In the mid-70s, friends Paul Allen and Bill Gates founded Micro-Soft—a combination of the words microprocessor and software—which ultimately made Gates the youngest millionaire at the time when the company went public in 1988.
However, about 10 years before Gates hit that financial milestone, he offered to sell the company to millionaire (and future president hopeful) Henry Ross Perot. Microsoft at the time was worth an estimated $2 million.
Although the exact number has not been disclosed, Perot recalled the asking price to be between $40 and $60 million. He determined that the price was too high, and turned down the offer.
Recalling the chance to capitalize on the wildly successful business, he admitted, “I blew it.”
While his net worth today is over $4 billion, the figure is eclipsed by Gates’ $93.3 billion net worth. One can only imagine what Perot’s net worth standing would be had he made the right decision at the right time.
While no business operation is infallible, it’s important for executives to recognize both challenges and opportunities within their organizations to keep business thriving.
Let’s take a look at some common scenarios where payment process blunders can hold a company back from success.
1. Customers want a speedy checkout process.
It was the new year, the time when there is a noticeable spike in traffic to websites promoting healthy eating and exercise. A newcomer to the market, FredsFabFit, expected to see a spike in subscriptions to his daily exercise videos.
Indeed, Fred’s marketing team did a great job in piquing the interest of those resolving to exercise more this year. But the number of clicks on his website were much higher than those making actual purchases. In fact, as the company dug into the numbers more, they were shocked to learn that of those that indicated a huge drop in users between the time they created an account to the time they actually completed a purchase.
Why were so many people leaving before they completed purchasing a subscription?
As the traditional shopper moves their purchases to e-commerce shopping, the expectation is that all online businesses, whether they offer one-time purchases or subscriptions, should be the same. Quick, easy, and to the point.
There are a number of reasons why a cart may be abandoned. Shipping rates may be higher than expected, delivery times slower than anticipated, or the checkout process froze. One statistic places abandoned carts at 26% because the process took too long or was too complex.
There are a number of ways to streamline the checkout process, and these focus on the placement of the fields that need to be filled out.
- Set the least expensive shipping method as the default but list other shipping methods and prices so a buyer can select the best option.
- Place the zip code before the rest of the address. When a user enters the zip code first, it can automatically populate the city, state and country. The fewer fields a customer is required to enter, the faster he can go through the checkout process.
A reputable payment platform is subjected to PCI compliance, ensuring that credit card data can be securely stored for future purchases, whether they are one-time purchases or subscriptions that necessitate recurring billing.
2. Customers don’t want to be forced into specific payment methods.
ICFredericksburg is the newest online newspaper in the Maryland area. As the company made the jump from print media to providing online coverage, many current print subscribers expressed interest in reading the publication on their computers.
When the site was officially launched, the subscriber rates were much lower than expected. Finally, the company’s CEO organized a survey to determine why there was a change of heart with online subscriptions. Across the board, the feedback pointed to the fact that they offered just one payment gateway, which didn’t complement the standard payment options that customers were comfortable using.
Think of vendors at a fair that don’t take cash, or a brick-and-mortar store that suddenly loses its ability to process credit card payments. If a customer comes to your business expecting to make a purchase with a payment method you either don’t support or don’t visibly support, you are more apt to lose that customer.
Many third-party payment systems give customers the option to pay via credit card, although it may not be apparent to a less computer-savvy user. Make sure your site gives multiple payment options to reduce checkout confusion. You can do this by working with a payment platform that supports multiple payment gateways to ensure your customers can pay however they prefer.
3. Customers want consistent, quality treatment.
Sales were booming for Nip and Nails, a subscription-based company that specialized in feline toys and grooming products. Anticipating growing sales with the new product launch, the company’s sales and marketing departments devised an incentive program to bundle their products.
Unfortunately, their customer care department was confused with the details of the new launch and when questions started to come in, they inadvertently provided misinformation. Frustrated customers not only opted out of the bundled price, but they also avoided purchasing the new product at all.
In a traditional business model, when a sale is complete, the customer relationship ends as well. However, with the more modern recurring billing model, a relationship with a customer doesn’t end after the initial sale is made. Because there is an ongoing customer lifecycle, that relationship needs to continue. If Nip and Nails customers get inconsistent support at any point in the lifecycle, they are more likely to look at the competition.
Businesses often fall into the trap of ‘working in silos’, meaning that each department works independently, versus interdependently. The sales department doesn’t talk to the AR department, etc. This leads to a dangerous breakdown of valuable information within an organization, and to a customer, it undermines the credibility of your business.
For a business to avoid operating in silos, consistency is critical throughout the customer lifecycle. The customer relations department is as essential for maintaining the relationship as the sales department. But it doesn’t end there. Even the frequency and tone of billing is critical to maintaining superior customer experiences.
Customer satisfaction isn’t confined to sales or customer support departments. Information needs to flow through different departments to provide a consistent, predictable experience. It is vital that marketing, sales, and billing departments are well aligned to maximize business opportunities.
4. Customers expect modern invoicing.
The ScrubHub is a leading SaaS company that oversees large cleaning companies across the country. With their cutting edge software, companies improve efficiencies by scheduling cleaning calendars, assigning workers, and overseeing billing.
While the company is growing their client base, the owners have put their efforts into product development and sales, while the billing department was left behind, struggling to keep up with manual invoicing every month.
Turnover in the department is problematic, as is the struggle to ensure that clients remit payments on time.
When a business is in its early years, owners often begin tracking their recurring customers with a basic accounting software. While it may be an effective starting point for a young business, a manually processed invoice runs contrary to the picture of a thriving e-commerce business.
A physical or manually generated invoice runs the risk of getting ignored unless there is frequent followup. The follow-up frequency can be difficult to keep track of. The manual and error-prone process becomes increasingly problematic for the Accounts Receivable department when it comes to tracking late payments, billing changes, or updated contact information.
A complete recurring billing platform like Stax Bill streamlines the billing process, lending credibility with brand recognition and automatic messages with billing issues through dinning management.
Not only is billing convenient and trackable through a modern automated billing platform, but it is in accordance with GAAP (Generally Accepted Accounting Principles) requirements and accurate revenue recognition.
RELATED: Checklist to Recover Leaking Revenue in Your Payment Gateway and Retain Trust During the Recurring Billing Process
The recurring billing and e-commerce models have been around for a few years now, but businesses often neglect to bring their billing practices up to date with the demands of their customer base. Avoid that ‘I blew it’ moment when looking back over the history of your company. Instead, keep an eye on conceivable problems with your payment methods to ensure they are facilitating the success of your business.