In recent years, business owners and new online companies have made the switch from traditional one-off transactions to a recurring revenue model. A recurring revenue model provides business with a more effective distribution channel for products or services, opens you up to a steady income stream, and helps you forecast revenue and growth. Your customers can also benefit from the flexibility a recurring billing plan offers, such as lower upfront costs.
Recurring Billing provides your business with the data to predict revenue and the ability to lower cost of individual sales, while increasing lifetime customer value.
How to Build Recurring Revenue
Using a Recurring Billing payment solution is the key to a recurring revenue model for your business. Recurring Billing enables you to set your customers up with automated payment plans based on a custom schedule. Customer plan information and credit card details are securely stored online and charge automatically once the subscription period begins.
Billing Automation Saves You Time
Even if your business is already using a subscription-based pricing model, manually processing those transactions can cost you time and money. Manually billing customers costs an average of $10 per month per subscription. Moreover, when a customer calls to update their payment information, it can typically cost at least one month’s margin just to deal with the customer support ticket.
Billing automation help your business avoid losing revenue because of manual billing costs. Automating your recurring payments is critical to building a steady revenue stream.
Businesses can save tens of thousands each month by employing an automated billing system for their recurring revenue models.
The Advantage for Businesses
For businesses, recurring billing generates predictable revenue for the duration of the subscription. It promotes customer retention because opting out and joining a new service provider is entirely the customer’s job, work they don’t want to do. Complete transaction histories for every customer on hand helps to resolve the issues that pop up from time to time, at a much faster rate, increasing their satisfaction with auto-payments and subscription renewals.
The convenience of auto-renewals means that the business doesn’t have to wait for customers who may hesitate before renewing.
To support recurring- and subscription-based payments, businesses must accept credit card payments. However, the storage of personal data from credit card sales is subject to strict guidelines imposed by the industry. By being PCI DSS compliant, Payfirma ensures that customer payment information and personal information are secure.
The Advantage for Customers
Customers like to know exactly how much they will be paying each term, it lets them plan out their future cash flow. Payment plans make products and services more affordable by allowing customers to avoid huge upfront payments.
Recurring Billing Strengthens Relationships
A recurring payment plan provides a continuous relationship between the business and the customer. It promotes customer loyalty and businesses can provide their current subscribers with special offers, using exclusivity as a reward for subscribing to their payment plan.
Getting Started with Recurring Billing
Now that you know what Recurring Billing is all about, how do you get started? Here are the steps you can take to set up your business for a recurring billing model:
1. Define the offer: What product or service is your business offering? At what pricing levels? Define the benefits that your customer will be receiving over during each payment interval and how many times it will recur.
2. How customers will be acquired: Define your sales and marketing strategy to bring in customers and get them on your plan.
3. Find a recurring billing service: Make sure to choose a service provider that will provide you and your business with the tools to begin offering recurring billing.
4. Customer support: After setting up your recurring billing feature, make sure your business has a solid customer support program to help your customers with any issues that may come up while choosing their plan or during their subscription.
5. Retention: To keep your customers happy, eliminate as much friction as possible during auto-renewal.
By embracing new payment options, businesses can remove the negative psychological association around parting with your money. This allows their customers to focus on the excellent service or product, instead of handing over cash on a monthly basis.
Subscriptions imply a closer relationship with the customer. It is the difference between just touching them at a single point of sale or being an ongoing presence.
Top 5 Reasons for Using Recurring Billing
How a new payment technology that can help your business predict revenue and improve the customer experience.
Cloud based billing services transfer the burden and risk to the provider.
2. Low Cost
With no hardware to be purchased, companies using cloud payment services pay for service and don't need to buy any hardware that would need maintenance or updates.
Cloud billing services gives businesses and customers peace of mind with secure transactions.
4. Always Up to Date
Cloud billing service providers continually update their service to meet the demands of market at no extra cost to the client.
5. No Maintenance
Recurring billing software does not require installing or maintaining hardware, it reduces IT expenses and management headaches.
To learn more about how Recurring Billing can help grow your business, talk to a Payment Advisor today.