The subscription/recurring billing model has taken the business world by storm in recent years. Once only seen in operations such as fitness and day care centers and utility companies, businesses of all types have discovered the benefits of recurring payments for themselves and their customers. If you’re still skeptical that this model may be right for you, take a few minutes to learn about the benefits of recurring payments.
Recurring payments defined.
Instead of collecting all that you are owed in one large transaction, offering recurring payments lets you spread the amount out over time. This configuration is also a great way to offer on-going services such as memberships and subscriptions. You and your customer simply agree that a set amount of money will be withdrawn from their credit card or bank account on a certain date for a fixed or variable amount of time. The rest is, for the most part, set-it-and-forget-it.
Minimizing late payments.
You have probably spent countless hours chasing down delinquent payments. It’s time-consuming and stressful, and it can take a toll on your relationship with your customer. All of that fades into insignificance once you have arranged for recurring billing.
After all, funds are automatically withdrawn. Your systems should be set to send an invoice as well as a post-payment confirmation, ensuring that the buyer always knows their status. The only time payments will be late now is if there is an issue with the client’s account. Even the likelihood of this happening can be drastically cut back with the right dunning software.
Stabilizing your cash flow.
The more control you have over the revenue coming into your business from customer purchases, the better equipped you will be to run your operations, purchase additional stock, and make expansion and marketing decisions. That’s hard to do when many of your payments are late or don’t come in at all.
With recurring billing in place for many of your customers, you will automatically have a base revenue figure for each month. Of course, other income will be difficult to forecast, but you will always be able to rely on that steady flow of recurring payments. With these funds in hand, you can make your payroll, keep your inventory robust, and perhaps even put a little aside for a rainy day.
Boosting your customer retention rate.
After you have set up your recurring billing capabilities with your merchant provider and signed customers up for this option, you will naturally enter into a long-term relationship with each of these buyers. That gives you numerous opportunities each month to communicate with customers, keeping your brand at the top of their mind for all the right reasons. Consider offering sales and promotions that gel with their recurring purchase so that they remain engaged and interested in the range of products and services you offer.
Recurring billing lets you keep your best patrons close. Although you should always be working to attract new customers, the value of these long-term relationships cannot be overstated.
Given the many advantages they provide, it’s no wonder that recurring payments have become so popular with companies of all types and their customers. If you haven’t already talked with your merchant provider about incorporating this configuration into your store, do yourself and your clients a favor today, and have a conversation about including it among your payment options.
