The complexity of subscription business models
The growth rate of companies driven by technology and customer centricity is outperforming the growth of most traditional companies. Traditional companies are therefore forced to review their eco-system strategy and business models to find new ways and partnerships to grow their business.
From a payment perspective, subscription business models create a new type of complexity. Customer conversion and acceptance rates are still important KPIs, but we also see a growth in the importance of customer lifetime value (CLV).
Different user journey for subscription payments
The user journey for a subscription customer is quite different compared to the customer journey in traditional purchases. The subscriber will, in most cases, accept to pay the subscription cost in advance to get access to a product or service for a predefined time.
The subscriber enters into a relationship with the company, expecting a friction free and transparent experience that allows the subscriber to keep control of subscriptions and costs. These expectations and the payment environment consisting of combinations of fixed fees, usage costs, discounts, tiered pricing options and add-ons can in many cases create challenges for the companies.