Businesses can and must adapt to changing customer payment needs

Written by Nathan Shinn, Founder and Chief Strategy Officer, BillingPlatform

From the continuing fallout of the pandemic, through to Brexit and fears of a looming recession, mounting economic pressures are forcing many to reassess their spending priorities going forward.

We are already seeing consumer spending habits change because of these. Recently, it was revealed that over one million music streaming subscriptions have been cancelled in the UK, with 37% of customers citing saving money as the reason for cutting services, while an increasing number of people are turning to alternative payment methods, such as buy now pay later services, to purchase goods.

It is not just individual consumers who are feeling the strain, businesses are also under increased pressure to streamline spending to ease the financial impact of the past few, challenging years.

Whether selling to companies or consumers, providers will be nervous about these changing spending habits. However, while this concern is understandable, firms should also see it as a wake-up call to adapt and meet these new expectations. Providers need to rethink the purchasing options they are offering customers, as well as their business models, to meet evolving demands, or risk being left behind.

Some organisations have realised the need to adapt and are viewing the changing market as an opportunity to evolve the payment options they are offering in order to provide more choice for those looking to monitor their expenditure. This is because providing a wider variety of payment options means they can avoid losing customers for which previous billing options, such as fixed-fee subscriptions, may no longer be viable.

Fortunately for providers, the number of different billing and payment options has grown in recent years. One of the most prominent of these new business models that companies are deploying is a usage-based pricing (UBP) model that allows end-users to only pay for what they consume. According to an OpenView report from late 2021, a quarter of companies that currently use a UBP model say they introduced it within the previous 12 months, and 2021’s adoption of UBP exceeds that of both 2019 and 2020 combined.

It’s positive to see businesses actively implementing alternative billing methods to meet changing customer demands. However, while this may sound like a straightforward approach, putting the processes in place is a different, more complicated matter.

When businesses are no longer generating the exact same bill for every customer, they need to be able to capture various inbound data on user consumption and/or their subscriptions, apply it against contracted rating agreements, and create a unique, accurate bill quickly. For companies that have never used multiple billing options, this can be a challenge as they need to put in place new processes which, if not implemented correctly, can lead to inaccurate billing. This both impacts the customer’s time and, consequently, the reputation of the business.

The impact of not putting in the correct processes has been seen in the UK energy sector, where it was revealed that 40 per cent of the problems energy customers contact Citizens Advice about are related to inaccurate billing. This example demonstrates that offering more payment choices alone is not enough and needs to be supported by technology and solutions that enable companies to do this properly, so they don’t risk compromising on efficiency or customer experience.

Those looking to offer variable payment options and for technology to support this should ensure they implement automated solutions, such as data mediation (the ability to process raw-usage data quickly and accurately), into the billing process. Using platforms which can analyse a customer’s usage and payment options means firms can rest assured they are providing customers with accurate invoicing information at all times, removing the risk of human error and costly mistakes.

At the same time, firms should implement technologies which can adapt to customer demands. Prioritising billing solutions which have the added flexibility to react to market trends in real-time, launch new offerings and expand into different geographies, means that businesses are future-proofed to meet the changing needs of customers and can avoid needing to make dramatic changes as some have had to in current conditions.

Consumer needs are evolving and companies that want to retain and attract customers must be able to meet their demands, such as more payment options. However, change isn’t easy and implementing new processes can be both risky and daunting. This means that those who want to provide more billing options need to ensure their offering is backed up by technology which can manage these new processes and adapt to changing consumer needs. This will mean providers can give customers the variety they desire, maintain a high quality of service, and help them survive and even thrive during these tough times.