It’s great to be able to learn from your mistakes, but it’s even better to be able to learn from the mistakes of others so that your business is not impacted by them. In a survey of dozens of companies that offer recurring billing subscriptions, many of the same mistakes were identified, and most of them were due to inadequate foresight in setting up a subscription billing platform that was both simple and flexible.
It can be a fairly complicated thing to set up a subscription business model, so it’s understandable how mistakes could creep into the process. After reading through some of these frequently encountered mistakes below, you should be able to avoid all of them when you’re setting up your own process. Take advantage of the mistakes that other subscription-based businesses have already encountered and overcome so that you can profit from the mistakes made by others.
Deciding on Pricing Plans
Before you take your products or services to market, you’ll have to consider several factors before deciding on pricing. You’ll probably base this at least in part on how your competitors are pricing similar products, and maybe also in part on what kind of revenue you’ll need coming in to cover all your expenses and make a profit. When you’re considering your pricing, the worst thing you can do is agonize over it and spend weeks or months trying to reach a reasonable price point.
You’ll be much better off to simply establish a range of pricing rather than a single price point, and once you have some business activity in progress, you should be able to use that to refine your pricing. You’ll be much better equipped to establish pricing after you’ve had at least a month of data coming in, and that will help you to make some more informed pricing decisions. What you should do even at the outset, is to try and establish a pricing system that has built-in flexibility so that it can be adapted to meet changing business conditions.
Just like any other relationship, subscription relationships with customers have the opportunity to expand through upgrades and renewals over a period of time. Make your customers happy and add value to the relationship by offering them gifts and discounts, and reserve price increases for future customers.
Hard-coding Pricing in the Billing Platform
Many companies end up hard-coding their pricing schemes directly into whatever products they’re trying to sell since they’re in a huge hurry to launch the company and start generating revenue. When you do this, it will be impossible to change your pricing scheme quickly when it’s necessary to meet the demands of the marketplace.
Even worse, you’ll still end up having to allocate resources to modify your billing system after you’ve launched, and that will take valuable personnel and valuable time away from business processes that might need them more. When you have hard-coded your pricing details into your scheme, you will invariably end up handling chargebacks, refunds, and credits on a case-by-case basis, which will take up even more of your time. You would be much better served by having a comprehensive billing platform in place at the outset, so you won’t have to allocate resources to make changes later on.
Missing out on Self-service Checkout Possibilities
Some B2B companies look down on self-service checkout as being something that smaller companies engage in and which is beneath them. This is definitely a mistake and a lost opportunity because it can in actuality be a tremendous benefit to your business. All B2C companies should think like major corporations, and all B2B companies should have both an upward and downward view on other business opportunities. When you shift to a recurring revenue model, it will most definitely increase your customer interactions exponentially.
When you have a manual processing system, it will invariably result in higher administrative costs, a number of dissatisfied customers, and a great many missed opportunities for generating additional revenue. It will also hold you back from upselling more effectively and pricing your products more advantageously. If you can develop an effective self-service checkout model, and place it right alongside your existing direct sales model, you will have additional opportunities to acquire more customers, and you won’t have to invest any significant effort to do it.
Putting Out generic Invoices and Receipts
Although invoices and receipts aren’t intensely interesting, in truth these are some of the primary methods by which you maintain contact with your customers. That means you should avoid issuing generic documents and lifeless emails that notify customers about charges to their credit cards.
Consider invoices and receipts as opportunities to advance your brand, reminding your customers about any special offers or upgrade opportunities. By adding a little spice to your billing platform invoices, you can create greater engagement with your customers and increase the value of your subscription relationship with them.
Thinking that Credit Cards are Foolproof
Supporting credit card payments is a relatively automated process, which you might think is a godsend because it’s simple, but you can bet that there will come a time when the process comes crashing down, and you experience some kind of failure. In a study conducted by TrustInSight, more than 1,000 consumers in the US were polled, and it was discovered that more than 17% had had their credit cards rejected by an online retailer.
The rejection could be for any number of reasons, including expiration or inadequate funds, but at some point, you can count on almost all of your credit cards being rejected at least once. Given the fact that you don’t get paid when this happens, it’s a serious issue that you need to address beforehand so you can minimize the damage.
For instance, you can set up a service that alerts you two or three weeks before a credit card is set to expire, so you can notify your customer that a new card will be needed. If you decide to use this service, make sure you are fully aware of all its terms and conditions, especially any hidden fees, cancellation policies, and rate fluctuations.