This post is by Team SaaStr from SaaStr
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By: Rob Nathan, EVP, Integrated Solutions at CardConnect With thousands of new startups emerging everyday and the average turnover rate for business applications trending at 39% annually, the SaaS industry couldn’t be more competitive. Despite the hyper competition, many SaaS providers take their organization’s payment processing experience for granted. Whether we want to admit it or not, payments can play a big and often unseen role in contributing to or reducing customer churn. In this article, we’ll take a look at some of the common payments obstacles faced by SaaS companies today and how they can be resolved.
Creating seamless customer experiencesIt is important to tailor the payment process to meet a customer’s expectations, taking into account all aspects of their journey. From a customer’s perspective, clunky user interfaces or a lack of convenient payment options is frustrating. Consider the diversity across the customer base, from the range of at their disposal to the availability of varying payment methods in their location. Offering a wider choice of payment options, such as allowing users to add multiple credit cards when subscribing (also reducing the potential for failed transactions) or ACH/Direct Debit transfers, also creates a frictionless experience for the end user which will help customer retention in the long-term.
Poor cashflow and failed transaction monitoringIn the SaaS industry, one barrier to reliable cashflow is the number of unsuccessful transactions a company attempts to process, which can cost time and money to resolve. When trying to grow a SaaS organization at scale, the idea of manually checking every single transaction in a spreadsheet is impractical. The best solution is to implement a robust payment processing platform which provides a complete overview of all your transactions and allows for easy identification of any failed transactions which may have taken place.
Making payments accessible overseasA 2017 U.S. consumer study found that credit and debit cards were increasing in popularity for all online purchases, occupying 76% of U.S. purchases made. By contrast, only 12% of online purchasers in Germany stated that a debit or credit card was their preferred payment method, with customers opting for alternatives such as invoices or PayPal. The importance of understanding local preferences but also offering a range of currency options for SaaS payments in a secure manner is vital.
Securing paymentsEnsuring online payment processing is secure and encrypted should be a top priority for any organization. Leading payment processors use PCI-certified Point-to-Point Encryption (P2PE) and patented tokenization to replace sensitive information in every transaction. This provides peace of mind for end users and businesses alike, bringing a level of confidence to the payment process and removing the risk of sensitive information being lost or stolen.
Reducing ChurnAlthough it varies from company to company, the average churn rate for a SaaS organization is between five and ten percent. The main problem from a payment perspective is involuntary churn, where customers are lost because card details have expired or the payment process fails.
Considering the higher cost of acquiring new customers for SaaS businesses compared to keeping existing ones, creating a payment process which reduces the likelihood of losing existing customers is extremely beneficial. By tailoring the user experience, in addition to adopting a platform which is both secure and easily manages the payment process, SaaS organizations can mitigate any risk and provide customers with a simple way of making payments.