Overcoming macroeconomic challenges

By Mike Chambers, formerly CEO of Bacs and a consultant at Access PaySuite.

 

For businesses offering a subscription-based service, the challenging economic climate is understandably a cause for concern. With less disposable income available and the cost of living continuing to spiral, many households may be reviewing their monthly outgoings and be forced to make some tricky decisions.

In fact, in the two years after the 2008 recession US-based Comcast lost 1.42 million cable subscribers and unlike today’s TV streaming services, cable subscriptions were long-term agreements requiring customers to pay a fee to cancel their contract.

To help consumers, the UK government has also recently announced tighter rules against so-called subscription “traps”, now requiring brands to make their subscriptions easy to cancel, and sending reminders to customers before a free trial ends or before a subscription automatically renews.

Thinking outside the box

Against this challenging economic backdrop, there’s a growing need for businesses to think outside the box when it comes to managing their subscription models, offering consumers more flexibility and freedom in an attempt to maintain their valued custom.

Mike Chambers

Earlier this year Netflix announced that for the first time in a decade it had lost subscribers – losing 200,000 during the first three months of 2022, and projecting a loss of a further 2 million subscribers between April and June. This announcement saw Netflix’s share price drop by more than 35 per cent the following day, wiping around $55bn (£42bn) off its value.

In response, the streaming giant announced plans to launch a lower-priced subscription tier – supported by advertising, in an attempt to offset this decline. Interestingly other streaming services, such as Spotify, have taken a different approach and rather than trying to chase full-price sales, the brand is offering cut-price deals for multi-user subscriptions.

The role of technology

Whichever approach a brand decides to take, they will need a specialist digital payments solution in place designed to facilitate flexibility around key processes such as collection dates, payment method and user logins.

Without the right technology, businesses are forced to manually process each and every payment, as well as amending and tracking customer records. Not only is this time-consuming, it may also lead to error or oversight. For example, if a customer calls and requests to amend their payment method or add additional users onto the account, the process needs to be seamless.

Similarly, specialist technology can support brands to offer more choice around how and by what means a customer makes their ongoing payment. In such challenging economic times, being able to meet or even exceed customer expectations is vital to prevent any further loss of subscribers.

Should a customer miss a payment this will automatically be flagged in the system, allowing you to quickly reach out to find out if the subscription set-up needs to be changed or altered in any way.

From a consumer point of view, being able to easily engage with the subscription provider is also of major importance, providing reassurance around the agreement and peace of mind that should they need to pause or cancel the agreement, this will be hassle free.

Given the ongoing economic uncertainty, it’s important for businesses offering a subscription-based service to do everything they can to both maintain existing customers, as well as winning new ones. With a flexible digital payments solution in place, businesses can offer customers a broader range of payment options depending on their individual circumstances, as well as reducing the administrative burden associated with managing subscriptions.

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