Better Billing Means Happier Customers
Following a few simple but essential best practices in billing can improve the customer experience and beef up your company's bottom line. When accepting credit card payments, it is imperative for a merchant to offer easy and convenient payment options in order to keep customers happy.
The billing function conjures up many images, few of them positive. Essential to success of your business, yet often a burden for most organizations independent of size or market, billing is seen as a necessary evil to collect cash and enable organizations to stay alive. Over the past few years, however, as the world has moved online and towards greater digital consumption, billing is increasingly immediate and central to the customer experience and thus plays a much different -- and critically important -- role.
Unlike the traditional retail world, the billing process in the Digital Economy is a key customer touch point, and thus incredibly important for businesses to get right. Rather than viewed as a cost center in which the greatest benefit is to minimize the cost of presenting and collecting payments, billing is now an important marketing asset to be used by the CMO as he looks to improve customer acquisition, reduce churn, and generate insights from data that was before ignored or inaccessible.
It's About The Experience
Take your favorite content, software, gaming, social network or video service and ask yourself whether your experience has ever been affected by one of the following, either positively or negatively.
- It offers the payment methods you care about
- You can take advantage of a new pricing promotion offered by the service
- You receive a reminder email that your subscription is about to be renewed, but that you can cancel at any time before the re-bill date
- You can pay in your home currency, not just in US dollars
- You are asked to update your credit card number because the service hasn't figured out the new expiration date
A billing infrastructure that focuses on digital businesses has to take into account all these different issues and a lot more. In fact, the centrality of billing to the customer experience is exactly why it is considered essential to both the acquisition and retention process, and given the predominance of subscription-style billing, to extending customer lifetime value.
Best Practices Win Customers
What do we know about the digital businesses who implement billing best practices?
Customer acquisition rates improve by 3-5 percent when you offer your service in local currencies.
Implementing an account updater that automatically takes into account changed credit card numbers, new expiration dates, etc., can add nearly 1 percent to your revenues.
Implementing sophisticated retry logic to cards that fail (for any number of reasons) enables businesses to add 15 percent annually -- or an easy US$150,000 for your average $1M business -- which is especially important when you consider the lifetime value of that customer.
These businesses understand that it's good practice (and legally compliant) to send a reminder email before renewing a customer on an annual subscription plan, but that it doesn't make sense to do the same thing for customers on a monthly plan.
Making it easy for customers to leave your service actually leads to longer-term customer lives.
These and other findings are what help companies that have the same equivalent service to truly gain a competitive edge in markets where marginal costs are often minimal and barriers to entry are low.
Digital businesses around the world are awakening to the marketing impact of their billing infrastructure -- for the inherent wealth of customer information and data that live within it -- and treating it with the same respect they treat their email marketing, lead generation and customer service capabilities.