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Consumers can now purchase almost anything as part of a subscription: software, digital marketing tools, streaming content, beauty products, alcohol, and clothing.

The sky’s the limit for subscription merchants. Many startups have opted to go the subscription route, aiming for the elusive and much-desired recurring revenue that comes from subscription purchases. Some sources claim that the demand for subscription boxes alone (think Stitch Fix or Trunk Club), has grown by 3,000 percent.  

As the subscription market becomes more saturated, online merchants need to find new opportunities to strengthen relationships with existing and prospective customers. A major part of this is providing a seamless online shopping and checkout experience. Eliminating friction is paramount and can be achieved by following some best practices.

E-Commerce Best Practices for Online Subscription Merchants

There are several things online merchants can do to improve the customer experience, streamline the path to purchase, and optimize checkout for consumers:

  • Include a wide variety of accurate, detailed product photos if you’re selling physical product subscriptions
  • Include product or service reviews by past purchasers
  • Include a “products/services you may also be interested in” section on your website that makes intelligent recommendations based on prior purchases.
  • Offer a free trial where possible and remind customers via email when their trial is about to expire with a prompt to upgrade to a paid subscription
  • Pre-fill forms where possible. If a user already signed up for a free trial, use intelligent form fills to make it easy for them to upgrade
  • Include a checkout progress bar that notifies the user where they are in the process (customer information > shipping information > payment information > confirmation)
  • Offer competitive shipping rates and delivery windows
  • Send confirmation emails that include shipping or activation information

These are only a fraction of the things online subscription merchants should be implementing to improve customer experience and optimize the path to purchase. They also don’t begin to cover the payment processing best practices that subscription merchants should consider to retain customers.

Online Subscription Payment Processing Tips

Subscription merchants face different challenges than regular online merchants. The ongoing nature of the business relationship requires special treatment when it comes to payment processing.

Gateway Considerations

Some gateways provide recurring payments features that can be activated for subscription merchants. There are also some third-party solution providers that offer recurring payments functionality as an add-on to your existing gateway. These tools simplify recurring transactions by enabling the merchant to enter the charge amount information and frequency only once, triggering automation of payments moving forward. The customer’s payment card is billed at the appropriate time and a receipt can be automatically emailed.

Compliance Considerations

Merchants should be sure that their gateway or recurring payment solution provider offers a PCI-compliant solution that facilitates secure online access and payment card data management. Some solution providers offer two-factor or multi-factor authentication options. Others enable the merchant to provide different levels of access to the gateway or app, limiting access only to users who need it. Some providers also store data using several layers of encryption in a segmented network with new encryption keys being generated daily.

Churn Considerations

Churn can be an uphill battle for online subscription merchants. One of the most common causes for unnecessary churn is when a payment card has insufficient funds. This is especially an issue with debit cards and can be resolved by updating billing and retrying strategies. For example, updating monthly billing dates to coincide with regional payday cycles is one option. Updating retry time from one hour to a space of three to four days can also be helpful in optimizing billing.

Another common occurrence is expired card declines. If a merchant does not have the most up-to-date information about a payment card, the transaction will decline. Utilizing an account updater tool to automate the process of updating card information can streamline operations and ensure that a transaction will not be lost due to a card expiration. It’s the same scenario in the case of a lost or stolen (or hacked) card. When a card is reissued to a cardholder, they often forget to update the payment details for their numerous online subscriptions. Account updater tools can handle these types of updates automatically, ensuring a seamless transition and minimal churn.

As the online subscription-based service and product offerings continue to evolve, merchants will have to evolve their internal processes – from digital marketing to payment processing – to keep up. Managing customer happiness while catering to prospective customers can be a balancing act. Employing automated recurring billing can streamline the process for  existing customers while freeing up merchants to focus on new revenue. Working with a digital payments advisor to identify tools that can aid your subscription billing operation can save you money in the long-run and improve your recurring revenue stream.