I was guilty of thinking that the subscription model had seen better days. I know now that’s not true (forgive my Generation X ways). Merchants are getting creative with recurring payments models – it’s not just magazines, tolls and gym memberships that work well with subscription billing.
Recurring payments, according to a recent study by payment processing giant Vantiv, are popular among millennials in several forms: beauty products (ever hear of Dollar Shave Club?), coffee and groceries.
What are the benefits of recurring payments?
Everybody wins with recurring payments with the right products or services.
Said the Vantiv survey, millennials are the most internet savvy age group, hence, their penchant for shopping online. There is very little to no consumer stress involved in setting up recurring billing for a product or service.
Recurring billing enables an online business to build, sustain and strengthen consumer relationships and experience. It also presents an online merchant the opportunity to test and offer other products on a subscription billing platform.
The one disadvantage (and it’s a big one)
With online businesses that use recurring payments, they can happen often.
- A consumer decides one day s/he no longer wants the product. Rather than contacting the merchant, s/he files a chargeback with the credit card issuer.
- A consumer receives a new credit card (which is happening A LOT these days due to hackers and identity theft), and forgets to update it with your business.
- A consumer forgets s/he kept a credit card on file with a business, particularly with long-term subscriptions.
Communication: the key recurring payments success
We’ve blogged before that most chargebacks can be averted by consistent communication with the consumer. We’re not advocating a deluge of e-mails to customers, but timely notifications such as:
- Payments received and processed
- Payments due
- Occasional sales
- Thanks for loyalty, including a special offer (consumer loyalty should be rewarded)
- Birthdays or consumer anniversaries, with an offer
And, of course, give the customer a clear opt-out should they wish not to receive e-mail notifications.
Need a Subscription Billing Merchant Account?
Instabill has several banking partners in place which offer recurring payments and subscription billing plans. Our merchant account managers are reachable directly at 1-800-530-2444