Subscription-based enterprises are among the most lucrative businesses today, and this is especially true for those engaged in producing online-based content, developing software, and designing product subscription boxes for niche markets. And with the advent of smart recurring billing solutions, it has become easier than ever to build and expand such types of businesses. These software-based billing and payment solutions enable business owners to engage and maintain their subscriber bases conveniently and efficiently.
Subscription Billing Solutions take care of tasks such as automatically charging member credit cards and finding resolutions to payment transactions that encounter error or failure. This is one of the most important aspects of retaining customers, as studies have concluded that many subscribers are inadvertently cut from a subscription due to failed payment transactions.
Unfortunately, many people who encounter such problems tend to lose the inclination to want to subscribe again, for one reason or another. With people’s busy and fast-paced lifestyles these days, as well as the fluid nature of the digital economy and online commerce, business owners need to prepare by putting up an automated billing system that not only streamlines signups but also provides features that will encourage customers to maintain their subscriptions.
Consumer Behavior and Attitudes
The beauty of automated subscription billing solutions is that it offers other functionalities that can benefit businesses and increase their profitability. A wealth of information and insights are waiting to be mined from so-called “Big Data” that subscription transactions carry with them. These insights are primarily useful in guiding business decisions and in maintaining or even improving customer loyalty.
For instance, the pattern of transactions of individual customers can be analyzed to determine consumer behavior and attitudes, as well as buying patterns. This is vital because it helps a company develop more effective marketing strategies and initiatives. More attractive payment schemes or options can likewise be offered in order to encourage customers to remain subscribed. Related products and services can also be pushed based on individual preferences.
Further on the side of business owners, they can also establish and capitalize on consumer trends better by studying patterns of consumer behavior. It can guide them in product and service development so that they can come up with offerings that meet customer needs better and more effectively.
Once introduced in the market, they can then refine products further based on consumer experience and feedback. This real-time information is made available by today’s digital nature of transactions and communications—data which can then be harnessed using software-based systems.
Average Customer Lifetime Value
Another important buzzword in terms of Big Data is average customer lifetime value or ACLV. This concept enables businesses to get a quick overview of the profitability of their digital subscription-based enterprise. It can give them an idea of how much it really costs them when they are unsuccessful in retaining customers for the projected lifetime of subscriptions.
Here is an example: for an expected 12-month or 1 year subscription lifetime of a customer, at an average revenue per month of $10, the ACLV is $120. If a particular customer churns at the 3rd month, only $30 dollars out of the ACLV is realized. The business has missed out on potential revenues of $90. This scenario is the basis for many experts reminding businesses that customer retention is more important than just simply growing one’s subscriber base alone.
Strengthening Customer Loyalty
Businesses may think that the best way toward profitability is to grow its subscriber base, but that may not be necessarily true. The costs of signing up new customers in order to make up for attrition may be higher than finding innovative ways to retain current subscribers. Experts point out that the key to successful and profitable subscription-based businesses is not to keep all customers, but the right kind of customers.
These customers are loyal subscribers who provide steady stream of income, and whose spending can be increased strategically through the right product and customer service innovations.