Tip: Decrease churn by offering BNPL for annual subscriptions
Afterpay recently announced buy-now-pay-later (BNPL) for subscriptions in the US, opening up a big opportunity for SaaS companies. Give customers a BNPL option to increase annual subscriptions and decrease churn.
BNPL has blown up in the e-commerce world. It is estimated to increase conversions by 20-30% and the average ticket size by 30-50%. In early 2022, one of the biggest BNPL providers will be opening its doors to subscription-based businesses. And while this isn't really applicable for monthly subscriptions, it could be great news for those who want to leverage annual subscriptions. Annual subscriptions reduce churn and provide a lump sum for businesses up front. And with BNPL, customers will be more likely to opt for your annual subscription, as they can pay it in installments. Just make sure to offer a free trial and a fair refund policy. If this sounds promising to you, get ready to implement Afterpay (or other BNPL providers which are sure to follow) in the new year.
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Has Afterpay rolled this out yet? Haven't seen anything after.
Aren't monthly payments already a form of BNPL for annual subscriptions?
Not quite. BNPL providers give the business the full payment up front, then the customer pays installments to the provider. So you get a lump sum instead of monthly payments, which can be helpful from a cash flow perspective. Plus, customers have agreed to a full year instead of going month-by-month, which should improve retention.
Oh, you're right.
I'm sure it does cost something though from the BNPL provider, right?
As I understand it, they get their money from charging people who don't make their payments on time — but I could be wrong about that (and it probably varies from provider to provider).
Nod to @zerotousers of Growth & User Acquisition 💪