the best way to accept recurring payments and manage subscription billing. Many companies don't have the resources, knowledge, or the capacity to set up automatic recurring billing on their own. Luckily, there are many subscription billing platforms available to choose from that are able to help companies of all sizes.
In order to choose the best recurring payment system, consider the following subscription eCommerce aspects and opt for a provider that can support your specific business needs:
With the help of a reputable payment provider, it's easy to accept digital payments for memberships and subscriptions. All you have to do is choose the best recurring payment system based on the circumstances and needs of your online business.
If you've considered switching to a recurring payment model then you probably already know of some of the advantages such as continuous cash flow, customer retention, and cost efficiency. But when it comes to selling a subscription service, there are advantages that aren't so apparent.
Whether you want to sell online memberships or use a subscription based model, here are some of the top advantages of switching to a subscription eCommerce platform:
If you are still learning about how selling a subscription service can help reach your revenue goals, it can be a lot to take in.
One of the most valuable assets that you have as a subscription eCommerce business is the data that you collect through your existing customers. If you don't already have buyer personas created for your marketing channels, then accepting recurring payments can help you get started. Use the data that you have collected to create several buyer personas that you can then target with different subscription tiers and packages.
In the beginning, you won't have that much customer data available to you, but it's still important to make assumptions in order to determine the types of packages that your future customers will want and how much they are willing to pay for them. As your company grows, you can incorporate that new information into creating more accurate buyer personas so you can adjust your membership levels and subscription offerings.
It might be hard to picture what upselling means when it comes to automatic recurring billing. Yes, you have their commitment to membership and their payments come out every month. But could you be earning more from your customers?
The fact is, many of your loyal customers would be happy to pay a little extra for more advanced features. Subscription-based businesses are good candidates to implement strategies for upselling, in moving existing customers to higher priced packages.
What is it that you sell to your customers? Do you provide a streaming service, a monthly box of goods, or a SaaS solution? When it comes to selling subscriptions online, it's best to think of your subscription as a product.
What do we mean by that? While many automatic recurring billing customers will directly become repeat customers, there are those who will consider unsubscribing. Thinking of your subscription as a product can help change the way that you think about your billing tiers and membership packages.
Think carefully about the features, services, and products that you offer at each tier and price them accordingly. You might consider setting the price a little bit below what you first have in mind. That way, customers feel like they are getting a good deal and investing in something that adds value to their life or their business.
Not all subscriptions are created equal, and neither are subscription billing platforms. Find a platform that meets your business needs, as well as the needs of your customers, all while leaving plenty of room for flexibility and growth.
It's also worth mentioning that you should choose the right eCommerce platform as well. If the sales platform that you choose is not a good fit for your brand or the kinds of products that you sell, then selling a subscription service isn't going to do you much good in terms of income. In the following sections we'll dissect exactly how you can go about finding the best recurring payment system for your business.
Whether you are looking to expand your reach or you are just getting your ideas off the ground,
there are some key things to consider as you begin your subscription eCommerce journey.
For both merchants and their customers, there are some capabilities that are non-negotiable when it comes to managing subscriptions, recurring billing, and online memberships.
There are numerous types of subscription management systems that come with different collections of features and capabilities. It's up to businesses to find the right match for them and for their customers. These tools must be capable of managing recurring billing, collections, communication, and customer management - all within one easy-to-use platform.
Automating the billing process allows businesses to enhance their features and products while also paying attention to their customer retention and acquisition numbers. The ability to charge customers at any interval automatically without having to manually process payments adds a layer of speed necessary to satisfy today's customer.
Look for a platform that also gives access to retry logic capabilities. These tools are used to reattempt payments that previously failed so customers don't experience any lapses in service and merchants continue receiving revenue from subscription sales.
Most recurring billing systems, including free ones, will come with the ability to send out automated invoices. However, in the subscription space, things can get complicated. SaaS, eCommerce businesses, and subscription service providers will typically need a professional grade subscription billing platform that can handle their complex invoicing needs.
For example, when managing B2B accounts, there will often be multiple users operating within a single subscription. B2C customers may have a subscription membership in addition to making regular one-time purchases with your company. In situations like these, it's wise to have detailed automated billing that accurately maps out your customer's pricing in a way that is simple to understand.
Subscription billing and recurring payments supply eCommerce businesses with an incredible amount of data. In order for this data to be used properly, there must be a way to sift through the noise to create a cohesive understanding of your customers and how your business is addressing their needs. In a perfect world, your subscription billing platform should provide you with reporting capabilities that can calculate metrics and trends while highlighting insights to inform business decisions.
A major pain point that merchants often have to deal with involves reporting limitations. In an answer to this glaring need, many platforms are starting to offer custom reporting capabilities. To avoid any issues with analytics and reporting, find a subscription billing solution that enables granular insights, customizable reports, and advanced analytics.
The process of choosing a subscription billing platform is simple when you know what you're looking for. A subscription eCommerce platform will address different needs for a small business versus a larger enterprise. The first step in choosing a platform is to identify the size of your customer base in order to discover the needs that your current growth stage calls for.
At some point or another, your business will need help to manage recurring payments. Additionally, your customers are going to need top-notch support as well. That's why finding a subscription billing platform that offers fast support is vital to the success of your subscription program. Whether you need assisted support, self-service, or a combination of both, there are plenty of subscription billing platforms available that can meet your needs.
Without an understanding of the why's and how's behind the actions of your customers, it's virtually impossible to gain a clear picture of your user base and the ways your business can expand. You'll want to find a platform that allows access to data for numerous customer metrics including renewals, expirations, forecasts, and trends.
Ensuring that the platform you choose comes with a reliable payment gateway can save you and your customers a lot of trouble in the long run. Even some of the best platforms available may not include a payment gateway as a part of their services, so double-check that you have everything you need to accept payments on your website, so you won't have to build your stack from different bits and pieces.
If you're still experiencing difficulty finding the right platform for you, then be sure to check out reviews from other businesses like yours to determine if a subscription billing service is right for your company.
While SaaS customers receive continuous, hassle free service with subscription billing, SaaS providers are tasked with creating a seamless experience that involves many moving parts. One of the most common questions that SaaS providers have when it comes to offering recurring payments is whether it's better to build a custom solution or choose to go with a subscription billing platform.
For many companies, it's better to select an automatic recurring billing platform that meets the needs of customers and offers customizable features. This saves SaaS providers and developers a lot of time and effort that could be better spent on optimizing their products and services.
Another reason why many companies choose not to build their own payment platform is the plethora of rules, regulations, and laws specifically for recurring billing. According to a recent survey, the average web developer possesses less than five years of experience. So, without in-house billing and payments experts with the right background, it can take years of preparation and study before a recurring billing payment solution can be built and tested.
Today, it's becoming increasingly important that businesses provide their customers with continuous service with streamlined journeys and easy access. SaaS subscription platforms are extremely popular for a variety of purposes, and companies that can accept recurring payments on a monthly or annual basis offer a more comprehensive service. Your solution should add value with ease of use and convenience in addition to reduced downtime for customers.
What it comes down to is the needs of your business and its customers. Define your goals and decide if your SaaS company is ready to accept recurring payments before you choose the best recurring payment system for your company.
Using a merchant account when working with a subscription provider offers businesses a number of benefits and opportunities. Subscription merchant accounts are known for their efficiency and reliability and can be a great asset for almost any business model.
Businesses who offer recurring billing should create multiple packages based on pricing tiers, subscription lifecycle, or other options so that customers have the freedom to choose the package that suits their needs.
You can also allow customers to decide between different recurring payment intervals. A merchant account comes with more flexibility and capabilities in the pricing department. For example, a merchant might want to offer pricing discounts for customers that choose annual billing to persuade users to pay in advance for their products and services.
With more ways to pay there are more ways for consumers to get involved with your brand. Merchant accounts for recurring billing can help businesses that want to accept payments across multiple sales channels. Some of these channels might include your own website, mobile apps, various marketplaces, and even partner websites. With a subscription merchant account, it is easy for businesses to monetize their sales and marketing channels.
Customer retention is the best way to ensure consistent revenues and long-term business success, and it's no surprise that automatically re-billing customers can help reduce customer attrition. Using a recurring billing payment model that includes re-billing is a great way for organizations to fight churn and increase their customer retention rates.
If a customer's recurring payment fails, automatically re-billing can ensure that the customer doesn't experience any gaps in service. Some merchant accounts include more powerful tools in this area, such as automatic updater capabilities. In the event a customer's card expires, this tool can automatically update the recurring billing payment method so that future payments are successful.
Another case where recurring billing can help increase customer retention is through auto-renewal campaigns. These campaigns offer customers a way to enroll in recurring billing programs and invite them to switch to an auto-renewal package. Businesses should leverage the convenience of automatically renewing their account as well as offering some kind of incentive for users to make the switch. In most cases, a percentage discount or a one-month-free kind of incentive is a great way to convince customers to sign up.
The reinforced security offered by subscription-based merchant accounts helps prevent fraudulent transactions and protect your business from scammers. Merchant accounts bolster your existing security efforts in a number of ways.
Out of the box PCI-DSS compliance is a must since you are dealing with vast amounts of private consumer data. Since all your payments will be processed through the merchant account, your business doesn't have to worry about storing this data on your own servers. Of course, if you prefer to have full control over the payment process then it is possible to host your own checkout experience with API integration.
Data encryption and tokenization is another way that using a recurring billing merchant account is vital for organizations. This means every payment will be encrypted and safely stored within the payment gateway's vault. Whenever it is time for another recurring payment to be drawn, the payment processor will use the encrypted token to complete the transaction instead of the actual card information.
Your subscription merchant account will also provide your business with support for risk mitigation for several different scenarios. There are many ways that merchants can become vulnerable to fraud including refunds and chargebacks. Risk mitigation support helps businesses ensure that their risk exposure is reduced.
When it comes to servicing customers, subscription platforms take over many onboarding and activation tasks so that companies can focus on their services. An ongoing, long-term customer relationship relies on great customer service at multiple points across their journey. Your recurring billing platform provider should offer self-service options as well as phone and email support for customers, to ensure queries are addressed quickly and the product experience isn't interrupted.
According to one study, half of the respondents reported that 40% or more of their companies' revenue came from subscription-based and usage-based models. Of the executive respondents, one-fifth said they were incorporating automatic recurring billing models into their future strategy, and another fifth said that they had a recurring revenue business in the works to launch in the near future.
Using a subscription-based system is a great way to monetize various sales channels and create a customer centric marketing and user experience. More and more businesses are getting onboard with automatic recurring payments as one of many means of expanding reach and supporting other customer retention activities.
With so many options available, it can be difficult to choose the best ecommerce subscription platform that meets your needs and the needs of your customers. The right provider can help you understand key insights about your customers and the value of your subscriptions. Whether you're selling directly to customers or you are mainly a B2B company, there is a recurring billing solution that is right for you.
See how 2Checkout helps you sell successfully online and test the capabilities that will support you in collecting more revenue from your subscribers.