What is subscription management?

Subscription management is the overseeing and handling of all subscription lifecycle operations for your customers. It includes all the ways that a company handles various aspects of their customers’ subscriptions—including all the ways they allow subscribers to manage their own orders. These include not only automated processes like recurring billing, but also manual processes like enabling product skips and order swaps, editing key customer data (like a mailing address), and making mid-cycle changes to a customer’s service.

What is a subscription management platform? 

A subscription management platform (also referred to as a subscription management solution) is a type of software. It combines multiple different tools that work together to help merchants serve the unique needs of their subscribers. 

The best subscription management software for your business all depends on a variety of factors, such as your stage of business growth, your previous experience with subscriptions, and the types of products or services you offer. 

How can subscription management software benefit my subscription business? 

Subscription management software can greatly benefit both businesses and subscribers. When customers are empowered to manage subscriptions themselves, they can typically meet their needs more quickly and easily. When merchants facilitate the subscription management process in this way, it can lead to higher levels of customer satisfaction and loyalty. 

For subscription model businesses, having a solution with all the subscription management tools needed to streamline operations can pave the way for continued growth and reduced support needs. It can also allow a business to get the most value possible out of recurring billing and subscription pricing models, even empowering the business to support multiple pricing models. This can help facilitate higher monthly recurring revenue (MRR), customer lifetime value (LTV), and retention of existing customers.

What is recurring billing, and who is it for?

Recurring billing is a payment model where businesses charge their customers a set fee at prearranged intervals for products or services. It is an essential process for subscription businesses. These payments can be established on any billing schedule—weekly, monthly, annually, or on a custom schedule. Companies that utilize recurring billing include subscription box services, SaaS companies, utility companies, businesses selling memberships (including gyms and streaming services), and publications (including newspapers and magazines). 

What are the benefits of this payment model?

The recurring billing model has a number of benefits for both businesses and consumers. Its convenience is a major benefit for both sides, as merchants automate these payments and shoppers only have to provide their credit card or other payment information once during signup, creating a more seamless customer experience. For the company, subscriptions provide consistent cash flow and make for easier and more accurate revenue forecasting. 

Any subscription business should be aware of the risk of billing errors, which may occur when credit cards become out-of-date over time. Strategies like dunning—payment retries and strategic communication around this with your customer base—can help mitigate the effects of this, improving customer retention. Strong security measures and PCI compliance are also crucial for businesses handling recurring payments.

What is a conversion funnel?

A conversion funnel (also called a sales funnel or marketing funnel) is a metaphor used in ecommerce marketing to describe the customer journey prior to making a purchase of a product or service. Typically, businesses categorize the levels of the funnel as follows, from the top (largest group) to the bottom (smallest group) of the funnel: the awareness stage, the interest stage, the desire stage, and the action stage. As a group of potential customers moves through the funnel, it becomes smaller and smaller. When optimizing your conversion funnel, the ultimate goal is to get more of your target audience through the action stage.

Sales funnel categories: top, middle, and bottom of the funnel

In conversion funnel optimization, different marketing tactics are used to reach your potential customer base at different levels of the funnel. Another way businesses organize the conversion path is by the terms “top of the funnel” (also known as TOFU or upper funnel), “middle of the funnel” (also known as MOFU or middle funnel), and “bottom of the funnel” (also known as BOFU or lower funnel). These categories all reference the amount of familiarity and knowledge a potential customer has with your products or services and how far along they are in the sales process, with top of funnel users being the least far along and lower funnel users being the farthest along.

What are recurring payments?

Recurring payments (also referred to as subscription payments, subscription billing, recurring billing, and automatic payments) are a key aspect of subscription commerce involving payments for goods or services that repeat on a set cadence. Up front, merchants or retailers must get customers’ permission to automatically charge their credit card or deduct payments from their bank account in exchange for the agreed-upon goods or services. The merchant will then continue deducting the recurring payment amount on the due date until the customer cancels the service. 

Examples of recurring payments include subscription box services, magazine subscriptions, automated student loan payments, and SaaS. 

What are the benefits of subscription billing?

On the merchant side, recurring payments offer consistent income, empowering more accurate forecasting and predictable revenue. This business model also offers the ability to track customer behavior over time and provides multiple touchpoints for communicating with customers, helping brands build an engaged community of subscribers. Finally, recurring payments offer merchants the opportunity to increase customer lifetime value and average order value.

Recharge’s subscription payments solution takes the guesswork out of launching and managing recurring subscriptions for your brand. Customize your payment schedule, skip or reschedule deliveries, offer cross-sells and one-time purchases alongside subscriptions, and notify customers of upcoming deliveries and shipping information.

What is an add-to-cart (ATC) button?

The add-to-cart (ATC) button is a feature of ecommerce stores that allows customers to choose items to purchase without actually completing the payment. For online stores, this button is often located on individual product pages or underneath an item on a product collection page, functioning as the digital equivalent of a shopping cart in a brick-and-mortar store. 

As opposed to a “buy” button or a “buy now” button, the add-to-cart button allows customers to save items to their cart so they can continue shopping, then complete the checkout process later on in the process. This results in a more seamless shopping experience for customers and allows shoppers to purchase multiple items at one time. For business, this can help to both reduce churn risk and increase checkout conversions.

How to calculate add-to-cart (ATC) conversion rate?

Monitoring your add-to-cart conversion rate, or the number of people who click the add-to-cart button on your ecommerce store, is important for optimizing your ecommerce store’s conversion rate. After all, boosting your ATC conversions can result in higher average order value (AOV), customer lifetime value, and retention.

To calculate your add-to-cart conversion rate, divide the total number of sessions for your ecommerce site where a shopper adds an item to their shopping cart by your site’s total number of sessions. Optimal ATC conversion rate for your business depends on your industry and vertical. Establishing a baseline for your own business and monitoring for inconsistencies can help you identify abnormalities and areas for growth. 

How can your company optimize your add-to-cart conversion (ATC) rate?

There are several strategies businesses can use to optimize their add-to-cart rates. Improving UX and UI for your website helps create a more seamless customer experience, helping drive ATC rate and making it more convenient for people to purchase your products and services.

Ensure that customers aren’t immediately taken to the cart page when they add an item, but can continue shopping, to make it easier for them to continue adding items. Placing add-to-cart buttons not just on the top of the product page, but also on the bottom of the page and beside the product on a catalog page, makes it easier for customers to add items to their cart.

Finally, optimizing your product detail pages, including clear and engaging product descriptions with compelling photos, can help provide customers with the information they need and encourage them to click the button.

What is conversion rate optimization (CRO)?

Conversion rate optimization (CRO) is the process of improving your website and content to increase conversion, or the percentage of users who complete a desired action. Conversion actions can include clicking a link on your landing page, downloading a file, filling out a form, purchasing a product, and more. 

CRO does not necessarily mean trying to increase web traffic for your site; rather, it involves designing your website experience so your existing visitors behave in a certain way.

How do I calculate my website’s conversion rate?

To calculate your conversion rate percentage from the website, divide your total conversions by your total website visitors and multiply by 100. Average conversion rate can also be calculated with the number of visitor sessions instead.

The key components of CRO are:

1. Conversion rate

The conversion rate is the percentage of website visitors who complete a desired action out of the total number of visitors. It is a crucial metric for evaluating the effectiveness of a website or marketing campaign in driving user engagement and achieving business objectives.

2. Website visitors

Website visitors are individuals who access a website through various channels, such as organic search, paid advertising, social media, or direct traffic. Understanding the behavior and preferences of website visitors is essential for your conversion rate optimization strategy and improving overall user experience.

What are the benefits of CRO?

Depending on how your business defines conversions, CRO can have enormous benefits: for everything from generating revenue to increasing average order value and customer lifetime value, to increasing MRR and/or ARR for subscription model businesses. 

Increased revenue: By improving conversion rate, businesses can generate more sales and revenue from their existing website traffic. A higher conversion rate means a higher percentage of visitors are taking desired actions, resulting in a positive impact on the bottom line.

Enhanced user experience: Conversion rate optimization involves optimizing various elements of a website, such as design, navigation, and content, to provide a seamless and engaging user experience. This leads to higher satisfaction among website visitors and encourages repeat visits and conversions. Conversion optimization improves the user experience, boosting customer loyalty and trust in your brand. It also allows for a deeper understanding of your potential customers and the design features, copy styles, and CTAs they find the most compelling.

Cost-effectiveness: CRO focuses on maximizing the value of existing website traffic, making it a cost-effective strategy compared to acquiring new traffic through paid advertising or other marketing channels. By converting a higher percentage of existing visitors, businesses can achieve better returns on their marketing investments. 

How do I optimize conversion rate for my site?

Because conversion optimization depends on your individual business, customers, and conversion goal, the most effective technique in the conversion rate optimization process is to learn more about your site visitors and target audience. 

Conduct user research: Gain insights into the needs, preferences, and behavior of your target audience through surveys, user interviews, and analytics data. Understanding your audience’s motivations and pain points is crucial for optimizing conversion rates. 

Collect information and conduct analysis of things like what draws users to your site, what makes them leave, where on your site they spend most of their time, and what channels, devices, and browsers they use.

A/B testing: You can conduct A/B testing to identify the design features, copy styles, and CTAs they find most compelling. Test different variations of key elements such as headlines, CTA buttons, imagery, and page layouts to identify which combinations yield the highest conversion rates. 

A/B testing allows you to make data-driven decisions and continuously optimize your website for better performance.

Optimize landing pages: Design and optimize landing pages with clear and compelling calls-to-action (CTAs), relevant content, and intuitive navigation. A well-designed landing page can significantly impact numbers by guiding visitors towards desired actions.

Improve website speed and performance: Ensure that your website loads quickly and performs smoothly across all devices. Slow-loading pages and technical glitches can negatively impact user experience and deter visitors from completing desired actions.

Personalize content: Leverage data-driven personalization techniques to deliver relevant content, product recommendations, and offers to individual users based on their preferences and behavior. Personalized experiences can increase engagement and drive higher conversion rates.

What is dunning?

Dunning refers to the communication a company sends out to remind its customers to update their payment details when a credit or debit card payment is declined. Dunning is used as a tool to help reduce involuntary customer churn, thus increasing customer lifetime value. It is a particularly useful tool for subscription ecommerce stores, where customers are not entering payment information with every charge—this runs the risk of the recurring payment details becoming out of date over time.

Effective strategies

Dunning includes both seamlessly clearing payments behind the scenes using a customer’s existing card information, and obtaining new payment details directly from the customer. In the past, companies used to send “pre-dunning” communication to customers reminding them before their payment information failed. Today, with advancements to automatic card update technology, this strategy is no longer relevant or effective. 

Many payment issues can be resolved simply by retrying a customer’s current payment details on file, with no action needed on the customer end. To avoid sending unnecessary emails each time a payment fails, one strategy is for businesses to create custom retry schedules to make the process more seamless for customers. Another effective strategy is to ensure dunning emails are consistent with your overall brand identity. Finally, tracking and measuring your performance over time through intentional data and analytics is important for continually optimizing your processes and systems.