How to streamline payment processes for revenue efficiency
Now, more than ever, payments play a pivotal role in subscriptions. Clunky and complicated payment procedures can lead to customer churn and missed opportunities. Instead, recurring billing should give you a competitive advantage and simplify your business.
If the phrase “simple payment process” sounds like an oxymoron, keep reading. We've compiled a comprehensive guide on streamlining payments to help you optimize your revenue potential.
What is a streamlined payment process?
A streamlined payment process is an efficient, optimized system that handles transactions between your business and customers. It aims to simplify the payment journey, minimize friction, and enhance the overall user experience–encouraging longer customer retention.
What are the benefits of streamlining payment processes?
An optimized payment system brings benefits to both customers and companies.
Enhanced subscriber experiences: Simplifying the payment journey can help you reduce customer churn–voluntary and involuntary.
Operational and security efficiency: Automating payment processes minimizes errors and frees your teams to focus on value-added tasks. Additionally, integrating robust security measures into payable processes helps protect sensitive information and build trust.
Data-driven insights: Streamlined payment systems often generate valuable data that can be used to analyze subscriber behavior and preferences to inform growth strategies.
Learn how leading subscription brands streamline payment systems to fix and prevent revenue leakage.
Understanding your current payment process
Analyzing your company's payment system is a complex but essential undertaking. It requires dissecting its various components, analyzing their interactions, and identifying opportunities for improvement.
Analyzing your current payment system
Payment processing goes beyond charging for a product. It’s an array of interconnected components. To optimize your payment strategy, you must review your current system first–review the following elements:
Payment alternatives and channels: This includes credit and debit cards, digital wallets, ACH payments, or other alternatives. Remember, different customer segments may prefer specific payment methods, making it essential to have several convenient options.
Payment gateways: Analyze their efficiency during high-volume transactions, security features, and integration capabilities with other systems.
Transaction processing: Delve into the mechanics of payment processing and assess the speed and accuracy of this process to avoid delays and inaccuracies.
Security protocols: Examine the security protocols to safeguard customer data, including encryption, two-factor authentication, and compliance with industry regulations.
Data collection and insights: Payment processes generate valuable data that can provide insights into customer behavior, preferences, and trends. Explore how this data is collected, stored, and used for business strategies.
Identifying improvement areas
When analyzing your current payment processing system, you may have come across several subscription billing challenges and limitations. Here’s where you can start improving:
Payment flexibility: Customers worldwide are getting used to alternative ways to pay. Your business must adhere to customers’ preferred payment methods and local currency. The ability to do this depends on which gateways are available.
System complexity: Payment flexibility creates complexity throughout a subscriber’s lifecycle. Without the capabilities to handle one-time purchases, upgrades, downgrades, or pauses, you have to expect churn.
Customer churn: There are more than 2,000 payment failure reasons. And it’s not affordable to manually handle them. Businesses with a streamlined payable process worry less about involuntary churn and focus more on improving their offerings.
Lack of visibility: Businesses that want to turn trial users into paying customers need to identify where their value stems from in their offerings, who their buyers are, and how to target similar prospects. A comprehensive view of subscriber data is key when making informed decisions.
Setting the goals for a streamlined payment process
What gets measured gets managed. Achieving your desired efficiency level requires clear goals and well-defined key performance indicators (KPIs).
Setting objectives to measure goal progress
These goals should align with your overall business objectives and customer-centric approach.
Enhance customer experience: Simplify the payment journey to ensure a frictionless experience for subscribers.
Increase revenue efficiency: Optimize payment processes to minimize failures, reduce churn, and maximize successful transactions.
Improve operational efficiency: Automate payment-related tasks and processes to streamline internal operations.
Defining Key Performance Indicators (KPIs)
Goals are set. Now, how can you track and evaluate your performance? Here are some KPIs to measure success:
Transaction success rate: The percentage of successful payments processed compared to the number of attempted transactions.
Average processing time: The average time it takes to process a payment, from initiation to confirmation.
Recovery rate: The percentage of failed payments that are successfully recovered through dunning processes.
Involuntary churn rate: The rate at which subscribers cancel their subscriptions due to payment-related issues.
Abandonment rate: The percentage of users who start the payment process but don’t complete it.
Improving your subscription payment infrastructure
A seamless subscription payment infrastructure is a cornerstone of success, and obsolete payment systems, manual processes, and a lack of flexibility can hinder business operations.
Updating the current systems
Outdated systems can introduce complexities and vulnerabilities. Upgrading to modern payment infrastructures and legacy systems can unlock advanced features such as multi-channel payment options, secure tokenization, and seamless integrations with third-party tools. These updates not only enhance customer security but also provide more convenience and choice, driving higher conversion rates.
Leveraging automated solutions
Automation empowers companies to deliver personalized and consistent experiences while minimizing manual efforts. It improves operational effectiveness, customer retention, and overall business growth.
Recurly is a subscription management and recurring billing platform that helps leading brands deliver powerful customer experiences through seamless, automated solutions–and much more. With Recurly you can:
Allow for plan flexibility: Providing plan options helps to funnel customers from free trial offerings to paid subscriptions. Recurly helps you easily organize and price plans tailored to business and customer needs.
Offer payment flexibility: Recurly caters to your customers’ preferences. Subscribers can pay any way they choose, regardless of location, whether by credit card, debit or direct debit, or electronic payment methods like PayPal and Apple Pay.
Set up multiple payment gateways: Businesses can choose their preferred gateways, change them anytime, and create custom routing based on unique needs. Multiple gateways mean broader access to the payments ecosystem and uninterrupted services during downturns.
Deploy strong fraud management solutions: Recurly and its partnership with Kount offers real-time fraud detection and machine learning algorithms to identify and block suspicious activities. Additionally, reducing data breaches risk by replacing sensitive payment information with unique network tokens.
Run smart dunning campaigns and retries: Recurly provides a reliable, immediate, and personalized process that helps prevent churn. Our decline management strategies can recover up to 76% of failed subscription renewals.
Learn how leading subscription brands have transformed their platform infrastructure for scalability.
Optimizing the subscriber experience with digital payments
As technology evolves, so do subscriber expectations. While these needs and preferences may vary across generations, one thing remains consistent: Consumers want convenience and loyalty rewards.
The rising demand for digital payments
In today's digital era, convenience reigns supreme, and the demand for alternative payment methods (APMs) is on the rise. In fact, PayPal was the most popular APM in 2022–accounting for 18% of all transactions and 92% of APM transactions within Recurly.
Adopting these digital channels provides convenience and flexibility and improves overall payment experiences. Customers can choose the method that best suits their preferences and lifestyle, resulting in increased satisfaction and loyalty.
Introducing loyalty programs and incentives
One of the most effective ways to promote customer engagement and retention is through loyalty programs and incentives like exclusive offers, reward points, or discounts. Additionally, membership programs can be linked with electronic payments, automating the redemption of rewards or discounts. This simplifies the overall payment process, enhancing the subscriber experience.
Valuable insights & data to streamline payments
As mentioned above, lack of visibility in valuable insights is a challenge most subscription businesses face. With the right metrics, you can make more informed decisions quicker based on relevant data.
Recurly provides the insights and reporting your business needs to monitor subscription performance and drive improvements. Our customizable, out-of-the-box reports track the performance of your subscription plans, monthly recurring revenue, subscriber retention, recovered revenue, and more.
Want to see what else Recurly can do for your business? Watch our end-to-end product demo to find out.