Due to continued growth in the eCommerce market and subscription businesses, saturation is at an all-time high. Customer retention is key to a successful business in a saturated market. So how can we improve customer retention? Well, it could be from the perspective of the product. You can use it to build product engagement. Product engagement, however, is just one part of what it’ll take to improve customer retention. What kind of engagement and relationship are you working on outside the product engagement? 68% of customers will stop doing business with a brand if they think it doesn’t care for them.
Are you wondering how to increase engagement and let your customers know they’re valued? You can do it by adding recurring billing to your Shopify, Amazon, or any other eCommerce store. Let AppstleSM experts tell you how to increase customer retention with a recurring billing strategy.
What is Recurring Billing?
Recurring billing is a payment model. Subscription businesses usually use this payment model to charge their customers at predefined times — weekly, monthly, annually, or custom intervals. Recurring billing payment models have been around for a long time and are commonly used by telecom businesses, newspapers, gym memberships, etc. They are now increasingly popular for SaaS applications and streaming services.
How Does Recurring Billing Help Customer Retention?
Recurring billing saves much effort and improves customer retention. An improvement in retention can increase revenue by 80% in almost two years, which has made this payment model popular.
Here are some of the main reasons why businesses should offer it:
1. Easy For Customers
It’s hectic to remember what to get every month and then re-order it. Subscription models save people from this trouble. But problems can arise due to involuntary cancelations because of late or failed payments. A recurring billing tool ensures easy management. This is because a recurring bill tool will notify them immediately in case of payment problems.
2. Inventory Forecasting
Inventory forecasting is much easier with subscription apps on Shopify, Amazon, etc. you can factor in various situations, find the average number of subscribers, and predict the revenue. This will help predict how many monthly products a business will need to satisfy its customers.
The average inventory accuracy is 60-65%, which is extremely low, given the importance of inventory management. For better inventory forecasting, use tools like AppstleSM Subscriptions and Loyalty, which offers inventory forecast and order management.
3. Steady Stream Of Revenue
Once consumers subscribe to a subscription business, they’re unlikely to unsubscribe anytime soon, even if it’s just to avoid a tedious cancellation process. Also, when consumers use products repeatedly, they may feel attached to the product and the company. This attachment increases customer loyalty and translates into a steady stream of revenue. Loyal customers are also likely to recommend the business to their peers, which helps in customer acquisition.
4. No Failed Payments
Recurring billing tools have dunning management and will notify the customers immediately in case of failed payments. This reduces involuntary churn, which makes up 20-40% of the churn rate, by accommodating payment failures and minimizing card declines.
5. Improves Customer Engagement
A subscription-based business needs to analyze data and detect patterns to understand the ongoing relationship between customer and company. A recurring billing tool makes it easy to manage customer data, act quickly on a change, check in with customers, etc. Use a recurring billing tool that allows custom notifications like AppstleSM. This is because 93% of customers will move to a competitor after a negative experience with emails and notifications.
How To Use Recurring Billing For Your Business
Companies, especially subscription-based businesses that bring in recurring revenue, must figure out how to correctly do recurring billing for Shopify and other eCommerce stores. A recurring billing tool has long-term benefits; its scope doesn’t end with just invoicing and payment collection. But like with many things, there is a right or wrong way to employ it. So if you want to use recurring billing for your business, here’s how:
1. Check Customer Cancelation Trends
To focus on customer retention, start by digging deep into cancelation trends. You need to begin with who and why. Get a churn report and identify cancellation numbers and any anomalies. Next, understand the trends of why the customers might be canceling. Apart from identifying customer churn better, you’ll be able to predict what type of customers will likely leave in the future.
To counter excess cancellations, you can use tools like the AppstleSM Subscriptions and Loyalty that offers features like:
- Cancelation management to identify reasons why customers are canceling.
- Dunning management to reduce churn.
- Pre-cancelation discounts to increase retention.
2. Know What to Prioritize
Churn comes in two forms: voluntary churn and involuntary churn. While businesses need to reduce both, the priority should be involuntary churn. In this type of churn, customers didn’t choose to cancel. The best way to handle this is to use a subscription app for Shopify or other eCommerce stores with dunning management and recurring billing. The tool makes payment handling easier and notifies the customer of a problem with their accounts.
AppstleSM – The Top Choice For Recurring Billing With the Shopify App
Mastering the art of retention isn’t easy, but with recurring billing, it’ll become a more attainable goal for businesses. If you’re looking for a membership or subscription app, try AppstleSM. Our AppstleSM Subscriptions and Loyalty app has been ranked number one in Shopify’s subscription category. It’s a tool/app you can use as a Shopify subscription app or add to your website’s store. We’ve become the best subscription app for Shopify, but don’t just take our word for it. Try it yourself and see how it can benefit your business. Shopify app recurring billing is easier to understand with AppstleSM. Contact us today for more information!