Gotransverse
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May 04, 2021A recent report from MarketsandMarkets predicts that the subscription and billing management market will nearly double in the next few years, soaring from $4 billion in 2020 to $7.8 billion in 2025. That’s a compound annual growth rate of 14 percent. What’s driving that growth? A lot of the trends that either surfaced or accelerated as a result of the COVID-19 pandemic and ensuing economic uncertainty, all designed to ensure relevance through rapid change and keep customers coming back no matter the circumstance. Here are five of them:
Growth of Subscription Models
In the subscription world, the most dramatic growth is expected in the media and entertainment vertical, a trend that was already going strong pre-pandemic. As movie theaters shuttered last spring and viewers looked for alternative sources of entertainment while studios looked for new ways to release their films, demand began to skyrocket. Now, from TV and movies to music, podcasts, and news, media and entertainment are driving a significant portion of subscription model demand.
Of course, this isn’t the only industry in which subscription models are taking off. When in-person retail shut down, consumers doubled down on their appreciation for the convenience — and now safety — of subscription services to deliver everything from groceries and other necessities to clothing, hobbies, and more. And even as in-person shopping has opened back up, many businesses are still successfully reaching customers through these recurring models. Research shows, in fact, that by 2023, as many as 75 percent of direct-to-consumer brands will offer subscriptions — and subscription and billing management software are empowering them to grow these initiatives.
Customer Demand for Flexibility
Another trend that has grown exponentially is the customers’ demand for flexibility in the way they purchase goods and services. As the economic fallout of the pandemic threw many households’ finances into turmoil, it became more important than ever for consumers to be able to purchase — and pay for — only what they wanted and would use. This bolstered the demand for subscription models as folks searched for cost savings through product-as-a-service offerings. But it also increased the demand for pay-per-use and other usage-based alternatives to simple subscriptions. Under these models, customers can tailor their purchases so they’re getting only what they need, when they need it.
We illustrated this concept in a recent post with the example of a gym membership: Under the basic subscription model, you’re paying $65 or more per month whether you’re using the gym consistently or not. So when your circumstances change one month and you find yourself skipping more days than not, the “cost-per-workout” calculation starts to make the subscription feel unjustified. But what if, rather than paying $65 per month no matter what, you could pay only for what you need? The charges could be per day or per piece of equipment used, by the minute or by the rep. Regardless of how it’s calculated, you’re only paying when you’re working out. For customers, this flexibility ensures they’re getting value out of their purchases; for businesses, the lowered cost of entry entices customers to stick around, even through change.
Market Demand for Agility
In an environment where the only certainty is change, businesses that want to succeed have to be agile enough to pivot on a dime. That means manual processes, excel spreadsheets, and outdated billing systems — already a hindrance before the pandemic disruption — are now a true liability as they cause costly errors and delays. Subscription billing and management software, on the other hand, allows businesses to automate their most time-consuming processes and configure new business models quickly and efficiently, easily keeping up with whatever the market throws at them.
Customer Retention
Reducing churn and retaining customers for the long haul is critical — and more difficult than ever. While flexible business models go a long way, in keeping customers coming back for more, it’s also important to ensure a smooth billing experience with every customer transaction. This means timely invoices that are easy to interpret, clearly spell out every charge for customers, and make payment simple. Billing is a key component of the customer experience, and a confusing or irritating process is liable to drive customers away. But by reducing friction and minimizing disputes, businesses can ensure customers walk away from every transaction pleased with their service and eager to buy again from the same brand. Here again, outdated processes hinder customer retention efforts, and savvy companies are seeking subscription billing and management software to streamline the quote-to-cash process.
Data Security & Regulatory Compliance
Finally, while the conversation around data privacy is not new, it has risen in intensity as businesses are collecting higher volumes of customer data and using it in more ways than ever before. Increasing customer pressure to keep data safe — and increasing regulations designed to do the same — have meant businesses are facing increased onus to comply with both ethically and legally mandated best practices for data security. While responsibility ultimately falls on individual businesses, subscription and billing management platforms can offer built-in measures and characteristics designed to play a powerful role in relieving the compliance burden.
For many businesses, sophisticated billing management is unfamiliar or uncharted territory. But as these trends continue to accelerate, the right platform will no longer be a convenience — it will be a must-have for companies that want to retain customers and meet their growth projections. The Gotransverse platform is designed to do all that and more. To learn more, we invite you to take a virtual tour today. If you like what you see, request a demo to talk with one of our experts about whether Gotransverse is the right billing platform for your organization.