Recurrence is the big recent trend in digital payment.
According to the 2019 Subscription Economy Index, businesses with recurring revenue have already grown more than 350% between 2012 and 2019. In fact, they had an increase in revenue 5x faster in relation to the main companies of the North American stock exchange.
In this way, it is possible to see the obvious: recurring charging has a positive impact on companies. Continue reading and see how!
What this article covers:
What is the recurrence model and how does it work in your company?
??The recurrence economy is about valuing the consumer experience instead of pushing products to him.”
Recurrence is a business model based on recurring sales, which is adopted by the subscription, plan or monthly fee model. The idea is simple: the product is not sold?? but access to it??
The model offers the provision of a service or product as a service with periodic renewal?? The customer makes periodic payments to receive his service or product, which can be a period of 1 month, 3 months, 6 months or 1 year.
For example, the customer subscribes to a subscription club in the monthly option. You will be charged the same amount every month, always on the same day.
In this way, it is different from payment in installments, which is just the total amount divided into installments. If the customer no longer wants to count on your recurrence, he just has to cancel the subscription to not pay anything else.
Why opt for recurring sales over one-off sales?
Like recurring payment, the customer stays with your company longer – after all, he will receive products or services with recurrence. In point selling, you never know if the customer will return.
This generates financial unpredictability, which can cause very fluctuating billings each month.
In addition, the customer only needs to be conquered once to remain with your company. Unlike the one-off sale, there is no need to continually try to capture the customer!
With the popularity of recurring billing, there is no shortage of examples of companies that work with recurrence?? Now check out some examples that show the benefits of the model!
Netflix is the most famous example among recurring businesses. In 2021, it recorded the number of 209 million subscribersbilling the amount of 7.3 billion dollars??
The sheer amount of content on its platform makes it quite attractive for recurring payment!
in the model of subscription clubTAG Livros is an example of success, having been founded in 2014. It offers two types of plans, TAG Curadoria and TAG Inéditos, and monthly delivers different literary titles.
With its differentiated business model combined with recurring sales, it has already registered 50 thousand readers and a billing of 36 million reais??
In a scenario of high musical competitiveness, Spotify’s differential was precisely its recurring billing model. It is possible to have access to the songs for free, but their premium plans make a huge difference to the customer.
Thus, in 2021, it reached the number of 356 million active monthly listeners??
Among businesses with recurring revenue, Smart Fit stands out for having innovated in the gym segment. The company brings a system of gym services with monthly valuewhich enables a much lower cost compared to punctual access.
With the lower cost of the monthly fee, the brand guaranteed more than 1.5 million customers here and in the world.
Among businesses with recurring revenue, it’s easy to point out different benefits of recurrence. It is part of the secret of great dealswhich managed to grow over time and quickly.
And what are those benefits?
It becomes easier to achieve financial predictability
With the recurring use of its services and products by the customer, it becomes easier to reach financial predictability?? With this, you can better plan your budget and investment, and also stabilize your cash flow.
Lower risk of default
With the recurring charge being made every month on the credit card bill or by debiting the account, there are smaller default risk??
Allows a closer relationship with the customer
Businesses with recurrence find it easier to promote a unique shopping experience?? To begin with, you have more time to gain customer loyalty (at least 1 month of subscription to build loyalty!).
Promotes an increase in sales
With the lower cost of the monthly fee (compared to single purchases), you attract the attention of more customers. In addition, these people remain your customers for longer, especially if the partnership works.
The result is that you have a increase in the number of sales??
How can businesses start receiving recurring payment?
Recurrence fits in the most different types of businesses:
- Clinics and offices;
- Language school;
- Bookstores and publishing houses;
- Software license;
- Software as a Service;
- Rental of parking space;
But how to start receive recurring payment?? Lucky for you, there is a great automated system for issuing and managing recurring sales.
And the best part is you can receive recurring payment in an automated way. Thus, it is not necessary to carry out manual transactions from month to month.
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secondary keywords: recurring payment, recurring billing, default risk, recurring sales, subscription club.