Subscription-based businesses are everywhere nowadays. And it doesn’t matter whether you’re seeking recurring deliveries of cosmetic products, tasty snacks, or gourmet dog food — whatever the niche, it’s highly likely that there’s a subscription service built to cater to it.
In recent years, the recurring revenue model has gained tremendous popularity among a wide spectrum of consumers. The factors influencing this meteoric rise are both complex and interlinked — increased internet accessibility, the development of cloud technology, and even the global pandemic have all played a part.
Consumers continue to flock to subscription services thanks to their perceived affordability, flexibility, and convenience. For the purposes of this article, we’re going to focus on that last point — convenience — namely, your checkout process. We’ll dive into why a good checkout process is so important for subscription businesses, and explore how optimizing it can lead to increased customer satisfaction, loyalty, and ultimately, business growth. Intrigued? Read on!
Customer retention matters
Retaining customers is a well-known business imperative. However, if you’re running a subscription business, this is even more critical than you may realize. In a subscription business model, customer retention is the key to long-term success.
Losing a customer is never pleasant, but it’s a particularly painful experience to lose a subscriber. Unlike a traditional ecommerce store, your entire business model relies on customers renewing their commitment to your product or service.
Forget about making a sale and moving on to the next customer: every conversion is another relationship you’re committed to nurturing. If it sounds like a lot of work, that’s because it is, but it’s also well worth the effort — and part of the reason why the subscription economy is expected to reach a market size of $1.5 trillion by 2025.
So, how do you prevent your customers from canceling their subscriptions? Or, to frame things a little differently: how do you create the kind of experience that elevates your product or service from a one-off purchase to a necessary expense? How do you earn a coveted place in your customer’s monthly budget? Truthfully, there are many angles you could attack this problem from, but your checkout process is a good place to start.
Avoiding cart abandonment
Treat your checkout process as an afterthought, and sooner or later, this will lead to customers abandoning their purchase, and ultimately, their subscription — not ideal.
Here’s the catch, though — subscriptions are a commitment, and consumers are already less likely to pull the trigger on an ongoing purchase, so it’s your job to ensure that your sales funnel is well-greased. If your potential customers are forced to deal with a glitchy, unreliable payment screen, or unclear instructions during the final moments of sign-up, how are they supposed to feel about committing to this level of service for the long term?
A smooth, intuitive, and secure checkout process is essential for any business — doubly so for those relying on a recurring revenue model. If you’re already running an ecommerce store, you may have an established checkout process. However, just because it works for individual purchases, this doesn’t necessarily mean it’ll provide a flawless experience when onboarding new subscribers.
However, building a bespoke checkout process (or adapting an existing one) isn’t exactly a beginner-friendly task, and the potential for mistakes is high if you’re inexperienced. Thankfully, several pre-packaged solutions are available. Stripe is a popular option, but its features are relatively limited — if you’re running a subscription service, it could be worth investing in a fully-fledged subscription management software package instead, as many of these packages incorporate a pre-built checkout process as part of their offering.
For example, Chargebee offers a fully customizable and hosted checkout as part of its service — a wise investment if you’re aiming to improve your customer journey. And if Chargebee’s recurring payment services don’t suit your particular business needs, there are plenty of alternatives available, too: just search our website!
What’s the key takeaway here? Well, by providing clear instructions and minimizing any potential barriers to commitment, consumers are more likely to complete their sign-up and convert. In fact, a survey by Baymard Institute found that 17% of cart abandonments were due to a complicated checkout process, highlighting the importance of a streamlined and user-friendly checkout process.
Reducing customer service requests
Running a subscription-based business can create unique challenges for your customer service team — let’s examine some of the issues they’re likely to be faced with on a day-to-day basis:
- Managing recurring billing issues: Unlike traditional businesses that typically only deal with one-time payments, subscription-based businesses need to manage recurring billing on an ongoing basis. This can create additional complexities, such as managing failed payments, handling billing disputes, and updating billing information.
- Handling subscription cancellations: At some point, your subscribers are likely to have questions or concerns about the cancellation process — especially if the cancellation process isn’t user-friendly (or it’s deliberately designed to make cancellation difficult — not a tactic we’d recommend).
- Keeping up with changing customer needs: With subscription-based businesses, customers can change their subscription preferences or upgrade/downgrade their subscription at any time. This means your support agents need to be knowledgeable about the different subscription options and be able to quickly and efficiently process changes to customers’ accounts.
- Balancing customer satisfaction with business goals: Subscription-based businesses need to balance the need to retain customers with the need to meet business goals, such as revenue targets. This can create unique challenges for customer service agents who need to find the right balance between offering discounts or refunds to appease dissatisfied customers and keeping the business profitable. For example, if a customer claims they forgot to cancel their subscription and demands a refund for the goods they’ve already received, a decision must be made — how much leeway will your support team allow for?
While having an FAQ, knowledgebase, or chatbot can alleviate some of the pressure on your support staff, the best approach is to address the issue at the source. By ensuring that your customer journey is clear and easy to follow, you can reduce the number of incoming support tickets dramatically.
And while it’s certainly not the only improvement you can make, a well-thought-out, properly-implemented checkout process can help reduce the burden on your customer service agents and improve the overall customer experience in one fell swoop.
Hopefully, we’ve managed to convince you that your checkout process really matters when it comes to running a subscription business. If you’re aiming to increase conversion rates, reduce abandoned carts, and ultimately, drive revenue growth, consider taking a closer look at your checkout system — it could be hindering your growth. For more on improving your ecommerce business, check out our guide on blending traditional and digital marketing, or for a refresh on some business fundamentals, read our 7 steps to building an international ecommerce business.