How to use Direct Debits to pivot your business model

Put simply, this business model is where a customer pays for goods or services in regular amounts, whether that be monthly, quarterly or even annually. Typically the customer will authorise a Direct Debit Instruction (DDI) that then allows the company to charge their bank account at regular intervals. This model works well for companies that are providing an ongoing service such as software companies, gyms or e-commerce subscription services, and customers particularly value the ‘fire-and-forget’ nature of paying for this type of service and not having to worry about it again.

Subscription services providing physical goods have also increased in recent years. In fact, the range of goods that can be bought on subscription means that any business can look at developing a subscription service to assist their customers whether it be a monthly gardening box or a quarterly delivery of wine.

So many companies are now moving to subscriptions as a way of doing business that it’s clear there are significant advantages to working in this way.

• Simplicity and convenience
• Better cash flow management
• Better scalability to enable growth
• Better customer retention
• Better customer communication
• Better customer insight and loyalty
• Easier operations

If you want to pivot your business model and take advantage of the benefits that a subscription model would provide then there are some important points that you need to cover.

Make sure you can acquire customers through any channel

Web pages are viewed more on mobile devices now than on desktop, so having a method of signing people up using any channel is a smart move. Make sure your website is responsive and works on any platform and check it on mobile phones and tablets.

• Investigate text subscription
• Don’t forget about more traditional methods like phone calls, especially if you have a service that is of use to the older age groups

Have a simple sign-up process

You must have a simple sign-up system that is automated and features great communications. Signing up to a subscription is quite a commitment and so it is important that your customer is able to do so easily and gets a sense of a business that is organised enough to deliver.

Think carefully about your pricing

Involve your accountant and make sure that you don’t under price. There’s nothing worse for customer retention than signing them up and then putting the price up two months later. If you price your service too low then you’ll find that you are locked into looking after customers and making less profit than you thought. If you price too high then you may not sell any subscriptions at all so have a chat with your accountant and get them to help you find the middle ground.

Ensure you can cope with the volume

Use Direct Debits to collect payments

Direct Debit is the best way to collect your regular subscription payments. Customers that buy subscriptions are invariably looking for convenience and they won’t want to be bothered with receiving a bill every month and then manually paying it. You’ll need to have a system that will not only collect the Direct Debit payments but will also connect with other systems like your accounting package or your CRM system. The best payment processing solutions will handle your collections automatically requiring little manual intervention.

Have a way to communicate with your customers

If you have developed a new service or got a short-notice deal on a great consignment of wine and you want to tell your customers about it then you need to have a reliable method. You’re going to need to talk to them about their payments, their account, when their next shipment is due and yes, you are going to want to market to them so before launching your own subscription service you need to make sure you have a communication method in place.

As we have seen there are a large number of very good reasons why this model makes sense for businesses from better customer retention to clearer cash flow forecasting. It’s important to make sure that you have all of the background elements in place before pivoting in this way so make sure your website is set up correctly and that you have a method of collecting Direct Debit payments. Once you have a subscription system in place you’ll wonder why you waited so long!

At Access PaySuite, we provide market-leading payment processing solutions to businesses across the UK. Our suite of Direct Debit solutions, online payment software and subscriptions management software is designed to fit your business and make your customer’s lives easier. 

Get in touch today and find out how we can help to drive growth in your business.