In today’s world, consumers and businesses can buy just about anything on a subscription basis. Streaming music? Check. Software? Check. Razors? Check. Massive data storage? Check.
This recurring business model has exploded in recent years because recurring relationships are advantageous for both buyers and sellers. Buyers have the benefits of flexibility, paying only for what they need, freedom from ownership. Sellers benefit from predictable revenue streams and deeper customer relationships and retention.
The next generation of wireless technology
A decade ago, 4G wireless technology was instrumental in driving this shift to recurring services. 4G transformed business models, encouraged widespread smartphone adoption and made possible everything from Uber to Netflix on your mobile phone.
Now we are on the brink of the next generation of wireless technology – dubbed 5G – with early rollouts already happening in North America and Asia. With speeds up to 100x what we experience with 4G and near-zero latency, 5G will certainly usher in a revolution in new services. Oracle’s recent report “5G Smart Ecosystems are Transforming the Enterprise” explores the transformative power of 5G. Imagine self-driving cars, remote-controlled surgery, and immersive virtual reality experiences.
In this 5G world, business models will continue to adapt and leading enterprises will move into flexible consumption-based pricing, bundling complimentary products, and selling more on a pay-as-you-go basis. Recurring relationships will still be a cornerstone, but the plethora of services will make simple subscriptions a relic of the past.
Would you rather sell access to an immersive multiplayer augmented reality game as a simple monthly subscription, or capture more value by charging for new 5G capabilities like a zero-latency or speed-boost experience?
Modern monetization systems can quickly launch new services with the flexibility to create any pricing model. They play an integral role in powering a full digital experience solution from social to concept to cash to care. And they scale to handle massive volumes of 5G transactions in real time.
As customers continue to expect intuitive, digitally-enabled, frictionless experiences, both monetization systems and payment systems must keep pace.
Payment systems and subscription services
Payment systems can only keep pace by handling recurring payments at scale and without friction. The move towards flexible and dynamic pricing models is key to succeeding in the world of recurring services. Charging only for the amount of product or service that consumers use leads to a more reliable and sustainable business model for predicting revenue.
Fundamental to this transformation is a carefully planned and executed payments strategy, and key to this is an optimal payment experience. Keeping the payments process lean by building an efficient, error-free workflow leads to a better customer experience. Finding an integrated provider with strong automation is essential to saving time and money, while streamlining the process for your customers. Pairing your monetization platform with an automated payments provider specifically designed to handle subscriptions creates a seamless end-to-end payments process.
Automation is key to reducing time spent reconciling and managing payments. Clunky, error-prone payments processes can make customers less enthusiastic about your product, whilst also risk tarnishing your brand’s image.
An optimised payment experience can lead a customer to actually choose one product or service over another. A leading payments solution provider, GoCardless, surveyed 12,785 consumers on their payment experiences. Some of the standout findings include:
- 84% of respondents think payment experience is important to their overall experience with a company
- 78% of respondents would be more likely to choose a brand that offered their preferred payment method
- 80% would be more likely to use a brand that allowed them to make and manage payments online
The Importance of Preference
Consumer preference, whether B2B or B2C is key to ensuring your payments strategy is built to scale, it can have a huge impact on checkout conversion and therefore how fast your business grows. Preference shapes how you should collect payments, as well as affecting customer satisfaction and therefore churn.
Since preference is always evolving, it’s important to stay attuned to customer perceptions, to ensure you offer a relevant payment mix that will drive conversion and business growth. There are many factors that influence how customers like to pay – some, deeply cultural. Preference for Bank Debit in Germany for example may, in part, reflect societal attitudes towards debt collection whereas in the US, credit cards remain an overwhelmingly popular payment method thanks, in part, to perceived incentives.
You can read the GoCardless report in partnership with YouGov to find out what payment methods consumers around the world (across four typical recurring purchase use cases: traditional subscriptions, online subscriptions, household bills, and instalments) are opting for in 2019 here.
Keys to Success in the 5G World: Modern Monetization and Payment Experiences
As tomorrow’s entrepreneurs envision and build transformative solutions, keep in mind the importance of monetizing next-gen recurring services and delivering a frictionless and secure payment experience. Choose modern monetization and payment solutions to lay the groundwork for success.
About the Authors
Jean Lawrence – Senior Director of Product Marketing at Oracle