Ask the experts: B2C subscription best practices

Summary

In this informative session, Stripe experts discuss various subscription models, billing strategies, and tools for improving customer retention. They emphasize handling voluntary and involuntary churn, using proactive measures like automatic card updates and reactive tools for recovering failed payments. The discussion also covers fraud prevention, prepaid transactional models, adjusting subscription prices, and simplifying subscription management with upcoming features like a pause and resume functionality. Overall, the session offers valuable insights into optimizing subscription-based businesses and streamlining billing processes for better customer experience.

Takeaways

• 😀 Subscription models offer flexibility with customizable bundles and different pricing tiers for products.
• 😀 It's crucial to differentiate between voluntary and involuntary churn when managing customer retention in subscription-based models.
• 😀 Proactive tools, such as updating customers' payment details before renewals, can help prevent involuntary churn.
• 😀 Stripe offers dunning tools that support payment recovery after failed transactions, preventing cancellations.
• 😀 Fraud prevention in Stripe includes the use of payment intents and setup intents to validate and secure card information.
• 😀 Prepaid models can be beneficial, especially in high-fraud industries, where customers can pre-purchase credits to consume over time.
• 😀 Businesses can link prepaid payments to invoices, ensuring payments are only processed after successful transactions.
• 😀 Stripe allows businesses to adjust subscription prices, add additional products, or apply one-time fees during renewal periods.
• 😀 Changing a subscription's payment date currently requires pausing and resuming the subscription, but Stripe plans to introduce a simplified one-click pause/resume feature.
• 😀 Feedback from users is highly valued, and any unanswered questions from the session can be directed to Stripe's sales team or submitted through feedback forms.
• 😀 Stripe's team emphasizes customer satisfaction and aims to continually improve features based on user input and requirements.

Q & A

What is the difference between voluntary and involuntary churn in the context of subscription models?

Voluntary churn occurs when a customer chooses to cancel their subscription, while involuntary churn happens when a payment fails or a customer cannot continue the subscription due to issues like expired payment methods.

How can businesses prevent involuntary churn before a payment is due?

Businesses can engage customers proactively by allowing them to update their payment information before a renewal or payment attempt, ensuring their subscription continues without interruption.

What tools does Stripe provide for recovering payments after a failure?

Stripe offers various tools to support businesses in recovering failed payments, including sending reminders or retrying payments automatically to prevent the subscription from being canceled.

How does Stripe ensure that a customer's payment card is valid when setting up a subscription?

Stripe uses two methods: a Payment Intent, which validates the card and charges it, and a Setup Intent, which only validates the card without charging, allowing businesses to verify the card before the trial ends.

What are billing credits, and how can they be used in subscription models?

Billing credits allow customers to pre-purchase a certain amount of usage, such as API calls, which are then deducted as they consume the service. This model is particularly useful in industries with higher fraud risks.

Can Stripe handle prepaid transactional models, such as those used for API calls?

Yes, Stripe supports prepaid models by allowing customers to pre-purchase credits, which are then used to pay for specific services like API calls. This method is useful in industries with higher fraud risks.

How does Stripe handle changes in subscription prices during renewal?

Stripe allows businesses to modify subscription prices at renewal, including adding new products or one-off fees, providing flexibility in managing customer subscriptions.

Is it possible to change the payment date for a subscription in Stripe?

Currently, changing the payment date involves pausing and resuming the subscription, but Stripe plans to introduce a native pause and resume functionality in the second half of the year, simplifying this process.

What is the 'pause and resume' functionality coming to Stripe, and when will it be available?

The 'pause and resume' functionality will allow businesses to easily pause a subscription and then resume it later with just one click. This feature is expected to be released in the second half of the year (H2).

How can businesses handle feedback and questions if they were unable to address them during a live session?

If businesses cannot answer questions during a live session, they encourage customers to submit feedback or ask questions through their sales team or directly to support, ensuring customer queries are addressed.