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Customer Engagement Made Easy - Why Flexible Pricing is the Bedrock of Subscription Success

Subscription services are becoming increasingly popular as businesses strive for predictable recurring revenue streams to drive customer engagement. But, as these service provider offerings mature and competition increases, so too does the need for businesses to differentiate through innovative pricing and product packaging.

Business customers, in particular, will typically want to negotiate a better price for any solution or service they are consuming and will invariably look for these to be tailored to their needs in some way. So, understanding its customer segments, and having a flexible way of pricing products and services, is crucial for any organisation in being able to effectively address its customers’ needs.

Customer Engagement Made Easy - Why Flexible Pricing is the Bedrock of Subscription Success
It’s all about offering customers flexibility – different kinds of business will benefit from different pricing models, and what works for a consumer video service probably won’t be suitable for an enterprise software application, for example.

Businesses also need to be giving customers a choice in terms of the payment methods they offer, with the emphasis on making the customer engagement as straightforward and ‘hassle-free’ as possible. This will enable them to drive up loyalty and reduce churn while also taking advantage of new up-sell and cross-sell opportunities. And according to payment service provider eMerchantPay, every additional payment method which is offered by a Merchant can help increase conversions by 14%.

Furthermore, payment approaches are just as important as pricing models. Depending on business focus and customer mix (B2C / B2B), the business will also need to decide whether it wants to enable its customers to pay by automated methods, such as direct debit and continuous payment authority, or other offline methods such as bank transfer and cheque. It’ll also need to think about whether to offer a choice of when customers pay; should it be annually in advance, or more frequently such as bi-annually, quarterly or monthly? 

Being able to offer a flexible approach to pricing and payments can be a great differentiator for any commercial organisation. Unfortunately, getting up and running with a new business model or strategy can be a protracted and time-consuming process.

To find out more about the broad challenges involved; the specific issues organisations face in migrating to a more flexible model as well as the benefits they can achieve when they do, Cerillion ran a survey examining the views of more than 200 senior decision-makers across four European countries (France, Germany, Italy and the UK), about their current and future pricing and payment strategies for both B2C and B2B services.

This white paper presents the results of the survey, identifying the key trends and highlighting the different stages of subscription maturity in these markets.