Exploring Subscription Services… Are They Right For Your Business?
Recurring Billing is Profitable
It used to be that when you talked about a subscription, you were very specifically referring to automatically receiving newspapers and magazines on a daily, weekly, monthly, quarterly, and annual basis. That all began in the 17th century and continued that way for quite some time.
However, in this day and age, subscription services have expanded in huge ways and can refer to just about any multi-utilized product and be offered by just about any online or offline business. In fact, the E-commerce subscription business alone multiplies by more than 100% every year, so somebody’s doing something right. The question is, does it make sense for your company to offer a subscription service?
How Subscription Services Work
When a business provides a subscription service to their customers, they’re affording them the opportunity to receive their regularly-used products on a continuing basis.
Specifically, a customer’s credit or debit card will be kept on file and charged as the specified products are automatically shipped out according to the purchaser’s prearranged time schedule. This service is offered by companies that sell a large variety of products as well as by those that concentrate on one or a few main products and brands.
A Win-Win Situation
The obvious benefit to a company utilizing a subscription service is that they bring in payments on a regular basis, aka predictable income, without the company having to continually chase after the customer’s business. This set-up is highly profitable, in that it’s bringing in steady money, thus contributing greatly to the company’s bottom line.
Subscription services are beneficial to consumers as well, who are then able to order and arrange payment for continuing delivery of their regularly-used products through a one-time effort.
This eliminates the necessity to continually order and pay for the products they repeatedly use each and every time they’re needed. Not only does this save purchasers time and effort, but it also assures them they will never run out of their much-needed items. In addition, many companies will offer consumers a price reduction for ordering on a subscription basis. All of these benefits serve to create happy customers.
Effects On Merchant Processing
It’s a proven fact that satisfied consumers, who feel taken care of, will have greater allegiance to the companies they’re doing business with and will be less likely to turn to the banks and credit card processors for refunds when issues arise. They will more likely go directly to the company they’re purchasing from to resolve any problems.
This leads to a lesser number of chargebacks, which is good news for all businesses, whether they’re considered high-risk or low-risk for merchant accounts. Chargebacks create merchant account problems regardless of the risk category a business may fall into. No business can afford to lose its ability to accept credit and debit card payments, so eliminating chargebacks is a really great benefit for all companies with merchant accounts.
Subscriptions Bring Profitability
If you’re considering starting a subscription service or adding one to your existing business, whether online or offline, if done correctly, you’re no doubt making a move toward an increase in sales. All told, subscription services can create a very positive purchasing experience for consumers and as we all know, happy customers generally lead to greater profits and isn’t that the goal?
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Joyce Hope is a writer who specializes in merchant accounts. She has worked for First Card Payments since 2017.