How To Turn Your One-Time Fee Business Into A Subscribe-Based Model

"Image courtesy of Stuart Miles / FreeDigitalPhotos.net"

“Image courtesy of Stuart Miles / FreeDigitalPhotos.net”

A subscription based business model has many advantages over a one-time fee model. It offers a stable income allowing you to pre-plan what resources you need on a monthly basis. A subscription based business can also offer your business a larger customer lifetime value while at the same time giving a perception of a lower cost for the product by your customers.

Subscription based businesses can afford to bring in fewer new customers per month and afford to dedicate more time to customer retention activities.

Changing your business from a one-time fee model to that of a subscription based model can seem difficult. However, Adobe has recently done this with their creative suite and while it has had some criticism, many pundits are seeing it as necessary for the company and consumer.

The main issue with this is how your business designs and implements the change. Here is our quick guide how you can switch.

1. Design Your Subscription Product

The first step you need to take is to design your product. If you run a software business this would be an easy decision. Other industries may have to be inventive but usually the subscriptions could allow customers access to resources, tools, guides, advice from your team, etc.

With your decision you should consider how much access to the product the consumer has. You might want to offer different access for different subscription levels. For example, if you have a digital art creator your lowest subscription model could offer 300 stock images to use, while a higher priced option offers 1,000.

If you want to start with one level of subscriber, remember to include some room for improvement later on. You may find customers want more features/access and would be willing to pay extra for it.

2. Choose Your Pricing Level and Billing Method

The price of your subscriptions is very important. You want to create a price point which gives you good revenue while being perceived by the consumer as a bargain. The monthly price should never be the same as a one-off fee, but instead that fee should be collected over the expected life-time of the customer.

For instance, if you sell a product now for $120 and you believe that the lifespan of the customer is 6 months you will want to charge at least $20 per month. You will also want to add a small margin, so the customers who are with your business less than you expected are still paying a significant amount towards that one-time fee valuation.

The next step is to decide how you will collect payments. The best option is to use a product, service or company which allows you to automatically collect membership fees. Many products available will automatically adjust your subscribers’ access should they upgrade, cancel or default on a payment. Ensure you check with your provider whether they offer this.

You’ll need to decide what to do with previous customers. Are you going to leave them with full access, offer them a discount or a subscription for free for a period of time? If they don’t take up your offer on the subscription will you remove access?

You could increase the uptake of the subscription with these clients by offering extra benefits in the subscription model than they currently have with the one-time fee product.

3. Communications And Testing

Create the website and all the online and offline systems to help run your subscription business. This can take minutes or days to implement depending on the software you are using. Bring in all the technical people you can to help ensure the system works flawlessly.

Then you need to create the marketing materials to announce the changes. Remember to sell the benefits of the change rather than the features. There are some generic benefits all subscription based customers can experience:

  • Lower initial and short term costs to gain access to product.
  • Better customer service and support.
  • Instant access to updates and fixes.

At the same time you want to identify a launch date and create a very specific marketing plan to create anticipation to your target audience through email, social media and other advertising channels.

4. Launch

On the launch day remove your one-time product and switch to the subscription based business. Don’t offer your clients any access to your old product to limit confusion.

Conclusion

Although it seems like a difficult proposition, changing from a one-time fee into a subscription based business is a simple and straight forward exercise. The benefits you gain from moving from one model to another can support the sustained growth of your business and offer your customers a great customer experience for a fraction of the cost per month.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

3 Security Questions Customers Will Ask About Your Monthly Service

"Image courtesy of cooldesign / FreeDigitalPhotos.net".

“Image courtesy of cooldesign / FreeDigitalPhotos.net”.

When customers are looking at your business they will be asking themselves several questions. Some of those questions will be about how your product can support them and whether the value you have placed on your product matches their perception.

One of the more complicated areas that will be scrutinized is the security of your business. Customers always want to know that you can provide a safe environment for their payments and details. Therefore there are a number of questions which they are likely to ask you and which you will need to answer.

Here are three of those security questions and how you can provide a solid answer to convince your customers they can trust your monthly services.

1. How Are Customer Details Stored and Used?

Privacy concerns are a major issue online. Many individuals have concerns that their details will be sold to third parties for extra marketing and sales. This can sometimes lead to customers receiving dozens of spam emails, unwanted mail and phone calls which are obviously unwelcome, so consumers avoid companies who do sell on their information. Customer data can be very valuable, which is why some businesses do this.

There are certainly instances where customers will be happy for you to provide their details to other parities. However, for the majority of the time small businesses should exercise caution and not sell on customer information.

There are two ways a business can effectively deal with this. The first is to include a checkbox asking permission to share consumer’s details. This creates a psychological contract between you and the consumer.

Another method is to clearly state that you do not share any customer data with third parties.

2. How Secure Is The Website From Hackers Wanting To Steal Information?

Hacking is a real security threat online. Major corporations and small businesses are constantly being attacked by rogue internet users in an attempt to disrupt a website’s operations and steal consumer information to sell on to other companies.

A big security leak is often bad news for a company and some businesses have been severely affected by hackers attacking their networks.

There are two ways in which your business can reassure customers on this issue. The first is to employ the best technology to protect your system. Tell your potential customers exactly what system you are using and how it is the best on the market to protect your network and their information.

The second is to regularly take down your site at a preplanned time to perform regular updates. Having constant reminders on this procedure and how it will affect your customers will reassure them you are taking the right precautions to protect their data.

3. Use A Good Third Party Billing Service

Nothing is more important to your customers than the security of their financial details. Consumers sometimes want to double check when they are being asked to pay a small business with no history directly.

Using a third party billing system is one of the best ways in which you can overcome this. A third party billing company is likely to be large, well known or at least have an established reputation which can be looked up easily.

Therefore advertising that all payments are taken through a third party might be a good way for your business to reassure your customers that their financial details are safe.

Conclusion

Demonstrating to your customers that you take their security seriously is a step towards developing a relationship built on trust. This type of relationship is strong and encourages your customers to be with you over the long term. This relationship sometimes requires you to reassure your customers with words – at other times it requires investment in technology.

Whatever the method, it is important you invest to attract customers to your brand.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

How To Use Comparative Selling To Sell Your Subscription Software

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Before making a purchase, many decision makers like to have a firm grasp of what they are buying. Normally this can involve some kind of interaction with the product. With subscription software this can be difficult. A free trial may be a good way to attract customers, but it might not be the best way to convert those who take up your offer.

Therefore, other methods have to be utilised to encourage your target market to purchase a subscription. Another method is to compare your software. Comparative selling can happen on a subconscious and conscious level for the customer and there are several methods to exploit this effective selling tool.

1. Comparing Price To Everyday Purchases

Your pricing may be very reasonable, but without a tangible product for the customer to see, they may find it hard to value the offer. Comparing the product’s price to common purchases creates an impression of product value in the mind of the customer. A common comparison for a subscription is coffee.

Be careful in your choice and the frequency. Four cups of coffee a month is ideal because many people consume more than that.

2. Original Price Compared To Sale Price

To achieve great sales, stating an original price for a product and then offering a reduced price will entice visitors to convert. Often these new customers are ‘bargain hunters’ who want to find a good deal online. This works so effectively it even outperforms the rule of 9 – that is any price which ends with 9 has a higher conversion rate than that of a price point which is rounded up or down.

Therefore it is important to consider demonstrating a higher starting price and then showing a discounted price, preferably ending with a 9 for double effect.

3. Comparing To Useless Price Point

How you price different subscription plans will greatly affect your customer’s perceived value of your product. This in turn will change how they convince themselves of which plan to purchase. Research by Dan Ariely on the pricing strategy of The Economist shows this to great effect.

In the Economist’s subscription options they had three price points.

Subscription Offer One: A web only subscription at $59

Subscription Offer Two: A print only subscription at $125

Subscription Offer Three: A web and print subscription at $125.

Subscription offers two and three don’t make sense being the same but option three offers more. In the consumer’s mind, the second option becomes a ‘useless’ price point and they would be better off selecting offer three. In the study, option three had a high uptake even though there was a cheaper option available. This is because when faced with this type of scenario, consumers become value seekers rather than bargain hunters and will always seek the most value for their money.

This was further demonstrated in further research. The Economist tested what would happen if they took away option two. In this scenario consumers were more likely to purchase option one as they convinced themselves they didn’t need the upgrade.

Therefore having three options with the second option at the same price point as the most expensive option may increase your revenue.

4. Comparing Compared To Competitors

If you are in a highly competitive market you may be tempted to highlight your services or prices against that of your major rivals. This could work in theory, yet research has shown that at times, lower cost products do not always perform well against higher priced branded products.

This is because there is a consumer perception of value on the branded product. Instead you should concentrate on comparing your product’s features and benefits to that of your competitors. Consumers are more likely to buy a product which has favourable benefits rather than a favourable price.

Conclusion

There are several options when you want to use comparative marketing to convert your customers. The above four options are used regularly by many organisations to sell products and subscriptions. Consider what methods you can exploit in your sales process to increase conversions, income and profits of your subscription based business.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

Key Subscription Business Metrics To Monitor Each Month

"Image courtesy of jscreationzs / FreeDigitalPhotos.net"

“Image courtesy of jscreationzs / FreeDigitalPhotos.net”

To run the most effective operations in your business you need ensure you are monitoring your business’ metrics very carefully. Metrics are the indicators which demonstrate not only if there is a problem within your business, but where it is and how you might be able to solve it.

Here are some of the key metrics, what they mean and how you can improve the results:

1. Net Subscriber Change

This is where you are comparing the number of subscribers from the beginning of the month to the end. This metric is displayed as a percentage and can be positive or negative. It is worked out by dividing the number of subscribers at the end of month by the number at the start of the month and multiplying by 100.

You’ll always want this figure to be positive. A negative figure will state that your subscriber numbers are shrinking. If your figure is negative you have to look at several aspects of your business. Firstly is your promise before the customer’s signup matching the service you are offering? Not matching your promise can result in customers leaving quickly.

2. Customer Lifetime Value

One of the most important aspects of having a subscription business is to ensure your customer’s lifetime value is high. This allows you to offset the costs to bring in the customers and supply them with your product over a longer period, increasing the profit you make per month. To calculate this metric you need to take the average amount earned from the customers who have left during the month.

A low value can be a sign of a number of different problems including poor customer service, a mismatch of promise and delivery and your customers’ poor valuation of your product. Therefore addressing these issues is an essential task.

3. Customer Acquisition Cost

The main issue with a subscription business is that one month’s subscription does not usual cover what it costs to gain new customers. Knowing how much it costs to acquire the customer and their lifetime value, can help you determine if you are running an effective business.

A high customer acquisition cost specifically refers to your marketing tactics. Therefore you need to consider whether you are utilising the best avenues for your market. PPC and display advertisements cost a significant amount. You may not need to remove them from your marketing mix, but you should adjust them so that your audience is more targeted or the copy is more persuasive.

You should also consider your checkout process ensuring there are as few barriers to buying as possible and your landing pages are optimised. Consider running split testing to test different landing page designs and how effective they are at securing new customers and leads.

As another option you could consider increasing your marketing on other avenues such as blogging and social media, both of which help increase your search engine page rank and are inexpensive. Search engines can contribute up to 70% of your web traffic.

Having a good marketing mix which encourages good page rank can lower your customer acquisition cost.

4. Customer Conversion Time

Not all customers convert instantly upon learning about your brand. Sometimes it takes time for them to do further research or to look around the market for other options. They may subscribe to your mailing list which further down the line will support their conversion. The length of your conversion time is indicates how persuasive your marketing content is.

A long time from the first interaction to converting into a customer means you need to look at your brands’ messaging. Are you being persuasive enough, are you selling features rather than the benefits? These can make a significant difference and lower the time it takes for your audience to covert, the acquisition cost and increase lifetime value.

Conclusion

Getting the most from your marketing is all about understanding the statistics of your business. The above four are highly important if you want to maximise your customer acquisitions and their value. From there you can make adjustments to create a successful, high earning business.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

5 Ways To Close New Customers Without Offering An Introductory Discount

"Image courtesy of iosphere / FreeDigitalPhotos.net"

“Image courtesy of iosphere / FreeDigitalPhotos.net”

Part of bringing on new customers is about closing the deals with them. There are many ways around this and often offering an introductory discount is the most popular. But this strategy often lowers profits and doesn’t guarantee long term clientele as once the discount has gone, so might the customer.

Therefore you have to think of other routes which you can take to ensure you are able to close the sale. Here are five high performing methods you could implement today.

1. The Balance Sheet Technique

Whether a business client or individual, a buying decision is an emotional decision based on a list of the pros and cons of the purchase. The balance sheet technique is about influencing the list by offering arguments on both sides.

A good sales person will always have pros which outnumber and outweigh the cons and it is always important to ensure you end the spiel on a positive. You should also ask your potential customer of their thoughts before you make the list. That way you can tailor your pros to combat their negatives.

2. Negative Assumptions

‘Negative assumptions’ is about having the potential client confirm their interest or intent to buy the product by giving a negative response to a question. Asking the client: “Is there anything which is stopping you from buying this product today?” or “Are there any concerns you have about the service?” are great examples of this approach.

This way you are making the customer reject their barriers to purchasing.

Though there is a problem that if they do come back with a negative reason you need to be prepared with a response.

3. Time Sensitive Issue

Nothing works better at closing a deal than giving the impression that what is on offer will only be available for a limited time. This works really well with products but can also be used with services. You can always tell potential customers you are only signing up a certain number of clients to your products, or that with demand as it is, prices may increase in the near future.

The fear of losing out because they have not completed the deal on time might backfire should your reasons for the limited time never occur. For example, if you say prices may increase and they never do, consumers may feel cheated and leave your service.

4. Provide Life Changing Advice

If you want to go for the long term consider signing up your potential customers for your emailing list. Then send them articles and useful tips which can help solve their problems. This is the best method to establish your business as an authority in the industry. The more knowledgeable and the more influence you have in their lives the higher the chance your audience is going to come and buy from you.

This is a rather long route approach and it could cost you in the short term. But email marketing is the third best sales performer after organic and direct searches.

5. The Workflow Option

If you have a potential customer who has a c

ertain deadline but they are not favourable to the deal you can use a workflow system to close the deal. This is when you get them to confirm the date at which they would like the work to be completed and then demonstrate how your product / service can help them achieve this.

You need to make clear that your timeframe only works because you have started the process at that moment (also using the time sensitive approach) and you should ask what will happen if they don’t meet those deadlines.

Closing a sale needn’t mean that you are offering lower cost prices. There are many options for closing a sale, many of which will not cost you anything. But whatever the outcome you must always consider the impression you leave on the customer. After all they might not buy today, but they could do in the future.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

How To Increase Renewals For Your Subscription Business

"Image courtesy Stuart Miles / FreeDigitalPhotos.net"

“Image courtesy Stuart Miles / FreeDigitalPhotos.net”

Recurring subscribers and renewals could account for 40% or more of your revenue. Ensuring you have a process in place to improve your retention is vital for the financial stability of your business. To do this you must put in place a set of procedures which actively engage and encourage current subscribers to stay with you.

It is estimated that only 21% of all businesses have a sales team whose sole job is to retain clients. Yet this team could be the most cost effective in your entire business. It is far easier to sell to a current or previous customer than it is to sell to a new one.

Therefore, you need to come up with ways to increase the number of current customers who stick with your business. Here are several tips to help you get started.

1. Ensure You Build A Relationship With Your Clients

When you are in the initial stages of selling your product with new customers, you are unlikely to know anything about your prospects. This means that you are often taking guesses at their requirements and desires in order to sell the benefits of your product.

Once they are a customer you can start to learn more about them what they want. This means when it comes to renewals you can heavily focus on your clients’ requirements and therefore improve the retention rate.

Of course one of the biggest ways to build a solid relationship with your customers is to deliver on your original sales promise. By doing this you will find your customers will learn to trust your business.

2. You Are Better Than Your Competitors

At the end of a contract very few customers are unlikely not to need the service or product you are offering, yet they may look for another provider. To avoid losing valuable customers to your competition you need to concentrate on what your competitors are doing and how they are performing.

By keeping an eye on how your competitors are performing you can demonstrate to your customers why it has been a wise choice to be with your business. It also supports why your clients should renew their subscriptions and contracts with your business.

3. Give Special Offers Based On Usage

Every one of your customers is unique. They are likely to use your services or products differently than that of your other customers. If you are able to monitor this you can determine what is really interesting your client and then re-sell them your package based on those observations.

You can take this process up a level and offer a special deal which is tailored around their usage. For instance, phone operators may notice that a customer’s calls make up 82% of their bill whereas SMS messages are worth 10%, with internet usage at 8%. The service provider could therefore offer a deal where their calls are cheaper but the SMS and internet usage are the same or slightly more.

4. Give Discounts Based On Their Length Of Custom

Similar to the above, customers who have been with your company for an extended period of time could be offered a discount for continuing on. Provided you have a sensible discount level the cost can be afforded because it is cheaper to maintain current customers than acquire new ones.

5. Ensure You Are Contacting The Customer Early

One of the biggest failings of businesses is not that they don’t offer the deals or the renewal, but that they don’t do it early enough. Therefore you should always attempt to contact the client at least one month in advance and talk honestly with the client about their renewal.

Catching them early enough will lessen the chance they have searched for an alternative supplier of your services or products.

Renewals are cost effective revenue streams. It costs far less to have an old client renew than acquiring a new client. This strategy does require you to invest the time and energy to create an efficient renewal system, customer service experience and to ensure you deliver on your original sale goals.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

How To Increase Your Prices Without Upsetting Customers

Image courtesy of Kittisak / FreeDigitalPhotos.net

Image courtesy of Kittisak / FreeDigitalPhotos.net

It is a simple fact of business life that as you continue to grow and expand – costs rise. This is a natural process that can occur from increases in numbers of employees, increases in wages and suppliers raising their prices to name a few reasons.

At some point you will have to consider whether or not to raise your own prices, yet this can be met with some resistance by your customers.

Some previously loyal customers may leave your business in order to find other service providers. Others could be speaking more to your customer services, taking up valuable employee time. This is probably why many businesses decide to absorb rising costs themselves rather than face the wrath of their customers.

Increasing your prices without upsetting all your customers is possible. However, it requires a significant amount of planning and skill to achieve. Here are some of the methods you can use in order to raise prices and still maintain the majority of your customer base.

1. Surprise And Delight Your Customers

The first trick starts long before you need to increase your prices. If you are able to satisfy the needs of your customers and excel their expectations they are likely to tolerate the odd price rise. On the other hand, should you only just be managing to support them and they are often finding mistakes or problems with your service, they are not going to want to pay more.

This doesn’t mean the odd mistake should prevent you from increasing your prices as long as you are quick at dealing with any problems to the customer’s satisfaction.

2. Communication

You need to ensure you are explaining when and why you are going to raise the price of your services. Customers like to know in advance for their own financial planning and providing a solid reason for the price increase can help them be more understanding.

Giving at least two months warning is probably the best time frame, enough time to plan for the increase yet close enough that it is not forgotten when the new price on the invoice comes in.
Avoid using the excuse of rising costs. This may be a primary reason, yet some businesses using this model come under heavy scrutiny. Some organisations have increased their prices, blamed on higher costs of resources, only weeks before they announce an even larger increase in profits.

As a business you have to make money but customers will not be kind if they see your wealth increase when you’ve told them you’re facing increased pricing.

Instead time your price increases to coincide with other positive changes to the company, perhaps new infrastructure, i.e. new technology being implemented or something else which will benefit your clients. If they see they will gain from the price increase then it will be received more favourably.

3. Add Extra Benefits

Follow the example of Amazon Prime or magazine subscriptions. When they increase the prices they offer customers more features. In Amazon’s case they add more content to their service, giving customers more choice. Magazines will often become larger or decrease the number of advertisements in their publication.

If you can find a way to add features to your service during your price increase you can be sure customers will not mind so much.

4. Do Smaller Amounts More Frequently

Probably one of the biggest mistakes is that companies do not raise their prices soon enough or do it in too big a jump. Customers are going to be more resistant should you increase your price by $5 every two or three years than if you do it $0.50-$0.75 every year.

Many companies do this because they are fearful of losing customers with a price increase. Yet with good communication and an excellent service, a smaller amount is more likely to be overlooked by customers.

5. Restructure / Redesign Your Products

One way of increasing prices is to restructure your products and hide the increase amongst the bigger changes. Sky TV and other satellite TV providers do this frequently by rebranding and renaming their channel bundles.

In these circumstances it can be tough for your clients to see the price increase. Instead they are likely to be studying the new features and structure and comparing it to the old. This may cause some customer service problems, but your agents could be trained to deflect concerns with explaining how the new structure improves the service.

Increasing your prices is a natural part of being in business. Ensure you inform your customers with a good reason and in a timely manner. Also remind them of the benefits of your service at this time and often the majority of your customers will stay with your business.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.