The subscription model is all about putting subscribers first and having a ‘grace period’ for payments and renewals is another way to show customers that your subscription business cares about them. In fact, Apple has recently rolled out this feature for App Store subscriptions highlighting its significance.
Many subscription businesses pay a lot of attention to their pricing which can be make-or-break for acquiring new customers in a competitive industry. However, delivering a superior customer experience is also critical to becoming a subscription leader and retaining that position. Take any of the subscription giants across the globe and you will find that an obsession with customer experience is ingrained in their company’s DNA.
Now, many subscription businesses are doing their bit to help customers make better choices and give them tools to manage their subscription journey. Free trials, value-added features and the ability to pause subscriptions are some of the ways the industry has innovated to stay ahead of the more inert traditional businesses.
However, not many businesses dig deep into the reasons that auto renewing subscriptions come to an abrupt halt, even though it can be as straightforward as stolen, expired or frozen credit cards. The customer is often not even aware of the problem and only comes to know about it after a communication from their credit card issuer or when their service is interrupted. Clearly, it is a case of double whammy for the customer who has to contend with the loss of their credit card as well as not having access to their subscription service.
Interrupting the subscription experience due to a reason which may not necessarily be the fault of the subscriber runs contrary to the very ethos of the subscription industry. By offering a grace period during which service access continues following a failed payment, subscription businesses can put their customers first and provide breathing room for the subscriber to resolve the issue. The grace period can last for a few days to weeks depending on the subscription plan, giving companies the chance to engage with their customers, understand their problems and offer more time to collect their payments. The customer, in turn, feels more valued and may then become a long-term subscriber increasing customer lifetime value.
Subscription businesses have been battling subscriber churn and the growth of subscription fatigue, and when a customer opts out of a subscription plan (whether knowingly or unknowingly), it is usually more difficult to win them back. Grace periods are a great way to keep subscribers engaged and reduce churn.
Apple introduces billing grace period feature
Tech giant Apple has recognised the importance of grace periods and recently rolled out the feature on its App Store
to help subscribers affected by unsuccessful auto-renewals. Apple will continue to try and collect payments from the affected customers without interrupting their subscription services. The grace period for a weekly subscription is 6 days, whereas monthly and annual subscriptions get a grace period of 16 days. Rival Google already offers the ability to add a grace period
for apps on its Play Store.
It is good to see the tech giants leading the way towards improving subscription experiences. This will no doubt force other subscription businesses to follow suit and add further ‘grace’ to their product or service.
Our recurring billing platform, Cerillion Skyline, is primed to help you offer grace periods by establishing automatic retry profiles for card payments, as well as configurable email notifications to keep your customers informed throughout the payment lifecycle. Contact us now for a demo or to find out more.