Understanding and Optimizing Subscription Payment Services

For businesses using a subscription based revenue model, the optimization of your subscription payment service is crucial to increasing steady revenue streams  and enhancing customer retention for exponential growth. The urgency to fine-tune subscription payment processes is underscored with the emergence of payment orchestration platforms. This post explores the concept of subscription payment services, the advantages of optimizing them, and the transformative role Spreedly plays in amplifying subscription revenue for your business.

What Are Subscription Payment Services?

Subscription payment services facilitate recurring transactions authorized by customers, allowing them continuous access to a product or service over a specified period. This model engenders a predictable revenue stream for businesses while offering customers an uninterrupted service experience. In the last 10 years almost every  business ranging from software providers like Adobe Creative Cloud to streaming services like Netflix have embraced subscription payment services. A staggering 98% of U.S consumers subscribe to at least one streaming service.

How Subscription Payment Services Make Things Easier

Subscription payment services are designed to streamline the management of recurring payments, ensuring a hassle-free experience for both businesses and customers. They automate a variety of tasks associated with subscription billing, reducing the administrative load on your team while enhancing the overall customer experience. Below is an outline of how these services operate and the key aspects they handle for you:

1. Customer Signup: Customers can easily sign up, select a subscription plan, and provide their payment details through a user-friendly interface.
2. Payment Authorization: The services verify payment details and obtain authorization for recurring charges, ensuring a smooth transaction process.
3. Billing Cycle Management: They initiate and manage billing cycles, automating the recurring billing process based on the chosen subscription plan.
4. Recurring Billing: The automated system takes care of billing customers at the beginning of each cycle without requiring any action from your team.
5. Notification Management: They send notifications to customers about upcoming charges, successful payments, and any other relevant subscription updates.
6. Subscription Management: Customers have the freedom to manage their subscription, update payment details, or alter their subscription plan as needed, with minimal intervention from your team.
7. Renewal or Cancellation Management: They handle subscription renewals or cancellations, ensuring a seamless process for both the business and the customer.
8. Customer Support: Providing support for any subscription or payment-related inquiries, ensuring a satisfying customer experience.
9. Analytics and Reporting: They provide valuable insights through analytics and reporting, aiding in informed business decision-making.
10. Compliance and Security: Ensuring compliance with financial regulations and PCI security standards to protect sensitive payment information.

By offloading these tasks to a subscription payment service, you will not only enhance operational efficiency but also create a more satisfying and reliable experience for your customers.

The Revenue Impact of Using A Subscription Model

The recurring nature of subscription payment services lays the foundation for predictable revenue, which is important for any business eyeing sustainability and growth. With global eCommerce projections north of $900 billion in 2026 these services will  minimize the friction often associated with one-time transactions and enhance the customer’s experience to foster long-term customer relationships.

In a subscription model, if a customer pays $20 per month, over 5 years (or 60 months), the total revenue generated from this customer would be $1,200. On the contrary, in a fixed price model, if a customer makes a one-time purchase of $200, that's the total revenue you'd get over the same period. The difference is significant - $1,200 versus $200, showcasing the substantial revenue potential and customer engagement that subscription payment services can offer over fixed price models.

Want to know what the  revenue increase for your business would be by combining Spreedly and your subscription payment service? Get in touch today!

Advantages of Optimizing Your Subscription Payment Service

Optimizing subscription payment services brings a multitude of advantages that not only contribute to a business's financial health but also enhance operational efficiency and customer satisfaction. Here are some key benefits that underscore the importance of fine-tuning your subscription payment processes:

• Revenue Predictability: Ensuring a steady and predictable revenue stream, crucial for long-term planning.
• Customer Retention: Reducing churn rates and fostering loyalty through seamless payment experiences.
• Operational Efficiency: Minimizing administrative burdens, freeing up resources for core business operations.
• Global Market Accessibility: Facilitating global market penetration, adapting to various payment preferences across regions.

Your Partner in Subscription Revenue Optimization

Spreedly's prowess in optimizing subscription payment services is a testament to its holistic approach towards payment orchestration. By providing a robust platform, Spreedly enables businesses to effortlessly manage subscription payments, thereby unlocking the potential for increased subscription revenue.

Payment Orchestration

Spreedly's payment orchestration capabilities allow businesses to effortlessly navigate the complex landscape of global payments. Through a single API, businesses can connect to multiple Payment Service Providers (PSPs), thereby creating an enterprise-grade payments stack tailored for subscription services.

Card on File

Card on file is a feature that allows businesses to securely store customer card details for future transactions. This is particularly beneficial in a subscription model where recurring payments are the norm. Spreedly’s infrastructure supports card on file functionality, ensuring that the card details are stored securely while providing a seamless transaction experience for returning customers. A robust card on file system can significantly impact customer retention.

By eliminating the need for customers to re-enter their payment details for every transaction, businesses can provide a frictionless payment experience, thus fostering long-term customer relationships and reducing churn rates.

Spreedly’s Advanced Vault

Vaulting a Card on File is a fundamental feature for subscription revenue optimization, with a vaulted card being one of that businesses most important assets.  But, not having the cardholder present for future Merchant Initiated Transactions means merchants must take a more active role in ensuring continued success of future payments. Spreedly's Advanced Vault removes the burden of that role by offering a suite of technologies designed to protect, maintain and enrich those assets to ultimately lead to more successful outcomes throughout the customer lifecycle.  

At the core of Advanced Vault, is Spreedly’s gateway agnostic, secure vault to store card data. Once vaulted, the product offers multiple Lifecycle Management solutions to help maintain cards in a ready to use state, in an easy to enable product.    

Spreedly enriches the original payment method data with BIN Metadata at the time of vaulting, allowing recurring revenue model customers the ability to act in real time on that data before proceeding with the first transaction. For example, identifying customers signing up for a subscription with a prepaid card, which has a much higher chance of failing due to insufficient funds at a later date.

Under this single product, merchants have access to Network Tokenization as well. A rapidly growing technology that uses a merchant specific, evergreen token that is resilient to expiration of the underlying card, but also is shown to reduce failures related to general decline.  

By combining all of these options, subscription based merchants are able to target specific pain points, and blend the right mix of products to optimize their recurring transactions.

Insightful Analysis and Reporting

Understanding payment analytics is crucial for continuous optimization. Spreedly provides insightful analysis, helping businesses to make data-driven decisions that enhance their subscription payment service and, by extension, their revenue.

By analyzing transaction data, businesses can identify patterns in subscription renewals and payment successes, thus facilitating more accurate revenue forecasting, enhancing revenue predictability, and determining what changes need to be made to grow that predicted revenue stream.

Tailored Global Transactions

With a focus on global transactions, Spreedly aids businesses in optimizing each transaction, ensuring compliance with regional payment preferences and regulations. This global approach is instrumental in expanding the subscription customer base and consequently, subscription revenue.

Tailoring payment processes and accepted payment methods to meet the preferences of different regions, a business could tap into new markets, thereby driving incremental subscription revenue and achieving a truly global footprint.

Chargebee’s Subscription Payment Service

Chargebee is known for its ability to enable organizations to manage subscription billing solutions by providing a plethora of features tailored for seamless recurring billing, invoicing, and customer-centric subscription experiences. Their platform simplifies complex subscription processes, ensuring a steady revenue stream and enhanced customer satisfaction.

The global relevance of Chargebee is evident in its offerings like multi-currency pricing and regional tax compliance, making it a valuable asset for businesses operating across borders.

Their partnership with Spreedly augments Chargebee’s capabilities, as Spreedly's payment orchestration expertise complements Chargebee's subscription billing capabilities.  The vault again lies at the heart of this partnership, allowing Chargebee to offer their merchants flexibility, and access to Advanced Vaulting technologies historically only used by larger merchants due to the complexity of integrating and orchestrating their use.  

The Path Towards Increased Subscription Revenue

In a landscape where customer retention is synonymous with revenue sustainability, optimizing your subscription payment service is not an option; it's a mandate. For over a decade, Spreedly has remained a formidable ally for businesses; offering a blend of security, efficiency, and global reach in optimizing subscription payments. Spreedly’s Advanced Vault is, in many ways, a symbol of our long term commitment to our customers.  As the demands of the digital economy evolve, Spreedly’s Advanced Vault will continue to evolve as new technologies emerge to meet those demands. Our customers can have the peace of mind that they will continue to see success over time through this one, cohesive offering. 

Explore how Spreedly can elevate your subscription payment service to new heights and propel your business towards remarkable subscription revenue growth.

Download the Payments Orchestration eBook Below