Running a small or medium-sized enterprise (SME) is hard work. You must be good at many things, from marketing and sales to operations and finance. And one of the most important things one needs to do is find ways to increase revenue and profits. One way to do that is by taking subscription payments from your customers.
In this blog post, we will discuss why SMEs should take subscription payments and the benefits they can derive from it. We will also cover tips on how to get started with subscription payments.
Let’s get started.
What are subscription payments?
Subscription payments are a type of payment where the customer pays for a service. This subscription could be monthly, yearly, or even daily. The service could be anything from a newspaper subscription to a gym membership.
In most cases, the customer will give their payment information to the company upfront, and then the company will automatically charge the customer on the agreed-upon schedule.
This payment type is becoming increasingly popular as it makes it easy for customers to access the services, they want without worrying about making each payment. Additionally, it can be helpful for SMEs as it provides them with a consistent revenue stream.
Benefits of subscription payments
The following are some of the benefits that your SME can derive from taking subscription payments:
Provides consistent revenue stream
One of the most important things for businesses is their revenue stream.
Consistent revenue is essential for keeping a business afloat, and subscription payments can provide a much-needed boost.
Customers make Subscription payments monthly or yearly, providing a consistent income that businesses can rely on at any time. This income can be a lifesaver for businesses with irregular income streams and help them plan and budget more effectively.
Another significant benefit of subscription payments is that they are predictable. Your treasury management team will adore the way they can forecast future flows using existing subscriber data, paired with a growth and retention assumption.
It can be a huge advantage for businesses, as it can more accurately forecast their income and expenditure. Of course, the business will always be unpredictable, but subscription payments can help minimize this.
Builds customer loyalty
One of the most important things for any business is to build customer loyalty.
Subscription payments can help as they encourage customers to use your service or product regularly. Customers who pay for service periodically are likelier to be loyal to that service and less likely to switch to a competitor.
Additionally, subscription payments can help you upsell and cross-sell your products or services as customers are already committed to regularly using your business.
Many businesses find that subscription payments are low-friction.
It means that they have a lower chance of being rejected or failing. The reason is that the customer has already given their payment information to the business and is typically only required to make one payment upfront. It can be a significant advantage for businesses, taking payments with fewer issues.
Customers, on the other end, also appreciate low-friction payments as it makes it easier for them to access the services they want.
Flexibility and scalability
Another great thing about subscription payments is that they are flexible and scalable.
As your business grows, you can easily adjust your subscription plans to accommodate your needs. It is a significant advantage over other payment types, which can be inflexible and difficult to scale.
Additionally, one can adapt subscription payments to suit the needs of different customers. For example, you could offer discounts for longer-term subscriptions or add additional features for customers willing to pay more.
As you can see, subscription payments offer many advantages for businesses. If you’re not already taking them, you should consider doing so. They can provide a much-needed boost to your business and help you predict and manage your income better. Additionally, they can encourage customer loyalty and make it easier for customers to access your services.
SMEs that take subscription payments can reap a lot of benefits. If you’re not already taking them, you should consider doing so. They can provide a much-needed boost to your business and help you predict and manage your income better. Additionally, they can encourage customer loyalty and make it easier for customers to access your services.
Tips on how to get started with subscription payments
Now that we’ve gone over some benefits of subscription payments let’s look at some tips on getting started.
Offer the right payment choices.
One of the most important things you need to do when starting to take subscription payments is offer the right payment choices.
You’ll need to decide which payment methods you’ll accept and ensure that you have the infrastructure to support them. Additionally, it would help if you considered offering a variety of payment options to customers so that they can choose the one that best suits their needs.
Ensure you package your solutions properly
Most customers are willing to pay for a subscription if they feel they’re getting value for their money.
You must ensure that your product or service is appropriately packaged and priced to maximize its value. For example, you could offer different service tiers with additional features at various price points.
Additionally, ensuring that your subscription plans are easy to understand and offer a clear benefit to customers is important. You’ll likely have difficulty convincing people to sign up if they’re not.
Make it easy to sign up and cancel
Another vital thing to remember is that customers should be able to sign up for and cancel their subscription service quickly.
You’ll likely lose customers if the process is too complicated or time-consuming. The sign-up process should be quick and easy, and customers should be able to cancel their subscription anytime with just a few clicks.
Focus your business model on recurring revenue
When you’re starting, trying and making as much money as possible from each customer can be tempting.
However, it’s important to remember that subscription payments aim to generate recurring revenue. It means that you should focus your business model on providing long-term value to customers rather than making a quick profit.
Doing this will make you more likely to retain customers over the long term and generate a steadier income stream.
Subscription payments can offer many advantages for businesses, including a boost to your business, customer loyalty, and easier access to services. If you’re not already taking them, you should consider doing so.
Offering the right payment choices and adequately packaging your solutions are important when getting started. Additionally, it would help if you made it easy for customers to sign up for and cancel your subscription service.
Finally, remember that subscription payments aim to generate recurring revenue, so focus your business model on providing long-term value to customers.