5 min read
3 key recurring revenue challenges
Engaging a recurring revenue model in your business is a key factor in sustaining positive cash flow management outcomes.
When attempting to increase profit margins and streamline your accounts, investing in a recurring revenue model is a beneficial step forward. By offering your clients access to direct debit software you not only make payments easier for them, but can also improve your company’s ability to retain and collect vital income.
There are a number of challenges you may be facing when considering a recurring revenue model for your business. To help overcome these issues, here are three of the most common difficulties and how to address them.
Attracting customers to subscriptions
One of the easiest recurring revenue models to integrate into a small business is to offer clients subscriptions to your goods and services. However, some business owners believe it is difficult to convince customers to sign up for a direct debit contract, due to the commitment to ongoing payments that can be processed without their approval.
Fortunately, the truth is very different. Many consumers are happy to commit to an ongoing service model. In particular, a paperless direct debit system provides clients with a payment system that is simple, easy and secure.
Collecting and using relevant data
As you sign more customers onto your recurring revenue model, the amount of data and vital information being collected increases exponentially. Collating and analysing this data can be a significant task that absorbs substantial time and resources.
When operating under a recurring revenue model, businesses need this data to ensure customer trends, product popularity and payment processes can be managed and reviewed. Understanding the influences on client behaviour can significantly boost the ability to market to and retain these customers beyond their current contract.
Fortunately, data collection can be easily integrated into a business model when payment solutions are moved to the cloud. By investing in a cloud-based direct debit solution, your company can ensure that all relevant data is collected in one place. This takes the pressure off your in-house IT infrastructure and creates a secure network for data retrieval and analysis.
Protecting against customer churn
Customer churn is one of the biggest threats to a recurring revenue model. If your clients are unwilling to stay with your company for the length of a subscription, they will be unlikely to contribute to your ongoing income.
Without sustainable customer retention measures in place, businesses risk losing all ability to create and maintain a recurring revenue stream. This is why it is vital to ensure you are monitoring consumer trends and making an effort to address any potential issues before they become problems.
Customer retention is much more cost-effective than attraction, so holding on to your client-base should be a crucial business consideration. Solutions to high customer churn could include improving the client experience, targeting individuals with personal marketing and creating subscriptions that are attractive and easily renewed.
While protecting your profits is important, ensuring data collected from your customers is secure should be a vital consideration. In particular, remaining compliant with the PCI DSS is a crucial factor in avoiding costly legal liabilities.
Fortunately, a cloud-based direct debit integration sourced from a qualified and professional provider can take this worry off your hands. A fully compliant payment service can easily be incorporated into a recurring revenue model, giving you the peace of mind that your business is performing to regulation.
Whether you are looking to deploy a subscription-based scheme, retainer services model or hard contracts, a cloud-based payment system might just be the best recurring revenue solution for your business.