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Subscription payments: When customers stay longer

Start-ups and scale-ups are bringing a fresh breeze into business ecosystems through subscription business models. Many industries have already adopted this way of working. And for a good reason: These models ensure better customer relations and add to subscriber lifetime value.

Peter Wilmenius | Jul 18, 2022 4 min

Subscription business models: Complex but worthwhile

To keep up with the success of customer-centric start-up and scale-up subscription models, many companies are rethinking their ecosystem strategies and business models.

From a payment perspective, subscription business models create a new type of complexity. But if mastered well, they can also help grow the business.

Different customer journey for subscription payments

The customer journey of subscription payment is quite different compared to the one in traditional purchases. After all, customers pay regularly for a long-term relationship with your company. That’s why expectations are high. It may be more important for a subscribed customer that everything works perfectly than for a customer who does not subscribe. Additionally, transparency is key: Subscribers want to know what they are paying for and how to manage the subscription.

But it’s not just about consumers’ expectations. The pricing for subscriptions is complex. It’s a combination of fixed fees, usage fees, discounts, tiered pricing options and additional services. This is extensive and can pose a challenge for companies.

Customer Lifetime Value in subscription payments

Despite the complexity, subscription payments are an excellent business model for many companies. Why? With a traditional e-commerce purchase, the relationship with the customer may be short. There is no guarantee that consumers will buy again.

However, with a subscriber, you enter a long-term relationship. In this context, customer lifetime value is an important indicator for the success of subscription business models. To calculate this subscriber lifetime value, the various steps of the customer journey are evaluated. These include, for example, churn, up-sale, cross-sale, onboarding processes and customer service interactions.

With more steps to track, the number of data points that can provide valuable insights about the customer also increases. If you want a successful subscription business model, it is vital to simplify all the steps in the customer journey and leverage the data generated. This will allow you to improve the journey. And ensure that your customers remain customers.

Freedom to select
communication
and payment option

Customers want to choose what suits them best. This applies both to the payment option and the communication channel. And it is especially true when it comes to long-term contracts.

One preferred payment option that consumers and companies have in common is invoicing. With the next generation of digital invoicing, we can ensure a customer-friendly onboarding and a clear overview of the active subscription. This creates a safe environment where your customer is in control.

We also offer relevant communication options so you can reach your customers through their preferred channels.

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