Dodd Caldwell is CEO of MoonClerk, an iterative payment system built around simplicity, flexibility and power. With over 5,000 organizations using MoonClerk, Dodd is an expert in how to grow businesses with subscriptions and recurring payments. Here’s what he had to say:
Describe the growth or transition to businesses using subscription/recurring payments.
What I’ve seen since we launched MoonClerk nearly 7 years ago is that technology is now allowing more businesses to more easily start and run subscription programs with recurring payments.
It’s not just us and our technology solution. And it’s not just payment technology.
Shipping, affiliate programs, marketing automation and many other activities that subscription businesses need to run smoothly are the surrounding software industries. Running a subscription business is easier now that these tools are more readily available.
In addition, over the last 7 or more years, people have seen the subscription model work in more and more industries. Most software went to the subscription SaaS model, physical products went to subscription boxes, coaches and consultants went to produce their services in a subscription format, and so on.
So, as more examples emerge, I think more people from other industries are seeing how they can apply the subscription model to their business.
What are the benefits for businesses using recurring payments?
For most small businesses starting from scratch to use recurring payments, one of the biggest changes is how much they automate their business and then enable other automations.
Every month you have to send invoices, fill envelopes, receive checks, deposit checks, etc. if you’re used to it, switching to recurring payments opens up a lot of administrative time for you to focus on the core aspects of your business rather than the background. -end.
Another benefit is the impact of recurring payments on cash flow and forecast. You still have to deal with the loss (people canceling their recurring plans), but knowing you have a constant stream of recurring payments you can better predict your business and cash flow.
What are the common issues or hotspots you see with recurring payments?
I would say one of the biggest problems with recurring payment systems is the lack of flexibility in accepting payments.
For example, you might want to accept a different upfront payment than the regular recurring payment and have the regular recurring payment begin on a specific date in the future. Does your system allow you to do this?
Every recurring payment system, including MoonClerk, has what it’s good at and what it doesn’t focus on. That’s why it’s important to find someone who has the flexibility to do what you want them to do.
Another downside is the lack of flexibility once payment has been accepted. For example, it’s quite common for the payer to change their shipping address or the day their card is charged.
Many systems that only have recurring payments as part of what they do, and not as a core focus, don’t allow for the flexibility you might need, especially when scaling.
What should businesses consider when using recurring/subscription payments?
You really need to figure out how you want your business to run.
What is your specific use case? Does the tool you use allow you to do this?
Sometimes people have an idea of how they want their business to run, but the tools just don’t exist. They need to understand if having this idea is necessary for it to be beautiful. Also, a lot of people come to us who are starting a business or starting a subscription aspect of their business and have not really thought about it.
They need to think about what their desired workflow is. Then look for the solution.
How can recurring/subscription models help businesses grow? Any example?
If you have a service, the subscription model helps you product those services. You can scale with one-to-many models instead of one-to-one.
For example, if you’re a personal trainer, you can certainly charge your customers your hourly rate and set them on recurring plans. This scales with the number of hours you have. However, if you are able to create and distribute content (through our Digital Distribution system), then you have created it once and there are as many people as you can subscribe to the content.
Even with a one-to-one model that you can’t scale, a recurring checkout system gives you time to focus on truly delivering value to your customers. For example, you may not be able to scale your lawn care business beyond a one-to-one model, but you can definitely save time by automatically charging your customers monthly.
Another area where recurring payments help you grow your business is that you don’t have to “earn” new business with every sale. You get them as a repeat customer. If you can reduce your loss and prevent people from canceling, then you have a real opportunity to grow.
How subscription-based businesses can use affiliate marketing
When considering your subscription business, you really need to think in terms of Lifetime Customer Value.
In my experience, PPC with Google Adwords can be used for social media ads, podcast advertising, etc. Most tried-and-true paid advertising channels like these don’t have great ROI because unless you have a high Lifetime Customer Value, these are methods saturated and you won’t be able to pay for them, at least in a reasonable amount of time.
The nice thing about affiliate marketing for subscription businesses, especially recurring commissions, is that you know the ROI is there regardless of Lifetime Customer Value. And recurring commissions give referrers (affiliate marketers) an incentive, as opposed to affiliate marketing for something like e-commerce, because they can know that they too will have a steady stream of revenue (for example, 30% per month indefinitely). here they only get paid in a single transaction.
Explain MoonClerk and how it can work for businesses.
MoonClerk is a “just works” recurring payment system. We like to think we provide a ton of flexibility without too much complexity. In this way, we are a kind of golden lock system.
With MoonClerk you can start small, but still scale with us. We are not a corporate solution. You can start accepting payments within 5 minutes, but you can still be with us when you generate millions of dollars a year.