Subscription-based services are a big hit because they provide businesses with steady income and help build customer loyalty. But to keep everything running smoothly, you need to have your payment processing dialed in. That means making sure transactions go through without a hitch, reducing customer drop-off, and keeping your cash flow healthy. Let’s dive into some practical tips for making your payment processing work perfectly for your subscription-based business.
What is a subscription-based business
Traditionally, when you heard the word “subscription” you thought of magazines: weekly, monthly or quarterly. The idea is simple, you subscribe one time, and then you keep getting new editions in the mail. Maybe you paid for a full year’s worth in one shot, or more likely, you made regular payments to keep your subscription going. The same thing goes for any membership-based businesses, even IRL ones, like gyms, sports clubs or health centers.
Today, we also think of subscribing to online platforms and streaming or gaming services, which will normally charge your credit card once a month for continued non-stop access to those platforms. Many subscription-based businesses offer discounts for paying up-front for a whole year.
The rise of SaaS (software as a service) saw subscription payment models overtake the legacy system of outright buying a piece of software which you now own (and for which the software provider is no longer responsible). The advantages to this system are that the provider can perform regular updates and fixes, cloud storage of customer data, and better ‘hands-on’ customer support.
Common businesses that are subscription based also include many high-risk industry businesses, such as adult entertainment, gaming, online dating platforms, and retail stock trading.
Subscription automation
If you’re a business offering membership plans that require regular payments, wouldn’t you prefer to have them automated? It’s far more convenient for customers than needing to remember to make a payment every subscription period.
As a business owner with membership plans, it’s key to meet your customers and clients where they want to be, and convenience is what many customers crave.
Automating billing ensures that payments are processed on time without manual intervention. This minimizes the risk of missed payments and saves on human labor time and effort. With these advantages, it’s easier for a business to scale up with new customers or to test out more elaborate premium tiers.
As for the convenience factor on the customer’s side of things, automated payments for subscription businesses cuts back on missed payments or rejected payments from improper payment data entry, which in turn means fewer service disruptions and greater customer satisfaction and loyalty.
Managing Declined Payments
While payment automation makes regular payments easier, as a business, you should also be working toward managing and minimizing declined payments for your subscription-based services.
To help reduce customer churn, maintain steady revenue flows, and stay in good graces with your payment processor, consider these following tools.
Retry Logic
Set up automated retry systems to reattempt failed payments after a short interval. This increases the chances of successful transactions and reduces the impact of temporary issues like insufficient funds.
Customer Notifications
When a payment is declined, promptly notify customers and provide clear instructions on how to update their payment information. This proactive approach helps resolve issues quickly and minimizes service interruptions.
Dunning Management
Implement a series of reminders to encourage customers to update their payment details when necessary. Friendly, well-timed reminders can help recover lost revenue and keep customers engaged.
Partnering for success
Centrobill understands the challenges of managing subscription-based services, particularly in high-risk industries. Whether you’re scaling up your subscription service or refining your existing processes, Centrobill has the tools and expertise to help. Contact us today to learn more.
