The Rise of Monthly Subscriptions Payments for Membership Organizations
Membership organizations are quickly transforming the way they get paid. Once, yearly fees were popular in the industry. But now that spot is fast being claimed by monthly billing. Subscription-based services have set the standard for convenience and transparency. And now users purchasing membership licenses expect the same flexibility they get from Netflix or Spotify.
The move toward monthly membership billing carries various advantages, but also has its fair share of challenges. It involves more than just financial strategy; a system is required to execute billing in a manner that can meet today’s customer expectations.
Executed correctly, monthly subscription payments can be a very powerful tool for membership organizations looking to combat churn.
Let’s break this down.
Why Monthly Subscriptions Can be a Better Fit Than Annual Payments
While annual subscriptions have their own advantages, monthly billing lays the foundation for:
More predictable revenue
Monthly payments make revenue more predictable for memberships as compared to annual subscriptions. Since payments flow in smaller chunks, they are easier to manage than huge annual lump sums. Plus, monthly cash flows are more readily accessible, and contribute toward more efficient financial planning for the year.
Lower upfront friction
Compare a $500 annual plan with a $60 monthly membership tier. Members can more easily commit to plans that require lower upfront costs, especially if they’re uncertain about the value the membership provides. It can be perceived as overwhelming by people when they are asked to commit to an expensive annual plan up-front.
Stronger long-term retention
Monthly membership dues are more manageable compared to yearly sums, so they reduce cancellations due to cost concerns. Plus, monthly billing cycles also serve as recurring interaction points between the organization and its members. They regularly remind customers of their ongoing membership, and the value it brings them.
More profit over time
If we take the $500 annual vs $60 monthly plan example again, it’s clear that the monthly plan members will bring in more revenue over the year. Yearly plans are mostly discounted and commonly prove to be cheaper for customers. But even though the monthly tiers are slightly more expensive, users still prefer them due to their simple manageability.
Easier refund management
In cases like chargebacks, organizations have to refund the entire or a part of their members’ charges. Annual refunds are risker to manage due to the large sums involved, and may prove costlier to memberships. Monthly refunds, on the other hand, are less risky and easier to issue.
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What Modern Members Expect Today
Monthly membership payments are better suited to address the expectations of modern members. These are some factors that members value in their membership experience today:
- Self-service billing
Members need to feel more in control of how their membership works. For example, they want to switch to other membership plans (let’s say of a gym membership) autonomously. Seeking confirmation from the admins first, and then manually making payments may seem like a chore, and delays in response may make them lose interest.
The best way to keep members engaged is to give them upsell opportunities right when they need them. They might change their mind if you’re too late.
- Payment flexibility
Payments must be as flexible as possible with the option to change billing cycles at will. Members don’t enjoy rigid tiers that don’t allow them to change plans easily, or purchase add-on services as they like. Monthly payment plans are typically more flexible than yearly.
- Transparency
Billing transparency is achieved by keeping a secure invoice trail. Members expect payment receipts at the end of each monthly billing cycle so that they can know exactly what they utilized over the month, and how much they paid for that. Competitive billing software allows your members to access their entire payment history in their self-service portal. This further strengthens transparency.
- Automated reminders
For making members feel valued, it’s a great practice to send payment reminders before collecting membership dues. It allows them to budget for upcoming fees better, and promotes goodwill.
- Multi-channel communication
Members often use multiple communication platforms simultaneously, such as email, SMS, member portal and social media. Keeping communication, such as payment reminders, invoice confirmation, event alerts and new offers, multi-channel increases its chances of reaching your members. Missing an email won’t mean they missed an offer they could potentially avail.
- Mobile-friendly checkout
Flexible checkouts are the need of the time. People barely use heavy devices like laptops on the go, but they always have their mobile phones to rely on. They use online banking and similar apps to make payments at their convenience. Hence memberships need to have mobile-optimized checkouts that make monthly charges frictionless (if recurring charges are not automated of course).
- Personalized membership tiers
Business professionals who know exactly what they want in a membership may not opt for the standard plans. They might want a customized monthly plan with a customized bill. Smart billing software allows memberships to tailor their tiers for such individuals, so that standard plans don’t become restrictive for them.
How Automation Facilitates Monthly Membership Billing
Monthly payments can prove quite burdensome for membership organizations managing invoices by hand. When an automated billing system is paired with strategic monthly plans, it results in automated workflows, and removes administrative burden. These are some ways in which automation supports memberships:
- Monthly invoices are created automatically
Monthly payments require monthly invoices. Creating them by hand each month takes time and effort, and once the member volume crosses a certain threshold, it becomes impossible to generate so many bills manually. Automated systems auto-generate bills for you, and send each bill to its respective payer automatically.
- Retry mechanisms are activated
Payment retry is one of the best features that automated billing has to offer. It makes recovering revenue hassle-free. Trying to recover failed payments manually requires a lot of effort on the admin’s end, and still can’t be relied upon. That’s because customer response is always uncertain. Automated retry mechanisms, on the other hand, provide better payment success chances.
- Membership lifecycle changes don’t need admin confirmation
Simple plan pauses, cancellations and renewals are tasks that shouldn’t require manual effort. They occur too frequently during a membership lifecycle to be managed manually. Letting an automated software handle such tasks makes members’ lifecycles smooth-flowing and lightning fast.
- Mid-cycle changes are prorated
Monthly payment plans are ideal for offering members upsell opportunities. Once a member decides to upgrade (or downgrade in another scenario), your billing software ensures that they go through a seamless transition. It ensures that they are charged fairly by prorating their bills, and updates their access permissions instantly.
- Member onboarding and expirations are handled automatically
New members need efficient onboarding flows to familiarize them with the membership’s services, and address any queries that they have. Automating such workflows and communication saves you a great deal of time. Smart software lets you personalize each member’s onboarding journey too.
Moreover, those using membership trials or limited time offers are also managed effectively, as offer, trial or discount expirations are activated automatically.
- Integrations with CRM, email marketing and other tools become seamless
Scaling memberships often need additional tools to make their operations more efficient. Such as CRM and email marketing tools. Their billing software can become a centralized platform that links all their additional tools together. When all platforms work in sync, fewer data errors are produced.
Why SubscriptionFlow is the Best Fit for Membership Organizations
SubscriptionFlow doesn’t assist memberships with automation alone. It equips them with AI-driven workflows and insights to take their operational efficiency to the next level. With SubscriptionFlow, they can set up monthly payment plans with peace of mind.
It means that they can access all of the following:
Plans that run themselves: Memberships benefit from monthly plans that need minimal manual membership management. Once a customer is securely onboarded via SubscriptionFlow’s checkout, their billing journey becomes automated and seamless.
Multiple plans activated at the same time: Monthly plans are cool, but implementing them doesn’t require memberships to abandon their smooth-working yearly or quarterly plans. Plans with various durations can coexist harmoniously. SubscriptionFlow ensures that each of your members get the exact billing experience they signed up for.
Member self-service portal: Your members get access to smart portals that act like their very own control rooms. They can modify their plans through their portals (such as pause, cancel, upgrade and downgrade), and get their profiles and bills updated in real-time.
AI-powered insights and churn signals: SubscriptionFlow’s AI agents help organizations keep their performance in view. They can see their revenue forecasts, predict profits, analyze financial trends, and monitor member activity clearly. The system also alerts them when it spots any signs of churn from any member so that re-engagement workflows can be deployed immediately.
Ability to scale to thousands of members: Your billing operations are fully automated, so adding new members does not mean extra administrative work. This means an organization can scale up with much more ease and start implementing revenue growth strategies with higher confidence.
AI-driven pricing suggestions: Not sure how to price your plans or when to update pricing? Our AI-driven pricing suggestions are at your disposal. They are smart, and based on real-time research of current market and competitor trends. The software allows you to first test new plan prices on limited customer segments, so you can enhance them based on real results and go live with them more confidently.
Looking for smarter automation to manage monthly membership payments? You are in the right place. Schedule a demo now to see SubscriptionFlow in action.
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