Tag Archives: recurring billing

7 Common Challenges With Subscription Model Businesses

Image courtesy of renjith krishnan at FreeDigitalPhotos.net

Image courtesy of renjith krishnan at FreeDigitalPhotos.net

Having a subscription business is one of the best to run. They offer you a significant number of advantages and are a great way for consumers to gain access to software, information or products that might usually be out of their price range.

Yet there are a numerous challenges that businesses operating under the subscription model face. Here are seven of those challenges.

1. Customer Management

Subscription businesses tend to have a significant number of users at any one time. This can be hard for the business to manage with all the customer records that are needed. An inaccurate customer management database can damage relations because mistakes are made. These mistakes can be down to staff not knowing what level of service customers have, whether they are on a trial or when their subscription period ends.

To avoid this, you need to utilise an effective customer database that can categorise where in the sales process an individual is and previous interactions they have had with your company. It should also track the current status for a customer’s membership.

2. Automatic Invoicing

With numerous customers signed up to the services of a subscription based business, manual invoicing becomes troublesome. Invoicing becomes an even bigger problem if you have customers on different payment options, subscription levels or with add-ons.

One of the best ways to solve this is to use an automatic invoicing system that can use your customer database to automatically generate and distribute your invoices. This can also be implemented when your customer purchases a subscription for the first time and for when customers cancel their subscription.

3. Secure Payments

One of the biggest challenges subscription businesses face is the security of their customers’ payments. If subscription businesses cannot offer guarantees that their payment system is secure, customers are unlikely to sign-up for membership.

4. Pricing Plan Management

Most subscription businesses have different levels of service. Dollar Shave Club for instance have three different types of subscription and some SaaS companies have many more. Different subscription levels are a great business strategy and likely to grow your business as it offers more affordability or choice to the consumer.

This can make recurring billing difficult to manage. To combat this complexity, you need to utilise an effective recurring billing software program that will manage pricing changes with ease.

5. Failed Transactions Management

With so many customers subscribed to the business, it can be difficult to notice when a failed transaction has taken place. It is an ineffective use of your time to go through the list of transactions manually to check everyone. This task is almost impossible if you have hundreds or thousands of customers.

Therefore, businesses need a way to automatically highlight when transactions have not been processed and to inform customers of failure. From there, the payment system can automatically resolve the issue by finding a solution for payment to be made or to cut off the customer so they don’t get access to the products / services until the payment has been made.

6. Discounts And Promotions Management

To grow, subscription businesses may require special promotions and discounts to entice target audiences to sign-up. This can be tough to manage manually and would require significant work that can make implementation financially ineffective. By using an effective subscription billing model, businesses can track the number of discounts redeemed and the effectiveness of the marketing efforts as well as seamlessly manage the billing.

7. Multi-Currency and Language Support

While some subscription businesses only offer their products to customers in one country, those offering subscription or content services can often be global. This can cause numerous problems with billing customers, whose charges may fluctuate with exchange rates or can’t read the bill because of language problems.

A good subscription billing system should be able to manage the invoicing no matter what country the customer is located.

Conclusion

There are numerous challenges that subscription businesses face while setting up their services and maintaining their customer relations. One of the only ways that businesses can overcome this is by using an effective recurring payment system that can address these issues.

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.

Getting Your Customers To Understand The Convenience Of Subscriptions

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Subscription businesses are a great model because they offer businesses a significant amount of benefits while also providing a high degree of customer satisfaction and affordability to customers. There is a problem however; many customers do not see the benefits of a subscription business and this can hold them back from joining your business.

The biggest benefit of course to customers is convenience, and customers respond well to businesses that offer this. Therefore, to attract more of your target audience to convert to subscribers, you need to make them understand the convenience of your subscription.

This can be more difficult than selling the benefits of your service, which might be obvious. So here are a few points you can highlight to your potential customers on why a subscription is beneficial.

1. Customers Know When The Payment Is Due / Being Processed

All your subscribers are likely to have a set date in which they pay for their subscription. This date is set each month and does not change. This is one of the most convenient aspects of a subscription service because it allows customers to plan their finances better and ensure they have enough money in their accounts when it is needed.

Another benefit gained from this convenience is that customers need not worry when they are going to receive their bill and panic when it arrives. By knowing well in advance when payments will be due, customers are more relaxed and have a happier customer experience.

2. Customer Know How Much Each Payment Is Going To Be

As your subscription payments are all going to be the same, unless they purchase one time add-ons, then the customer is always going to know what the price is going to be for the products they have bought.

This can be a great convenience as it further supports their financial planning and again stops the panic when the bill comes in. Also, because the payments are regular, there isn’t any negativity when the bill comes. Customers will often try to reduce bills if they are issued periodically and are not set, partly because they want a good deal, but also because they are often surprised about the amount being charged.

Therefore, you can save yourself time and improve opinion of your business by highlighting the set price charged per month.

3. It Saves Time

Receiving and paying an invoice periodically, uses up the customers’ spare time and if it is a business client, they are likely to want to spend more time being productive than completing administrative tasks that are unnecessary.

The same can be said with customers. Most people today live a very busy life and it is important that you highlight to them that an automatic payment for a subscription service will save them time.

4. It Costs Less

Most subscription businesses offer reduced rates for those customers that pay a subscription automatically. This is because it costs less to process these payments and therefore, the business can afford to take a small cut to entice customers.

You need to highlight this to your customers who are likely looking for a good deal and will probably assume you are still charging them for payment processing costs.

Conclusion

Your customers might not understand the convenience of a subscription based service. Therefore, you need to explain to them how it can save them time, stress and money while being good value for money and excellent service. Use the above four points to help you create strong arguments why your business’ subscription service is good for your customers and see the number of subscribers increase.

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 Often Should You Update Your Subscription Pricing?

Image courtesy of jscreationzs at FreeDigitalPhotos.net

Image courtesy of jscreationzs at FreeDigitalPhotos.net

There are often times that you will need to update your subscription service prices. The reason for these adjustments might include changes in costs or attempting to reduce / increase demand for your services.

Most clients expect prices to increase over the longer term. This is often due to costs such as new government legislation which has forced you to implement new controls. These costs should be passed on to your customers.

However, there are times when fees can decrease. For example, you might introduce a new sales process or technology within your company that significantly reduces your customer acquisition cost.

In either of the above cases, the costs would change significantly and quickly. It would be fairly easy to know that these are good times to update your pricing strategy. Changing the prices at these times though might make new customers unhappy, especially if they have missed a saving. You might also have unhappy existing customers, who would need to be told carefully about any price change.

Slow Changes In Cost

In most cases, prices changes happen very slowly. You might struggle to know when to update your subscription prices in this case.

There are also logistical problems with changing your prices. The first problem is failing to change your fees quickly enough. Waiting too long can significantly impact your profits.

Likewise, when changing your fees, you might have significant marketing materials advertising old prices. These would need to be changed; which will be expensive.

So how often should you change the prices for your subscription business?

Weekly

This is an extreme frequency to change prices. However, this would allow your business to maintain a good profit margin and suffer limited losses.

If you were to implement a weekly change in the prices, then you would have expensive weekly changes to your physical marketing materials and likely other processes in order to implement the changes.

There could also be issues with your subscription management and customer services. Unless you change all existing customer’s fees at the same time, numerous clients on different payment plans will make it harder for your customer service team. If you did change everyone’s fees, you could anger clients very quickly and lower your retention rate.

Monthly

Monthly might be an option if your suppliers have regular fluctuations in their prices.

Changes at this level are easier to manage but customers may feel unhappy if they cannot rely on a regular monthly price for your services.

Quarterly

Many big brands do reviews based on their previous quarterly results. Changes every three months are easy to implement and limit profit loss.

However, quarterly changes might again prove to be too much for your customers who might complain about your frequent changes. If you wanted to implement quarterly changes, it might be best to consider how you are going to communicate the changes with your clients before you commit to this frequency.

Annual

Annual is often used by small to medium businesses that have a limited new customer generation and rely on the long retention of current clients. Annual is a good way to manage your price strategy and if you inform customers in advance of when you do price reviews, they will be ready for any changes.

Annual changes also allow you to better prepare your customer service team, marketing materials and other requirements needed to implement the changes.

Conclusion

Changing the price for your subscription service is not a decision to be taken lightly. How often you make those changes can have a significant impact on your business and its clients. Ensure you are doing it right by considering the costs of changing your subscription fees.

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 Encourage Clients To Use Auto-Billing

Image courtesy of Boians Cho Joo Young at FreeDigitalPhotos.net

Image courtesy of Boians Cho Joo Young at FreeDigitalPhotos.net

Auto-billing is one of the best ways to ensure you are continuously receiving subscription fees from your clients. It allows you to cut costs on your billing system which can be funnelled into other areas of the business to improve products and services.

There is evidence to suggest that a good auto-billing process will increase the trust between you and your clients in the long term. As the trust grows, your client may buy additional products or services from your business or become a powerful marketing tool to sign up their friends and family.

For the client, there are also significant benefits. Firstly they will know exactly when their payments are due and how much their invoice will be. Secondly, it saves time for them to be able to trust their credit card company or bank and your business to automatically process the payment. Thirdly, auto-billed clients can receive better customer service as these clients are classed as high priority by many businesses and are therefore are given preferential treatment.

Despite these advantages, there is sometimes resistance by clients to being placed on an auto-billing system. Some don’t initially trust companies, believing that once they are on an auto-billing contract the prices will increase without warning.

So how do you confront this resistance and encourage your clients to use your auto-billing system? Here are five ways:

Offer A Discount

Many energy companies use this as a way to encourage their clients to pay for fuel consumption on a monthly auto-bill process. Normally, the average savings clients make for signing up to the auto-billing system is about 5%. Savings are a particularly powerful tool for clients who are always looking to cut down on expenses and this way is great if you have a system that has a regular cost.

Offer A Fixed Term – Fixed Cost Deal

One of the major concerns for clients is a change in price just after they have signed on to an auto-billing system. You can alleviate these worries by offering a contract that states you will not raise the price of your services for 6 or 12 months. This is very good if you offer a service like telecommunications, software, etc.

During this term you are building trust because you are keeping to the contract. This will increase the chances you will retain that client for the long term.

Offer A Free Gift

Everyone loves receiving a free gift. If you offer them a token gift when clients sign up for auto-billing, they will become more interested in the option. The token gift doesn’t have to be expensive but it does have to be something highly useful and unique to gain any interest from the client.

Classic examples of gifts can be mugs, t-shirts and vouchers. Some of these can be branded so there is a constant reminder of who provided them with the service and can also act as subtle marketing messages to their peers.

Offer An Unique Feature

Sometimes it is good to entice your clients to the auto-billing system to offer them something that those on a pay-per-use system will not get. This makes them think they are getting a better deal for the same price – increasing the likelihood they will sign-up for your services.

Only Offer Auto-Billing

For some businesses, it is preferential to only offer their clients auto-billing as a method to make payments. In this case your clients have no choice and although it can sometimes have a negative impact at the beginning of the relationship, with good customer service you can turn create a positive relationship by the end of the first contract term.

Conclusion

There is sometimes resistance from your clients to sign up to an auto-billing system. However, there are significant benefits for both your business and customers in using an auto-billing system. You can encourage sign-up using one of the five tactics from the list above.

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.

What Frequency Works Best For Subscription Business Billing?

Image courtesy of digitalart at FreeDigitalPhotos.net

Image courtesy of digitalart at FreeDigitalPhotos.net

When you are building your subscription business or looking to see if your model is as effective as it could be; you need to check your billing frequency is optimal. There are many different considerations to make when you are looking at the frequency. Here are some of your options with the advantages and disadvantages.

Daily

This is probably one of the extreme options you have for frequency billing. However, it can also be one of the best if you are in a market with a short customer lifespan.

The advantages of this frequency is you have a regular daily income that you can clearly manage and you can see on a day to day basis the net effect of your marketing efforts based just on the income.

The disadvantages of this model could be very serious. For instance, daily invoicing requires significant management of the subscriptions and most auto-billing platforms charge per transaction and sometimes a percentage of the transactions (N.B. Fusebill charges on subscriber per month basis). If you don’t have a significantly high subscription charge, you could find that profit margins are too low for this to be financially feasible.

Weekly

This model is probably still for those who have a short customer lifespan or have regular deliveries of their product (i.e. food, magazines / newspapers). This is more feasible than daily payments but the cost of managing the subscriptions can still be expensive. Also, the regularity of these payments can make the payments seem high to the customer, even if the same rate could be offered on a monthly or yearly basis (i.e $1 a week would be $52 per year). Therefore weekly payments have a higher chance of being cancelled.

On a positive note, customers can often manage weekly payments very effectively so you are likely to have few subscribers default on their payments. Although, the end of the month can be a tricky financial time and this would be when you are likely to have higher defaults.

Fortnightly

Having your billing set so your payments go out every two weeks is an unusual method to set your billing schedule to. One of the biggest problems with this is that not every month would have the same number of payment dates. This can make planning difficult for customers who manage their finances monthly. It can also be hard for you to justify the billing schedule if you have an evenly distributed product (i.e. software) as payments on a month to month basis would be uneven.

A big advantage of this however is that you can distribute your bill processing across a wider range of dates making billing management easier.

Monthly

Probably one of the most commonly used frequencies. Monthly billing is very easy to manage both from your business’ point of view and your subscribers’. There is also the added bonus that you could separate your billing dates into different groups to spread out your workload. For instance you could split your subscribers into four groups; each pay on a different date i.e. 1st of the month, the 10th of the month, the 15th of the month and the last day of the month.

This is a great model for those who are providing a consistent service over the longer periods, like software, publications and membership sites. However, if the size of the payments per month is too high, some customers may be dissuaded from buying your product whereas a weekly schedule would have suited them much better.

Annually

Once a year payments are an extreme case and are often used by businesses that are confident their customer lifespan is significantly long. There are some advantages such as less management is necessary for the payments. This means businesses can offer discounts to tempt new customers into signing up for annual plans.

The problem with this model is your subscribers may forget about renewal and therefore not have the funds available when the time comes. This can lead to you having poor retention. To combat this, ensure you are informing your customer in advance of when their renewal is due.

Conclusion

Having the balance between your customers needs and desires and your own is important when it comes to deciding what frequency your business needs to bill your clients. You also need to consider your product and how often it is delivered when coming up with the billing model. With these thoughts in mind you should come to a conclusion of which billing frequency is best for 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.

How To Sell The Convenience Of Auto-Renewal

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

When you have a subscription business you need a method to collect the membership fees from your community. You could attempt to do this by sending out a manual invoice at the start of every billing period. This can be expensive and a waste of time that can be put to better use.

Instead, you could use an auto-renewal system to collect payments automatically from your customers. There are several benefits for your business when usin

g an auto-renewal payment scheme. For example:

  • It reduces the amount of administration you and your team have to do.
  • There is a higher retention of subscribers for your business.
  • You know exactly when payments are going to be made by your customers.
  • Reports can be auto-generated to inform you when payments have failed or been cancelled.

While these benefits are a good reason for your business to use an auto-renewal subscription model, your customers will need to be sold as to why they should auto-renew their subscriptions.

The Convenience For Your Customers

The major benefit for your customers is the convenience an auto-renewal subscription model offers. It takes time for your customers to receive, check and pay a manually issued invoice. Having the process automatically completed each period allows them not to be disrupted in their daily lives.

In addition, the process can have financial benefits. As you will not have to process the payments manually you might be able to offer a discount. Energy companies commonly sign up customers to an auto-renewal system by offering a small discount, often between 5 and 10%.

These benefits are especially good if your members are paying a standard flat fee for membership. It allows them to confidently know exactly when and how much the payment will be. This can support their financial planning and management.

Calming The Concerns

One of the major concerns customers may have is cancelling their subscription. It is likely that at some point some of your customer will want to leave the business. They may feel they have to go through significant processes to cancel their subscription including speaking to your customer service team or sending emails to your cancellation team. This may worry them.

In reality the process is much easier. A customer only needs to cancel the payment instructions which exist between them and you. This can be done through their online banking dashboard. This means the payments can be stopped immediately, instead of waiting for your administration team to process the cancellation.

At the same time your online system can be informed immediately and access restricted at the next ‘end of period’. Or if you send out physical products, your distribution team can be informed of the change and they can remove them from the mailing list.

Another benefit for the auto-renewal is your customers will never miss out on a product or period because they have forgotten to make the next payment. This can be particularly useful for physical products such as magazines.

Conclusion

Auto-renewal is one of the most popular methods for subscription businesses to sign up customers. While they have significant benefits for the business, customers are sometimes unaware of the advantages they can gain from signing up to an auto-renewal system. By selling the benefits such as never missing out, the ease of payment and cancellation should they want to leave your business you can increase the uptake of auto-renewals.

This allows you to save costs in manually sending and processing invoices. This can lead you to invest the funds elsewhere in the business or offer your customers a more competitive price.

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.