As inflation forces consumers to rethink their monthly budgets, it’s becoming clear that U.S. shoppers want to keep their subscriptions and are cutting spending in other areas first. However, they’re also increasingly likely to switch subscriptions to providers that offer better customer experience, particularly around billing and payment. Overall, 40% say they’ll switch for easier billing, and 23% are willing to pay slightly more for subscriptions that make billing easier, adn reduce billing friction.
Improving the subscription billing process isn’t necessarily complicated, and it can help retain customers and perhaps allow your brand to charge a premium for a better experience. Here’s how to audit, test, secure, and improve your subscription billing and payment options to retain existing customers and attract new ones, even as households tighten their budgets.
Consumers are used to personalized product recommendations, and personalization is often one of the reasons they choose a particular subscription. To usher those customers through signup and checkout—and to keep them as subscribers—the payment process needs to cater to their individual preferences as well.
The simplest way to do this is to accept a range of payment methods, and especially to accept digital wallet payments. Now, more than 70% of customers prefer to use digital wallets instead of credit cards some or all of the time when they buy online. That statistic comes from ClearSale’s 2021 five-country survey of 5,000 ecommerce consumers over the age of 18. Another finding from the survey is that only 28% of consumers always have their credit cards within reach while they shop online, which underlines the importance of digital wallet options that store and protect card data, such as PayPal, Google Pay, Apple Pay, and Amazon Pay.
Giving subscribers the payment methods they prefer is the first step to reducing billing friction. The next is to explore other options for payment customization. This lets them manage their cash flow better, so they don’t have to worry about covering their subscription bills.
Subscribers also reported an interest in splitting payments among multiple people—a feature that payment apps like Venmo have trained consumers to expect. For example, a streaming video subscription that’s shared among roommates might be split between them, instead of having one person pay the entire bill and wait for their roommates to reimburse them.
Digital wallets are one way to reassure subscribers who are concerned about data security, because their card numbers are shielded from the retailer. However, retailers and ecommerce businesses can do more to demonstrate their commitment to security. Nearly half (49%) of consumers say the possibility of scams deters them from doing more of their shopping online, and 38% say they’re deterred by concerns about website security, according to our research.
Often, ecommerce sites avoid mentioning security because they don’t want to raise the possibility of fraud in customers’ minds, but 88% of consumers in the survey also said they feel more secure shopping on websites that clearly state their fraud prevention and data privacy tools. Adding the badges or logos of the tools you use, especially on the checkout pages, can increase signups and loyalty.
Take Steps To Prevent False Declines for Your Subscribers and Reduce Billing Friction
Recurring payments like subscriptions can be vulnerable to account takeover fraud, and they can have false decline rates around 20%. Both fraud and false declines disrupt the customer experience and can cause churn.
Reducing declines for subscription payments while preventing fraud requires screening of each month’s payment, ideally with behavioral biometrics to see if there’s been a dramatic change in the user’s choices, shipping preferences, or activity on the site that might indicate account takeover. Flagged orders should be reviewed by an expert rather than automatically declined; that extra step can reduce false declines and ensure a friction-free payment experience for subscribers.
After customers have subscribed, it’s also important to make it easy for them to see their account status and make changes when they need to, such as changing from one subscription tier to another. It should also be easy for subscribers to cancel or pause their subscriptions without having to contact customer service—although customer service should be easy to reach if subscribers have questions about their billing or account.
When your customers can pay for their subscriptions the way they prefer, trust that their data is protected, don’t experience fraud or false declines, and can self-manage their accounts, they’re more likely to stay with your service instead of shopping around for an alternative with easier billing experiences.