Consumers demand a fast and convenient online buying experience. The pressures to adapt and innovate have never been more vital for merchants. Forrester Research guest speaker Lily Varón shared how to leverage billing technology to exceed customer expectations during sticky.io’s live webinar in March 2022 titled, How Billing Technology Is Shaping the Future of Buying.
Webinar attendees submitted follow-up questions and Lily provided these answers based on her industry research.
Q. How have consumer expectations around purchasing physical goods online evolved?
Consumers are increasingly interested in subscribing to physical goods (e.g., auto-replenishment or subscription boxes). In 2018, 33% of US online adults said they’d be interested in a scheduled delivery service for items that they use regularly. In 2021, 44% said they were interested in receiving automatic shipments of products they use frequently. Part of this growing interest in subscriptions is driven by consumers’ overall willingness to experiment. Over 10 years ago, 39% of US online adults agreed that they were always willing to try new brands and products; today, 53% of them agree. As more and more brands feed consumers’ appetite for innovation, such as by pivoting to rentals or introducing consumers to boxes full of new products through subscriptions, they condition consumers to expect experimentation while buying, so we expect consumer interest in and experimentation with physical-goods subscriptions to grow further in the years to come.
Q. How do recurring revenue models and modern billing technology empower merchants to exceed consumer expectations?
Selling used to require persuading — via word of mouth, reviews, promotions and more. But with the shift toward consumers expecting and rewarding experimentation, more retailers and brands are making retention an even more important revenue driver, which means that their focus shifts to product experience development and how to embed as much recurrence into that customer relationship as possible. The challenge is that persuasive marketing helps make consumers aware of a subscription and gets them to try it for the first time, but it usually doesn’t help customers decide whether to continue using a product. They instead decide to continue — or abandon — a product or service on the basis of their personal experience and their perceptions of ease, effectiveness and emotional impact — the core of the customer experience.
What many brands may not realize is that billing/payment is one of the most pivotal moments in the customer journey — an experience whose emotional potency is particularly evident when something goes wrong. As brands build product experiences that favor and facilitate experimentation and retention, they need billing and payments technology that can help brands be creative and adaptable — technology that lets them configure and reconfigure the subscription offering to the customer’s exact specifications. Inflexible billing technology can throw the whole business out of gear if it simply cannot bill in the way the brand wants to or if it adds friction to the onboarding and offboarding of products, services and business models that brands are deploying. That is why Forrester has identified billing technology as one of the most important technologies to support the future of buying.
Q. How can subscriptions support a broader customer-centric ecosystem?
Forrester predicts that retailers and brands will ultimately know fewer than 20% of their customers, primarily based on first- and zero-party data collected with customers’ consent. Subscription and billing data is a component of a first-party data strategy to fill gaps that data deprecation leaves behind. Its data provides useful and unique contextual information about customers that companies can leverage for insights and engagement. This data becomes more important across the organization — not just for revenue recognition and revenue performance management but actually to inform marketing and product development.
Q. How can merchants leverage billing data to deliver personalized experiences to customers?
I often talk about a subscription as a customer insights practice. You know the least about your customer at the beginning of their subscription. To evolve the offering and continue to add value over time, brands need to incorporate personalization and insights-gathering into the model. This is where the Venn diagram of subscription strategies and loyalty strategies becomes a circle. Brands should find ways, from the beginning, to build useful customer profiles in the offerings and incorporate that data into product development and customer experiences. Some brands even bootstrap this by creating dedicated customer service lines or other “VIP” feedback opportunities as a perk to enrolling in the subscription or loyalty programs.
Personalization isn’t a trivial initiative, as most retailers and brands know by now. But the technology ecosystem is evolving to support better data management and portability as well as better privacy and security — which are already critical in billing and payments but continue to rise in importance as you start building more detailed profiles of your consumers over time.
Q. What are your predictions for billing technology in the next three to five years?
ln the future, the market will require billing tools that help your business be adaptive, creative and resilient. These are the key pillars of what Forrester calls “future fitness” — the strategy for merchants to thrive in the future. But merchants don’t often consider billing technology as especially strategic or critical for driving revenue. I beg to differ, and I think highlighting the ways in which billing technology enables this future fitness is a good basis for understanding why the future of buying requires powerful billing technology.
Let’s take adaptability first. Merchants need the ultimate flexibility in their billing tools to simply configure and reconfigure the monetization strategies and accurately map to and manage their increasingly diverse and dynamic revenue supply chain — including its customers, partners, products, channels and business models. We’ll see more decoupled components, better support for partner and ecosystem participation, for splitting and sharing and for modeling edge cases and exceptions.
Of course, all of this helps brands be creative, but to foster the human power of creativity to organize experiences and digitally express the values of the brand to the consumer, all of this configurability must not compromise the usability and speed with which we need to experiment and express our creativity. So we will see much more support for low-code and no-code configurability, workflows and task automation (even in multiparty — e.g., partner or ecosystem — scenarios) and enhanced communications capabilities to keep all parties in the revenue supply chain connected, engaged and empowered.
And finally, resiliency: This is where billing technology historically has played more of a direct role in keeping customer data secure and ensuring compliance with reporting and revenue accounting standards. But as the business becomes more adaptive and more creative, billing technology will evolve its capacity to enable resiliency in more ways in the future (for example, by alerting, alarming, instrumenting and automating — enabling front-office agility while keeping the guardrails and governance that the back office requires). All of this will happen at the vast, fast and relentless pace of change that will define the future of our businesses.
Lily focuses on the strategies and technologies that firms need to win, serve and retain customers in the age of digital business. This includes recurring customer and billing management solutions, the merchant payments processing landscape, evolving consumer payments behaviors and more.