Scaling Subscriptions: Maximizing Revenue And User Experience

From music to meals, subscriptions have captured the hearts of consumers who crave convenience and a touch of excitement in their lives. It’s no wonder that brands are eager to embrace this trend and cultivate enduring relationships with their customers.

Streaming services for movies and music have been the big standouts, and they’re certainly not alone. From software and razors to fresh produce, subscriptions services are everywhere.

What are Subscriptions?

Subscriptions are a payment arrangement where customers authorize merchants to withdraw funds via their Credit Cards, Debit Cards, UPI or Wallets, at predetermined intervals in exchange for goods or services.

Streaming services, subscription-based providers, energy companies, e-commerce, fitness, and other industries have all seen a rise in subscriptions. As a merchant, you can take advantage of recurring payments for a variety of reasons, such as better customer retention and long Customer Lifetime Values.

Types of Subscriptions

There are two types of subscription Payments. Your Rent, Netflix, or newspaper is a fixed frequency, fixed amount Subscription while phone bills and SaaS subscriptions are fixed frequency and variable amount.

How Payments work in Subscriptions?

Subscriptions or Recurring Payments involve the customer authorising the merchant to deduct a specific amount at specific intervals from their bank accounts via cards, UPI or Net banking.

While convenient for merchants and customers alike, this method has historically had a bumpy ride towards a seamless Payments Experience.

Let’s look at how the Payment flows for subscriptions vary as per the price.

While this seems straightforward, the failure rates in Subscriptions or Recurring Payments are quite high. Even if subscription setup rates or conversion rates are good, the subsequent debits are where problems arise.

Why Payments Fail in Subscriptions?

Subscriptions can unlock growth and scale for business but the flow - from registration to renewal is ripe with inefficiencies. Payment Failures and poor checkout experiences can leave customers with a poor experience and subsequent churn.

There are multiple categories under which a mandate/subscription failure can fall. Each of these Error categories have their own use-cases and retry recourses with which we can convert the failed orders into successful ones! Let’s understand the various reasons for failures in subscription Payments.

Business Failures

Approximately 75% of all mandate failures are business failures. Business failures are largely characterised by the user not having sufficient balance (54% of all business failures are such) in their account. Some of these failures are also user-led, due to the user’s action or inaction, such as incorrect details, or account disabled. These failures can be remedied via better Payment UX and retry specific recourses. Let’s take a look at some error messages which fall under Business Failures.

1. User dont have sufficient balance in the account
2. Transaction failed because of stolen/pickup/lost card
3. User has declined mandate for this cycle
4. Transaction Limit exceeded for the user

Technical Failures

15% of Mandate failures tend to be technical failures. Technical Failures are characterised by a momentary break in payments pipes wherein the PG or the bank server were unresponsive at the time of the debit call. These failures can be recovered, thereby boosting Success Rates drastically. Let’s take a look at some error messages which fall under Technical Failures.

1. The gateway request to submit payment information timed out. Please submit your details again
2. Payment processing failed due to error at bank or wallet gateway
3. No active PG found
4. Your payment has been declined by your bank. Please try again or use a different method to complete the payment.
5. Payment was unsuccessful due to a temporary issue. Any amount deducted will be refunded within 5-7 working days.
6. Transaction not found
7. REQUEST_NOT_FOUND

Notification errors

10% of Mandate failures can be attributed to the Issuing bank failing to send a pre-debit Notification to users.

Recovering declined payments

As we mentioned above, there are multiple reasons why a subscription payment might fail. That said, these are still recoverable. The Transactions which fail due to technical glitches can be retried immediately. But if it fails due to non-technical reasons like insufficient funds, retrying over an extended period is preferable, giving the user ample time until payday. You need a system which can dynamically act on the failure reason and retrieve the failed transaction.

Juspay Intelligent Retries

Intelligent Retries are part of Juspay’s suite of solutions for Subscription Businesses. It is a state of the art intelligent and dynamic system that can identify when to retry and when to bide the time, balancing customer satisfaction with business considerations. Juspay’s Retry identifies the failure reason and triggers retry mechanisms for payment failures.

Juspay Retry initiates the debit call repeatedly over a period of time, until a success response is received, or the frequency is exhausted. Its dynamic decision engine allows exhaustive experimentation to arrive at the optimum frequency and retry intervals.

Retrying Business Failures

Since Business Failures, are usually user related, the best way to solve them are by nudging the customer to solve the errors.

1. Juspay Intelligent Retries nudge the customers to ensure sufficient balance is available in their accounts, and retry after 24-48 hours.
2. Juspay Intelligent Retries send customers one time payment links, in case they are unable to pay using the same account.
3. The customer can also update their mandate details, or set up a new mandate in order to ensure the mandate doesn’t have business failures.
4. Juspay Intelligent Retry first attempts the transactions without notification for a couple of days and then send customer the payment link.

Retrying Technical Failures

We analyse the failure reasons, and confirm if a particular transaction failed due to technical reasons.

1. We can reattempt the transactions, at quick intervals, so that if it was temporary issue, it can be fixed.
2. We can also retry it for a long period, if the error is something that will take long periods of time and even trigger a payment link if Retrying itself won’t help.

We ensure to attempt retries only when there is a high chance of success and preventing your business from incurring extra card network fees, and also provide to you the flexibility to configure what errors we can retry and provide option to configure them.

Overall monthly SR improved by 2 - 3% from baseline average SR of merchants, say 60%

Use cases

1. Blip in downstream systems (PG, Issuer bank, Processor): Gives delta of ~1% daily
2. Failsafe mechanism against long downtimes: On days when PG was down for a few minutes/ hours, we could still maintain recurring SR baseline of 60%

Retrying Notification Failures

There can be two reasons why Notification can fail.

1. Request to bank for sending notification failed.
2. Request was successful, but notification from bank to customer failed.

First reason, is a technical reason that can be reattempted, and fixed, by sending that notification again and doing a Notification retry.

Second reason, can come because of multiple reasons like User cancelled the mandate or bank faced some technical issues. We can solve this, first by understanding the reason, what exactly was the reason, behind, if it was actually a business related failure, then, all business retry logic would work, while if it is bank related technical error, we can reattempt notifications again.

The Revenue Impact of Juspay Intelligent Retries

From entertainment to essentials, subscriptions services are everywhere with a payments experience that is more sensitive than single e-commerce purchases. Customers are stickier with their subscription services, which leads to upto 6x Customer Lifetime Value for businesses compared to single payments. And, by just retrying failed mandate payments, businesses can drive upto 30% of a revenue increment.

Juspay Intelligent Retry Recovery Rates

Juspay’s Intelligent Retry system senses the failure reason and adapts to a specified recourse basis that. It knows when to retry and when to allow for more time, thereby improving the customer experience. Let’s take a look at how Juspay’s Intelligent Retries fare against various failure reasons.

Grow your Subscription Business with Juspay

Subscription Business Models need to have built-in flexibility, agility, and security. And, the right payments platform can be a powerful business growth tool for this business model.

Juspay is the payments platform of choice for India’s leading companies who use a subscription model. From Insurers such as ICICI Prudential to PocketFM, Juspay has been a revenue driving force for subscription businesses in India.

We’re part of India’s growth story, one which makes Payments seamless for her startup ecosystem and her billion citizens. If you are a business owner, looking to scale your own subscription model, drop us a message here.

FAQs About Subscriptions

1. How do Subscriptions work?
In subscription payments, Customers’ payments for goods or services are automatically debited from their accounts on a prearranged basis. This is done with the help of Mandates.

2. Are subscription payments safe?
Customers authorise automated debits from their bank accounts through e-Nach & e-Mandate, which processes subscription payments. These mandates are safely stored, enabling businesses to securely initiate payments on a specific date.

3. Can I pause or cancel my subscription?
Yes, you can cancel or pause your subscription anytime, depending on the terms & conditions agreed upon by both the parties at the time of subscription initiation.