Recurring payments are the future. Subscriptions are taking over the ecommerce world with a bang!
Shopify, one of the world’s largest ecommerce platforms predicts, “the subscription ecommerce market is projected to reach $473 billion by 2025.”
With stats like these, it makes sense why so many people are moving towards selling subscription products and accepting recurring payments on their online store.
Shopify surprisingly recorded that “15% of Americans have signed up for one or more subscriptions to receive products on a recurring basis.”
This number is growing everyday and soon everyone will be selling subscriptions.
We cover the following topics:
- What are recurring payments?
- The Benefits of Recurring Payments
- How to Track your Recurring Revenue
- How to Pick a Secure Recurring Payments App
- How to Attract New Customers using Subscription Discounts
- The Importance of Recurring Payments Reports & Financial Analytics
- How to Choose a Trustworthy Payment Provider
- What is Subscription Churn rate?
- How to Choose a Subscription App with Multi-Currency Support
- How to Find a Simple to Use Recurring Payments Software
- The Power of Recurring Billing
- The Importance of Customer Retention
- How to Set Up Recurring Payments
- Using Recurring Payments on Shopify
- Best Recurring Payment App for Shopify
What are recurring payments?
Recurring payments are when your customers pay you on a repeat basis. Another way to thinking of recurring payments is Auto-pay.
If a customer signs up for a subscription, they agree to have their credit card charged on a regular basis for frequent deliveries.
If you’ve ever paid for an online subscription such as Netflix, you know you enter your credit card info once and then you’ll be charged again and again.
Recurring payments are ideal for recurring transactions. If something is purchased over and over again, this usually involves recurring payments that are processed automatically.
Benefits of Recurring Payments
There are so many benefits to offering recurring payments on your online store. If you’re offering recurring payments, this means you are selling a subscription product. Customers sign up for a subscription and are charged regularly on a predetermined schedule.
- Let customers choose how they want to pay (one time vs. recurring billing)
- Merchant earns recurring revenue
- Ecommerce subscriptions can grow your business $$$
- Customer happy they can subscribe to a product on AutoPay
- Merchant can easily determine next months recurring revenue (MRR)
- Attract new customers by offering subscription discounts
- Let customers choose delivery frequency
- Easier to cross-sell and up-sell to current subscribers
- Customers enrolled in recurring payments have higher retention
5 Do’s with Recurring Payments
1. Do track your recurring revenue
When you use a recurring payments software, you’ll want to make sure you’re making money using it! This will help keep track of how many subscriptions you’re selling.
A good recurring payments app will tell you Total Earned or MRR. MRR stands for monthly recurring revenue.
You’ll also need an app that shows your Upcoming Subscription Value. This is how much money the app estimates you will make next month. A revenue forecast helps you monitor your progress financially.
A recurring payments app like Ongoing offers at-a-glance reports and charts so you can visualize your data easily.
Subscription analytics and reports help you identify any patterns such revenue dips or sale spikes.
A low recurring revenue signals a possible issue such as your sales funnel or marketing strategies. If that’s the case, you might want to focus on:
- Getting people to your website (organic or paid traffic)
- Improving your CTR (click through rate) how number of clicks on your website in search results
- How you’re getting found on Google (what keywords do you rank for?)
- Optimizing your product page
- Review the subscription plans offered on your products
2. Do pick a secure recurring payments app
Not all recurring payments software apps are created equal. Some will offer you high levels of security and others will not. How can you tell the difference?
It’s a good idea to choose a PCI compliant app. This stands for Payment Card Industry Data Security Standard. This ensures that companies “accept, process, store and transmit credit card data security in a secure environment.”
A recurring payments app will need to handle sensitive information such as credit card numbers. It’s important the software is secure and safe both for the customer and merchant.
Ongoing is the best recurring payments system because they offer built-in security. Their security features tokenization and vaulted credit cards.
The merchant can’t view customers credit card numbers in full which ensures a secure online payment process and lowers liability.
3. Do attract new customers with subscription discounts
Offering subscription discounts is the perfect way to encourage shoppers to click the “Add to Cart” button and increase conversions.
In order to get the discount, shoppers will need to commit to a subscription.
A subscription discount is when you offer your product at a reduced price if it’s being ordered on a repeat schedule.
For example, let’s say a bag of coffee cost $10 if you buy it once. But if the customer signs up for a subscription to a bag of coffee, they get 10% off and now it’s only $9 per delivery.
Since the customer agrees to be billed every month to receive a bag of coffee, they are gaining access to this discount perk for their loyalty.
Subscription discounts are a great strategy to utilize with products that offer recurring payments because it incentivizes the customer to buy more long term.
Also, the greater the commitment, the greater the subscription discount can be. For example, a bag of coffee on a yearly Prepaid plan might be discounted 15% off.
3. Do review your recurring payments report
Your recurring payments app should offer financial analytics. This tells you the health of your business. A simple report to look at is are you making more or less money than last month?
If your monthly recurring revenue (MRR) is decreasing, that’s not good. You want this number to go up.
An app like Ongoing offers reports on it’s subscriptions dashboard for merchants so they can see how well they are doing.
Merchants can view new incoming subscription orders and the associated products.
Financial subscription reports can help merchants see patterns between which products are doing the best and most popular.
Other reports include projected recurring revenue for the next month. The Upcoming Subscription Value makes it easy to know how much cash you’ll have on hand in the future.
Lastly, they’ll be able to see a chart with their current subscription count and easily identify any fluctuations like spikes or dips.
5. Do choose a trustworthy payment provider
The goal is to keep all of your customers’ payment info safe.
In a nutshell you want to make sure the payment processor you choose works closely with big banks and well known credit card brands.
As a merchant, you want to be able to accept recurring payments from people all around the world in their local currencies. The idea is to make shopping simple so you can let customers pay how they want to boost conversions.
All recurring payments software use a payment provider to process credit card payments. You want to make sure that company is legit.
A payment processor like Shopify a highly reputable and trusted company. They’ve processed over a billion dollars in ecommerce sales and have over 2 million customers.
Ongoing offers a 3D Secure Checkout with Shopify Payments as their payment provider. This keeps your online store safe when selling subscriptions. They accepts credits cards using Payment Data Encryption, and PCI compliant servers for your added protection.
Ongoing is the best recurring payments system because it can accept website payments from all around the world.
By installing an app like Ongoing on your Shopify store, you would be using Shopify as your payment provider which is a trustworthy choice.
Dont’s with Recurring Payments
6. Don’t ignore subscription Churn Rate
Churn Rate is the rate at which people are leaving your subscription. If people are unsubscribing from a subscription, this is churn.
And it’s not a good thing.
Bare Metrics defines churn rate as “the percentage at which you’re losing customers per year.” The goal is to have your churn rate as close to 0% as possible. The idea is to keep the number as little as possible.
Your churn rate indicates how fast you are losing customers and money. You’ll want to aim for a subscriber churn rate of between 5-8%.
Ideally, you want to keep your current customers and add new ones. This is the way you can grow your monthly subscribers and recurring revenue.
You want as little churn as possible because this means customers are sticking with their products, and are being charged automatically on a repeat basis, earning you more money over time.
A good idea is to calculate your churn rate so you can see how you’re doing.
Churn Rate Formula: (Cancelled Customers in the last 30 days ÷ Active Customers 30 days ago) x 100
For example let’s say there were 300 subscribers at the beginning of the month and then at the end of the month 10 subscribers canceled their subscription.
50 cancelled subscribers ÷ 300 active subscribers 30 days ago x 100 = 16% churn rate
In this case, it means the churn rate is 16%, which is not ideal.
2. Don’t use an app lacking multi-currency support
Multi currency support is mandatory when selling subscriptions online.
By showing your checkout prices in foreign currencies, it is much easier to make a sale.
You don’t want website visitors having to do math in their head. Potential customers will most likely walk away if they don’t know how much something costs.
Especially with subscription discounted pricing, you want shoppers to know how much money off they are getting off if they subscribe for 1 month vs. yearly.
Displaying the checkout price in their local currency can make the difference between landing a sale and losing a sale.
It makes the difference. It creates clarity and trust and makes for a smoother shopping experience.
If you choose a recurring payments app that offers multi currency support and displays the price in every currency, you can experience higher ecommerce sales.
You’ll want to use a subscription app like Ongoing that automatically displays the price in any currency which creates confidence in the customer.
You want the shopper to click the “Add to Cart” button and having multi currency support gets you closer to this end goal.
3. Don’t use a complicated recurring billing app
Keep it simple when it comes to installing a recurring payments app for your online store. If you choose an overly complicated subscriptions app, you’ll get bogged down.
Choose a simple to use subscriptions app that handles all the heavy lifting for you like recurring billing, customer email notifications and multi-currency conversions.
In a perfect world, you’ll want to get up and running quickly and make your first subscription product that offers and accepts recurring payments.
If you have to worry about stressful integrations and complicated installation processes, you’re most likely going to place it aside.
Ongoing makes their installation process super simple and requires no coding knowledge. They keep lowering the learning curve so that any entrepreneur can sell subscriptions on their store.
With Ongoing, you can install the app yourself by adding one line of code to your theme, or click a button and have their awesome team do it for you.
Creating a subscription product is also super easy and only takes three click. First create your subscription plans, choose your products and display the subscription widget on your site.
4. Don’t turn a blind eye towards the power of recurring billing
Recurring billing is one of the biggest benefits of using a recurring payments software. When a customer signs up for a subscription, they are agreeing to have you automatically charge them on a set schedule.
With recurring billing, a customer is automatically charged and the merchant is automatically paid on a repeat basis. it’s a win win.
For example if a customer wants to buy a bag of coffee on a monthly basis, the customer only needs to enter their payment information once and then it will be on AutoPay.
A subscription app like Ongoing has a built-in recurring billing feature which will automatically charge a customer according to their delivery frequency and billing preferences.
A recurring billing software keeps track of all subscription order payments for the customer & merchant.
The benefit of recurring billing to the customer is they already approved all future repeat charges in their initial subscription order, so all charges happen automatically.
Another perk of recurring billing is it handles failed credit card payments in a way that can capture possibly lost revenue. Ongoing has smart logic that lets it attempt to charge a failed credit card a certain amount of times in order to collect payment.
This saves you from having to chase down customers with late or missed payments and helps earn you more recurring revenue.
5. Don’t miss out on high levels of customer retention
Since subscriptions auto-renew on their own, this can help increase your customer retention.
Customer retention is how well you are keeping your existing customers. Ideally you want this percentage to be close to 100%.
If you retained 92%+ of your customers, you can easily scale up your business.
Customer retention is super important when selling subscriptions online because it means you are not losing customers to cancellations.
By not offering recurring payments on your store, you can be missing out increasing your customer retention.
Not to mention, offering subscriptions means that you are also able to sell more products to those subscribers.
One study by Shopify showed “Subscription businesses create extremely loyal, repeat customers—and repeat customers spend 67% more than new customers.”
This means it’s much easier to pitch a new product to an existing customer than it is to find, and market to a new customer.
Accepting recurring payments on your online store helps you lower your total acquisition cost so you can spend less on advertisements and focus on selling to your existing user base.
How to set up recurring payments
Are you ready to get started with subscriptions on your online store? You easily accept recurring payments on your store by installing an app like Ongoing.
Ongoing is a Shopify app that is PCI compliant, and offers secure online payment methods for subscription products. It handles all of your subscription payment processing with automatic recurring billing.
You can easily transform any product into a subscription product. This means you’ll be able to offer subscription plans for this product that shoppers can choose from.
Can you do recurring payments on Shopify?
Yes, but you need an app!
All you need to do is install a Shopify subscription app on the Shopify App Store to solve your problem.
Why? Shopify does not currently offer recurring billing or subscriptions functionality built-in directly to their platform. For extra features, you will need to install apps.
To enable recurring payments on Shopify, we recommend checking out Ongoing.
This will give you the ability to create subscription products with automatic recurring billing and process repeat transactions.
Best Recurring Payment App Shopify
Ongoing is the best recurring payments Shopify app.
Do you have a product customers would enjoy frequent deliveries of (weekly, monthly, quarterly)? Then setting up recurring payments on your store is a good idea.
Get started today by getting Ongoing and learn how you can start your very own subscription business. With Ongoing, you can easily transform any product into a subscription!
You can also sell a curated monthly subscription box on your online store using Ongoing’s recurring billing management. Get repeat customers, repeat revenue, and repeat orders the easy way.
What’s not to like?
Start using recurring payments on your online store today and earn more money.