Enhanced Stability and Predictability of Revenue for the Business
There’s always an element of unpredictability for businesses in terms of revenue generation from day to day, week to week, and month to month. Depending on market conditions, competitor activity, seasonality, and consumer behaviour trends, sales can go up and down, often in ways that cannot be anticipated. By having recurring automatic payments setup for customers, revenue flow becomes a bit more stable for the business. While there will still be some natural ebb and flow as new customers come on board and some customers leave, recurring payment programs provide a certain level of predictability that can allow businesses to better focus on long-term customer acquisition goals, improved customer experience to build loyalty, and strategic marketing programs to grow market share.
Reduced Potential for Missed or Late Payments and Increases Customer Retention
Following on the theme of revenue stability, recurring automatic payment programs facilitated through a modern POS solution also work to minimize customer churn by reducing friction in the payment process. Essentially, recurring payments make it so that customers can all but forget about them, counting on them to continue to operate quietly in the background as they go about their daily lives and worry about other more important things. It’s been shown that people who sign up for recurring payment plans for memberships and subscriptions are more likely to stay on as customers for longer periods of time than customers who manually pay at each payment interval. Automatic payments make it easier for customers to maintain their membership or subscription status and reduce the risk that they will cancel their plans or switch to a competitor.
Automatic payments have the added benefit of reducing, and in many cases eliminating, the possibility of late payments or missed payments due to customers forgetting about them. With payments being made automatically directly from the customers’ credit card, debit card, or registered bank account, there are no delays caused by manual payment processing requests or approvals. Things simply continue operating seamlessly until the payment terms have concluded, or the customer chooses to change their membership status or subscription level.
Increased Security and Lower Risk for Businesses and Customers
Automatic recurring payments also lower the risks of transaction fraud or data theft for both businesses and customers. All payments are processed through secure encrypted connections that are fully-compliant with PCI regulations, and tokenization technology used by digital payment gateways helps to ensure that the unique data associated with each individual transaction is rendered useless for any data thieves who attempt to create fraudulent purchases.
Clearly, the benefits of automated recurring payments to customers are significant, and the advantages business can realize are equally so. However, as we mentioned at the onset, these benefits and advantages can only be obtained if your company has a point-of-sale solution that is capable of efficiently setting up and managing recurring payment accounts for customers.