Recurring payments can span nearly every industry in both B2C and B2B settings. But no matter what the payment is for, one critical consideration is to ensure you as a business have accurate consumer data for your recurring payments.
What Are Recurring Payments?
Recurring payments are when a customer—consumer or business—pays a large transaction total over a period of time in small increments. These increments can be weekly, monthly, or yearly. Popular recurring payments are ecommerce’s Buy Now Pay Later options. Or a business can have their own in-house gateway set up to store consumer payment information and auto debit their account in increments.
Recurring payments can help businesses close sales by offering flexible payments. Larger transactions can be daunting to consumers. But splitting up their total cost over time can be an easier pill to swallow.
Industries That Commonly Use Recurring Payments
When thinking of recurring payments you may be thinking of subscription services like Netflix, Spotify, Fab Fit Fun, BarkBox, and Good Ranchers. However, physical goods and SaaS subscriptions are a whole other beast.
We’re simply talking about setting up recurring payments to handle a singularly larger transaction.
Medical Industry
One common industry that thrives with the implementation of recurring billing is the medical sector. This includes doctors’ offices, dentists, surgery centers, laser eye treatment centers and more.
Medical expenses can be a lot. Regardless if the treatment is necessary or elective. Whether you had to undergo emergency cardiac surgery or if you chose to get a face lift. If you needed a tooth extraction or if you wanted invisalign and teeth whitening for a more striking smile. Whether insurance covers their portion of the procedure or not, these costs all add up.
But these industries still need to help their patients while still generating revenue. To help with this, these facilities can set up payment plans for their patients so they can cover their large medical bills over a longer period of time with smaller incremental payments.
Retail
Another industry that can take advantage of recurring payments is retail. I’m not talking about a convenience store or gift shop. I mean large products like furniture or the latest electronics for your home. These items can cost consumers hundreds to multiple thousands of dollars. But if your sales team wants to close more deals, offering to split their customers payments into a few months can really help make their decision easier.
eCommerce
As mentioned, eCommerce frequently uses recurring payments via Buy Now Pay Later programs. Even if it’s a smaller order of only about $50, consumers can still break that payment into a few months if that dress really calls to them.
Home Repair Services
Lastly, service based businesses like home repairs, renovations and all types of contract work. Homes are always in need of repair and upgrades, but on top of regular expenses and mortgages, most homeowners don’t have thousands of dollars lying around to bit the bullet. That’s where monthly payments can save the day.
What is Big Data in Recurring Payments?
Data is information. A text message, an email, or a blog post… are all digital data. As you can imagine, the vast majority of the world’s data comes from the last few decades, with the explosion of internet usage. But, data is not just composed of static artifacts. Data can also include behavior…such as things that customers do.
Purchases, abandoned carts, and navigation through a website are all data points that can be analyzed. These moments become talking points companies can use to make more effective decisions. Despite economic uncertainty, nearly 88% of companies increased their investment in data analytics, and 90% will continue to invest.
Data may tell you where the majority demographic of your subscribers are so that you can focus your marketing efforts on the groups you’ll see the most success with. But you must observe customers in their natural habitat to get more out of customer data. You need to see how they engage with your product or service. For a business the size of Amazon or Walmart, this is no problem.
Amazon, in particular, leads the way in using consumer data to fine-tune its sale approach, turning the Bezos-founded empire into a juggernaut dynasty that will last for a thousand years (perhaps hyperbolic, but it sounds epic). But for most SMBs, Amazon-level analytics is not possible. Thankfully, as mentioned, there are third parties that provide analytic software.
Price Optimization With Payment Data
Amazon uses data for price optimization. There must be more than the old trick of knocking a price one penny below the dollar amount you want to charge. Amazon takes your activity, competitor prices, availability, and other ingredients and throws them all into the blender. The resulting smoothie is a price that changes every 10 minutes as Amazon recalibrates its discounts.
This results in markdowns on its hottest products and produces higher profits on items that are not as in demand. It’s a seemingly counterintuitive strategy, assisted by big data, that has boosted Amazon’s revenue by as much as 143%.
Optimizing Fraud Prevention With Payment Data
Amazon also uses data to thwart fraudulent purchases. This is something that banks and credit card companies also do. Consumer purchases are entered into the analytic pool to create a comprehensive portrait of each account holder and their normative purchases.
If something is purchased outside that pattern or their typical locations, Amazon may require additional verification, or they may block those outright. In summary, Amazon uses big data to do more, sell more, and make more.
Consumer Data Privacy
Accurate customer data in recurring payments necessary. You need to retain customer data like payment information and contact information like email, phone number, and maybe even address.
The treatment of consumer data, in general, will increasingly be in the spotlight of debate. It has already emerged that Amazon is using Alexa devices to listen to your conversations. And that Facebook may have sold your data to other companies without your permission. Se la vie! But data drawn from consumer account information has limitations due to PCI compliance requirements.
Reducing Churn Rate With Customer Data
One of the biggest reasons consumers leave a business is because they are frustrated by customer service. Data points can help you assess how and when customers engage with support services. You can see what some of the common complaints are. You can see how efficiently these complaints are addressed. And you can test out different offers or incentives to keep customers engaged.
Data For Recurring Payments: A Wrap-Up
Recurring payments offer benefits to both businesses and consumers across various industries by improving accessibility through affordable payment plans. Accurate customer data is crucial for successful recurring payment systems, and businesses can leverage this data through big data analytics to enhance pricing strategies, prevent fraud, and optimize customer service.
However, consumer data privacy and PCI compliance must be prioritized. By effectively utilizing data, businesses can reduce churn rates and improve overall customer satisfaction.
To learn more about the intersection between data and payment processing for your business, contact ECS Payments today.
