Even if you haven’t heard the term “subscription economy,” by now, you’ve probably already fully immersed it in your day-to-day life.
From Netflix to BlueApron, businesses everywhere are using subscription-based payment models to drive recurring revenue and lasting relationships with their customers. In fact, the subscription economy has grown 300 percent over the past seven years, with more than $420 billion spent on subscriptions in 2015 alone.
That level of rapid growth cannot be ignored.
What is the Subscription Economy and Why is It Growing So Rapidly?
The term, “subscription economy,” coined by Zuora CEO Tien Tzuo, is defined as a business model in which customers must pay a recurring fee at regular intervals — such as weekly, monthly, or yearly intervals — in order to access a product or service. Unlike the product economy, which is built for one-time transactions, the subscription economy is a way for businesses to build loyal, long-term relationships with their customers.
“Everywhere we look we see new ways the Subscription Economy is expanding into new spheres and putting down deeper roots as a core part of the global economy,” says Carl Gold, Chief Data Scientist at Zuora. Others have claimed that every business will soon become a subscription-based business.
Undeniably, the subscription economy is one of the fastest growing business models the eCommerce world has ever seen.
Why Have Subscription-Based Payment Models Become So Popular?
Every business owner wants to know how to create more loyal, long-term relationships with their customers.
For many, the answer to that question lies in the subscription economy.
In other words, subscription models change the nature of customer relationships. The convenience, flexibility, and simplicity offered by subscription models is incredibly attractive to businesses and buyers alike. They not only establish guaranteed revenue streams at set intervals for the business, but also create a sticky, loyal connection between the business and the buyer.
By tailoring your subscription plans and packages to your customers’ values and lifestyles, you can generate the most loyalty and the most revenue for your business. For example, you could offer student plans, family plans, or other flexible subscription-based plans and capture more customers than you would if you only offered one set package for every type of customer.
Additionally, more and more businesses are moving to subscription payment models because they’re a great way to secure recurring, reliable revenue streams. If you have 500 customers paying $30 per month for a subscription, then you can set and anticipate your income every month based on those subscriptions, and it creates a much more stable method of growth for your business.
Shoppers, on the other hand, like subscription models because they’re simpler and more convenient. Rather than paying $120 upfront for a yearly plan, shoppers can make automated payments of $9.99 per month, and it makes it a much more palatable purchase.
At BlueSnap, we recognize that this is an extremely valuable payment model for both shoppers and businesses. That’s why we partner with Zuora to offer the most robust and flexible subscription and global payments functionality possible.
Power Global Subscription Payments with the Zuora-BlueSnap Payment Gateway Integration
BlueSnap and Zuora have been integration partners for several years now, enabling Zuora businesses to select BlueSnap as their payment processor for their global payment needs.
By pairing Zuora’s robust subscription engine with our powerful end-to-end payment gateway, businesses can offer a seamless payment processing experience to their subscription customers. The integration includes:
- Connections to 30 global banks for maximum payment success and lower costs
- Quick, simple onboarding with no setup fees or long-term contracts
- Support for all major credit and debit cards, ACH payments, and multiple currencies from around the world
- Built-in fraud protection technology from industry leader Kount
- The newest enhancements, including Account Updater, Level 2/3 card data processing, and multi-partial refunds
- 3D Secure 2.0 to provide Strong Customer Authentication as part of the latest PSD2 directive
But because we’re always working to improve our product and offer the best possible experience to our customers, we’re currently working on enhancing the functionality of the Zuora-BlueSnap integration.
With support for SEPA Direct Debit and LATAM cards launching in the next few weeks and Apple Pay on the way, the BlueSnap integration offers the most comprehensive payment gateway to Zuora customers.