Retailers need to master subscription payments to attract millennials
As a target demographic, new strategies need to be established, and since millennials account for such a large percentage of the population, catering to them could very well lead to improvements in a business. First, let’s start with a simple question: what do millennials want? Though simple, it's a question that has stumped many marketers, yet is crucial to answer.
Recent research indicates that nearly 92% of young consumers value loyalty programs, which means subscription plans that allow for convenience, reliability and consistency. Paying regularly using their debit or credit cards is a sacrifice that most millennials are willing to make if the result is having the convenience of getting goods and services shipped to them on the spot, without having to re-order every week or every month.
For merchants, this bodes well for business, since subscription-based customers often are loyal and will provide steady, predictable, reliable and recurring payments. However, there are some potential drawbacks, including declined authorizations which may result in decreased customer lifetime value.
Working with payment providers such as Checkout.com give merchants the flexibility to manage their subscription payment processing as they want. Another benefits for merchants is that they don’t need to be PCI compliant; Checkout.com holds the card data and provides an encryption to maximize security.
Ideologies that favor quality over quantity
Another major factor that millennials seem to have is their willingness to support product quality and ideology over factors such as price. A survey conducted by GT Nexus highlights that millennials aren’t attracted to just edgy, cool or flashy. Rather, their focus lies more on the factors that occur behind the scenes. How do operations work in the manufacturing side of a business? How do they produce their goods and services? How is the supply chain management?
In this study, over half of the participants surveyed admitted that they switched their favorite brands due to problems associated with quality, availability and other behind the scene issues. They prefer quality, rather than just a low price-point. What’s more, millennials are concerned not only about the product itself, but also about if the company’s values are aligned with their own personal beliefs.
Methods of payment
When it comes to ensuring that your subscription program runs properly, having the correct payment methods is key to making sure that you can effectively provide the ongoing, reliable service that millennials want. Out of the possible options, three payment types remain popular: credit cards, bank transfers and e-wallets.
As the number one online payment method today, credit cards are reliable due to their ease of setup and upfront payments. Though the cost of fees in regards to fraud and chargebacks can reduce profitability, for both businesses and customers, the ease of which credit cards can be used for payment outweigh the potential negatives.
Bank transfers can be difficult to set up due to bank processes, but when established, can offer merchants who use this method with lower fees and lower incidences of fraud.
Finally, e-transfers act as a middleman that handles the back-end of the previous payment methods. While not platforms of recurring payment on their own, many of these e-wallets have a proven track record of robust security when it comes to payments.
With the right management, subscription based programs and SaaS payments offer a combination of predictable cash flow, high customer loyalty and efficiency in terms of operations. As long as a company is able to effectively streamline its services and promote its values, then attracting millennials shouldn’t be a problem. From then on, they have the potential to become your biggest advocates.