Considering how heavily customer retention affects cashflow, recurring payments fintech GoCardless is urging businesses to focus more energy on customer experience to reduce turnover.
On a SmartCompany webinar last week, Carolyn Breeze, general manager of GoCardless, and Powershop’s marketing manager Michelle Grigg discussed how to grow customer bases by reducing friction in shopping experiences.
Speaking again with SmartCompany, Breeze and Grigg encourage businesses to find insights from their customers’ needs and habits.
By doing this, business owners can compete for loyalty through simple steps such as pre-filling forms to lessen the burden at checkout.
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“We also believe the economy is moving more towards a usage mentality rather than ownership mentality,” Breeze says.
“So people are turning consumers into subscribers to give a better forecast for their business.”
How can businesses get a better idea about what convinces their customers to spend with them?
Market research is really key to understanding your customers and their spending habits before convincing them to do something.
It doesn’t have to be the fanciest thing in the world. It could be using really simple tools such as the ones available on Google, or using websites such as Hotjar, which also allows you to ask your customers questions such as whether they would recommend you to a friend and why.
It’s that ‘why’ that gives us really interesting insights: why they’re choosing us, why they’re not choosing us, and why they haven’t rated us.
Once you’ve got those kinds of insights, then you can make some decisions.
How can businesses prevent customer churn from happening?
That is a huge question!
One of the first things to consider is making sure the experience for a new customer at your checkout is as frictionless and pain-free as possible.
Do your research and offer alternate payment methods and packages that really resonate with your particular customer base.
As an ongoing thing, offer payment methods that mean customers don’t have to re-enter their details at any given time.
Every time that you ask the customer to re-enter their payment information is another opportunity for them to re-evaluate their relationship with you.
Another thing that is important is taking into account customer preference, and associated operating costs, and the mechanics associated with that option. Credit cards are plastic, and can be lost or expire, whereas people rarely change bank accounts, so that’s a really good way to secure your relationship with your customers.
More holistically, the way to keep customers and reduce churn is to keep customers happy. Most of the time, even if they don’t know it themselves, they want clear and simple choices.
Whether that comes down to streamlining sign-up forms or having pre-filled payment details, these actions are going to reduce churn.
But customer churn should an absolute priority because customers are a reason for being.
Once you find the reason why they’re churning, you have the opportunity and examples of how to improve your business and your offering overall. Therefore, it becomes better from a financial standpoint as well.
I think it’s also important to acknowledge natural churn in your vertical. There’s always going to be churn so understanding where you sit compared to your competitors will give you a realistic view of how you’re performing.
How do you make the most of having recurring payments?
Powershop wants to give our customers payment options as individual as themselves. Flexibility from that angle has driven customer happiness and user referral.
So it’s not about ‘something for everybody’ because we do have a portion of customers who prefer to set and forget.
It’s about making sure that they can pay the way they want.
There’s a trend that we — Michelle and I — both agree on, which is smoothing out payments. Instead of sending out typical, regular invoices, a water company on the Sunshine Coast does direct debit and then smoothes out the payments. Consumers have the option to pay fortnightly, monthly or quarterly. This is a trend we are seeing across many verticals, not only in the utility space.
It’s resonated really well with their customers, and it’s becoming an expectation across other regular payments.
Providing direct debit for recurring payments gives business owners the ability to be paid on time without having to chase money and invoices down. And it allows for better forecasting.
What advice would you have for businesses considering taking on bank debit?
It’s historically been difficult for businesses to access bank direct debit which is where we come into play. The banks are fantastic, but they don’t have that technology layer to allow for small businesses to use it in the way enterprises often use it.
So when it comes to deciding if it’s right for your business, I would recommend looking into your customer base and understanding their preferred payment methods.
Then, choose the right payments partner. Choose the partner that can easily integrate with platforms you’re already using and, or, automates the process for you end-to-end.
The interview has been edited for length and clarity.
GoCardless is a global leader in recurring payments. Our global payments network and technology platform takes the pain out of getting paid for more than 50,000 businesses worldwide, from multinational corporations to SMBs.