Movies, food, wine, newspapers, exercise, dating… the list goes on. Many businesses today are trying to figure out how to get their customers to subscribe for a daily, weekly, or monthly plan. For good reason as studies show subscription services allow businesses to cut down on marketing costs, draw recurring revenue and get more business. Instead of buying something once, customers pay at regularly scheduled intervals to keep the product or service flowing. In return they typically receive a discount.
Subscription-based businesses report a 23% increase in the number of customers. That’s just one reason why auto-pay plans are on the rise. Another is the recurring revenue that allows businesses to maintain a steady flow of income and better manage product inventory.
Research shows the subscription market has experienced annual growth of 17% in the last five years. The Subscription Trade Association also predicts 75% of direct-to-consumer brands will offer subscriptions within the next two years, while global eCommerce will account for 18% of the total market share.
Here are just some retailers that have boosted sales with auto-pay plans:
- Amazon made more than $1.4 billion in subscription-services revenue in just one quarter in 2017.
- Peloton’s fitness subscriptions grew from 543,000 in Q1 2020 to 1.2 million in Q1 2021, according to a 2021 report by West Monroe.
- The CBD company Equilibria told Forbes its subscriptions shot up 100% in March of 2020.
THE PRICE IS RIGHT
Customers love the subscription service for its value, convenience and personalized offerings. They’re clearly saying that they’re willing to pay more often for a lower price and frequent deliveries.
A new poll in September 2021 showed consumers are spending an average of $273 a month, or $36 more a month than in 2018. While the average consumer now has four subscriptions, surprisingly, none of the consumers in the survey knew exactly how much they were spending on subscription services.
The auto-pay plans grew in popularity during COVID-19 when one in five people purchased subscription boxes to have products available during the pandemic. The most popular subscriptions at the time were HelloFresh (21%), BarkBox (20%), Blue Apron (19%) and Dollar Shave Club (18%), according to Forbes. In 2018 (the most recent data available), Americans spent $2 billion every month on subscriptions.
SIGN UP TODAY
The number of monthly visitors to subscription business sites has grown 800% since 2017, with food and beauty products the top sellers.
So, how do implement auto-pay plans for your business? Experts recommend you first answer these questions about your product or service:
- What do your customers need?
- How will you price the weekly, monthly or annual plans?
- How will your plan be better than others out there?
- How will you keep your customers?
Keeping the customers who sign up is critical because studies show it can cost five to 25 times more to get a new customer than to keep the current one.
Next, Digital consultant and INC journalist John Boitnott says businesses should choose a subscription model type:
- Curate existing products in a monthly box
- Replenish consumable products at regular intervals
- Offer consumers exclusive access to products and experiences
Once that’s done, he recommends creating a business plan and exploring technology that helps automate all aspects of the subscription from ordering to processing to payment.
At Red Maple we offer products such as Advanced Trade and Pricing and Advanced Credit Cards for subscription billing.
“Subscription billing provides companies a means of invoicing customers on a regularly scheduled basis. Each billing line in a contract may have a different schedule and billing type to meet your requirements,” said Patrick Hodo, COO of Red Maple.
“Advanced Trade and Pricing includes contract-specific pricing, volume discounts, usage-based agreements and a lot more. When paired with Advanced Credit Cards, invoices can be paid automatically, which means you can instantly charge customers every week, month or year depending on your needs. It’s simple and easy recurring billing.”
Once businesses are ready to launch their auto-pay plans, experts recommend they offer free trial periods, allow customers to pay with debit or credit cards, and focus on creating a great experience. The overall goal with subscription-based plans is to reward your customers with great products and services they want on-demand, saving them time from not having to repeatedly shop, and money by receiving better deals for their loyalty.