Attracting and keeping millennial buyers as loyal customers is an important goal for CNP merchants. This generation has an estimated $600 billion in purchasing power, which is expected to grow to $1.4 trillion by 2020. These are numbers that merchants can’t afford to ignore.
The good news for merchants is that millennial buyers are attracted to recurring billing options. They appreciate the convenience and affordability offered by modern subscription services. With the ability to subscribe to grocery orders, beauty products, household items, music, and clothes—the inconvenience of outbound shopping for daily consumables and services are alleviated.
Recent research of millennials’ consumption revealed that more than 70% have a product subscription and 89% have a service subscription. One of the reasons cited for this preference for subscription purchases is the overwhelming amount of choices buyers are facing. A regular weekly delivery of groceries, for example, alleviates decision-making and reduces what this demographic sees as unnecessary hassle. The simpler the better when it comes to day-to-day conveniences, and the recurring billing model fits this lifestyle perfectly.
However, as merchants know, recurring billing can bring with it a range of payment and chargeback issues. But with some smart outreach and proactive communication, merchants can prevent the common causes of recurring billing-related chargebacks.
It’s up to merchants to use best business practices to protect themselves from the inherent risks of recurring billing.
Clear Subscription Policy
Merchants must make the subscription policy terms obvious and easily available. Display this policy on the checkout page of the website, on confirmation emails, and on any receipts included with product delivery. Detail the terms of the subscription, including the length of the subscription, the charge schedule, the amount of each charge, and the details of the customer’s agreement to pay for the subscription. It may be helpful to have a checkbox on the payment page that the customer ticks to confirm agreement to the transaction.
When it’s easy for a customer to cancel their subscription, they’re less likely to contact their credit card issuer and file a chargeback. Some merchants include a link on the confirmation email and on the website that provides clear instrucitons on how to cancel. It is important that a cancellation is followed up with an email that details the terms of the cancellation, including pending payments unaffected by the cancellation and how these are processed. Always include contact information on the cancellation page and confirmation emails, providing the customer a simple way to reach out with any inquiries.
Along with a detailed confirmation email, it’s a good idea to send billing reminder emails. This helps prevent the “I forgot I ordered this” friendly fraud claim. Send customers a reminder email detailing their next recurring billing credit card charge. This should include a reminder of their agreement to this recurring transaction and provide details of the length of the subscription—when they will be charged, the charge amount, and when they can expect delivery of the product or service. Include contact information to make it easy for the customer to ask questions, change their subscription, or to cancel.
Free Trial Rules
A great marketing tool for subscription services is to include a free trial. However, these free trials often result in friendly fraud chargebacks. It’s very important that the rules of the free trial are made clear. If the free trial has an automatic subscription at the end of the 30-day trial, for example, it’s important to communicate this clearly. When customers register for the free trial, display the free trial guidelines on the website and in the confirmation email.
Making Recurring Billing Work
Along with these suggested business practices, it’s imperative that merchants remember the cardinal rule of customer-merchant relationship building: be available, accessible, responsive, and helpful.
When merchants are quick to respond to questions and do their best to solve customer problems, the prospect of there being disputed transaction or resulting chargeback is greatly reduced.
The millennial generation is connected, vocal, and very aware of their consumer rights. Merchants can quickly takes hits on their bottom line from negative social media comments or online reviews. Remember, millennials prefer subscription models because they are simple and straight-forward—so, ensure that you are simple and straight-forward with your communication and policies.
The CNP recurring billing space is becoming more crowded: good customer service and modern business practices allow you to stand out from the crowd. To learn how you can monitor lost recurring billing revenue and better manage customer communication, contact our team of fraud prevention experts.