Why customers choose subscriptions for digital services

With increased flexibility and convenience, subscription services and as-a-service models have rapidly become some of the most popular ways to access digital products. However, it’s crucial to ensure customer loyalty through excellent CX and easy payments such as digital wallets to avoid dreaded “customer churn.” In this article, we provide examples of how businesses might achieve this using digital payment processing technology from Worldpay to reach their subscription goals.

Subscriptions – a successful business

In recent years, software as a service (SaaS) has become a popular and effective way of providing customers with the digital tools they need without significant upfront costs. SaaS is, in many ways, a modern subscription model with a number of additional benefits like continuous refresh of services and products. SaaS has become one of the primary means of accessing digital tools like productivity programs, cloud storage and even anti-virus.

The popularity and ubiquity of SaaS has encouraged consumers to embrace subscription models for all manner of products and services, even outside of software. Today, we subscribe to everything from cars to organic vegetable boxes. And the SaaS market is growing rapidly. By the end of 2021, 99% of businesses use one or more SaaS solutions, and the market, overall, is growing at a rate of 18% a year¹.

However, with any changing business model come new and unique challenges. For example, customer retention is a substantial issue in the SaaS space as people can generally end their subscriptions at any time, usually without financial consequences. In fact, as many as 150m people across the globe are expected to cancel at least one subscription in 2022². As this revenue likely forms a major part of any subscription-based business’s overall success, taking steps to reduce this loss of subscribers, through everything from quality service to alternative payment methods (APMs), is crucial.

Subscription attractions

Understanding customer needs could be the key to avoiding churn, the process where users subscribe, then unsubscribe a short time later. Businesses can take steps to mitigate this churn factor and retain customer loyalty by offering people the experience they are looking for. Getting levels of churn down is important for any business but is particularly crucial for providers reliant on recurrent revenue.

One of the best ways of potentially achieving this is through delivering a high-quality service. Customer thresholds for what they’ll tolerate can often be quite low – a single bad experience having a potentially significant impact on their opinion of a provider.³

Personalized content or service recommendations could lead to higher engagement rates as consumers are encouraged to explore options within your offering. As a subscription-based digital service provider, you will likely manage large amounts of customer data and preferences, giving you the ability to create a more personalized service based on their specific needs.

Whether that’s suggesting tools and add-ons they could benefit from, or just reminding them of what they’ve already tried out, the opportunity for value-add is significant.

Applying it all to payments

It’s also important to be able to provide customers with flexible ways of paying for their digital subscriptions.

For example, subscription model strategies can add extra flexibility by giving customers the chance to pause subscriptions or combine multiple products or services in bundles. Those looking to minimize frustration and complexity should provide simple-to-use options, plenty of choice and simple management of ongoing payments.

Digital wallets could be useful here, thanks to seamless customer experiences during subscription sign-ups. An additional factor in their favor is the ability to adopt two-factor authentication as they are underpinned by the user’s card details. Plus, digital wallets are compatible with the fundamental subscription requirement for recurring payments – something that can’t be said for all APMs.

Worldpay provides solutions for seamless recurring payments, helping to remove some friction and potentially increase customer satisfaction. Worldpay’s Account Updater ensures subscriptions continue without interruption, even after card expiring, by keeping account details up to date automatically. Businesses could benefit from increased convenience and security and potentially reduce churn when selling digital services.

At Worldpay we understand that smart business owners require payment solutions that support easy, reliable business operations. Discover the virtue of making subscription payments easy, whether that’s through card-not-present transactions, APMs, digital wallets or anything else. Connect with one of our payments experts today to learn how easy it is to set up recurring payments for your business.

References

¹ Shiff, L (2021), The State of SaaS in 2022: Growth Trends & Statistics. BMC Blogs. Available at: https://www.bmc.com/blogs/saas-growth-trends/#

² Deloitte (2021) As the world churns: The streaming wars go global. Available at: https://www2.deloitte.com/us/en/insights/industry/technology/digital-media-trends-consumption-habits-survey/summary.html

³ Hyken, S (2020) Ninety-Six Percent Of Customers Will Leave You For Bad Customer Service. Forbes. Available at https://www.forbes.com/sites/shephyken/2020/07/12/ninety-six-percent-of-customers-will-leave-you-for-bad-customer-service/