An IDC report showed that in 2020, more than half of the world’s businesses were offering digital products and services to their customers. This trend coincided with another – an increase in the number of companies opting for subscription payments.
This is not surprising, given the multi-pronged benefits of subscription payments for both the companies and their customers. So, what are the benefits that have made subscription payments such a hit?
Top 5 Subscription Payments Benefits You Must Know
Here are some of the benefits your business will get upon switching to subscription payments:
1. Accurate Prediction of Revenue
With subscription payments, businesses can predict their revenue with greater accuracy, thanks to the frequency of payments from the customer’s end. This becomes very useful when it’s time for your business to take stock of the annual revenue.
Subscription payments also pave the way for regular billing, which means that you’ll be able to collect subscription fees from all your customers without missing deadlines.
2. Fixed Frequency
This benefit is a win-win deal for your business and your customers alike. Subscription payments are cyclic because they allow payments to be made on a fixed day and date. Moreover, most payments come with the feature of automation.
For example, Netflix allows users to link their bank details to their accounts. Netflix then automatically debits a specific fee every month, depending on the subscription plan chosen.
This allows customers to be on top of their payments while ensuring a fixed and regular income for the business.
3. Flexibility
It wouldn’t be wrong to think of subscription payments as a jack of all trades. This is because of the many functions they can perform:
- Can support different modes of payment
- Can accept customer payments in different currencies
- Allow you to tailor your plans according to your customers’ changing preferences
- Establish an easy and hassle-free system for generating customer invoices
4. Great for Customers
By offering the option of subscription payments, your business can easily achieve increased customer retention rates. For example, your customers will find it more feasible to pay $30 per month for a service instead of paying $180 in one go for six months.
This will not only help you retain your existing customers, but it will also help you attract new ones through flexible trial periods. In the long run, you will also witness an improvement in the quality of business-customer relationships.
5. Increased Freedom
When you have a considerable fraction of your customer base on subscription payments, there’s more room for your business to experiment with new products and services.
For example, if you have customers subscribing to your video rental service, you can give them a freebie like a coupon or a voucher. You can then monitor your customers’ reactions and use the data to figure out what does and doesn’t click with them.
In short, subscription payments can give your business the freedom to experiment with new ideas while also helping you understand your customers’ needs better.
Final Thoughts
There are many good reasons to incorporate subscription payments into your business. These include a steady inflow of revenue, fixed frequency of billing, all-around functions, improved customer retention rates, the freedom to experiment, and a channel to gain valuable insights into customers’ needs.
It is best to leverage advantages when you spot them.