How COVID-19 is shaping the way we shop
How ingrained are subscription and recurring businesses in our day-to-day lives?
I don’t know about you, but I listen to music on Spotify and store my files on Dropbox; Netflix has alleviated many arguments in my house; birthdays are taken care of thanks to flower delivery service Bloomon. And of course, an Uber is never more than a couple of taps away.
All this points to the steady rise of the subscription economy. It has evolved in response to the demands of today’s consumer, who want things faster, easier, and better. And businesses that address that need, are attracting loyal customers and growing fast.
Critical to success, of course, is a frictionless and uninterrupted experience. And payments play a central role. It allows for seamless customer onboarding, and reduces your involuntary churn rate (which is when a service is paused or canceled without the customer’s knowledge).
To deliver an experience that keeps your customers coming back again, and again, we recommend the following:
The signup is the moment of truth, and it is vital to get it right. There are many things that can impact (both positively and negatively) on the experience.
"It is valuable to have a payments partner with inside knowledge of the market, and the tools to help you." - Thierry Locard, Netflix.
Shoppers around the world have different payment expectations. Some prefer cash-based payment methods, others bank transfers, and for others, it has to be mobile. Live sports streaming service, DAZN, reports that SEPA Direct Debit accounts for the majority of its subscribers in Germany.
Bear in mind, you might need to adjust your business model in markets where local methods don’t support recurring payments. Spotify lets users in Indonesia pay using bank transfers or with cash at local convenience stores.
And of course, in this mobile world, a mobile-optimized payment flow is fundamental.
Once your customer has subscribed, you want to ensure an ongoing service, that doesn’t end until they want it to. This means minimizing your involuntary churn rate, which can be tackled in a few ways.
"We want to provide uninterrupted service. That is where tools such as Account Updater come in."
If a card-on-file is lost or expires, it can cause a payment to fail. As a solution, Visa and Mastercard provide Account Updater services. These let you update your customers’ stored card details automatically. To make things even easier, Adyen's Account Updater maintains a centralized database of card data and updates you with any changes.
"We want to provide uninterrupted service where payments run smoothly in the background. That is where tools such as Account Updater come in.” Thierry Locard, Netflix.
Payments often fail because of an outage or downtime in the patchwork of legacy systems that make up the traditional payment flow. To limit the impact, Adyen retries payments that fail because of technical reasons. This generates a significant uplift in successful payment requests, translating to happy customers.
Of course, we can’t do much if the customer has insufficient funds. But, by fine-tuning your billing strategy to suit each market, you can reduce the impact. As illustrated by Jagex Games Studio:
“If you’re looking for one key metric to base your rebill strategy around, country is the most important; it is where you’ll find the most consistent trends in behavior. ” Alastair Morris, Jagex
Our data also reveals some interesting trends. In the US, refusal rates peak toward the end of the month before people are paid. And we've found that payments during nighttime hours have a 2% lower success rate. This is because issuing banks tighten their risk systems overnight.
Discover how to optimize your subscription and recurring payments, increase loyalty and drive revenue. Download our Ultimate Guide today:
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