SaaS Fees Issues: 6 Common Problems

Get it wrong and you could see your client base dwindle and growth stall. Get it right and you’ll enjoy soaring subscription rates to help your SaaS business fly.

Read on to learn about six common SaaS fees issues and how tapping into the power and flexibility of Direct Debit can overcome them.

1. Perfecting Customer Experience

Your innovative software idea has hooked users in. They’re on board, eager to be impressed. They now need proof not only that your application can deliver the goods but that dealing with you as a business is a pleasure not a chore.

Investing in exceptional customer experience (CX) can reap substantial rewards. Research shows that companies with a $1 billion annual turnover can expect this to increase by $700 million within three years, if they focus on delivering dazzling CX. This figure increases to $1 billion in extra revenue for SaaS businesses.

An essential part of an impressive, revenue-boosting user journey is the payment path. This is especially important in the SaaS world where the goal is to migrate customers from the free to the paid version of your product.

Polishing this process will smooth that transition, building on existing trust and nurturing the loyalty you need to grow.

When choosing how to accept regular subscription payments, consider your customers’ preferences as well as what will suit your business best. The aim here is to deliver benefits across the board: simple, efficient, reliable and secure.

Step forward Direct Debit to tick all the customer experience boxes.

Easy for them to set up, easy to integrate with existing accounting systems and easy to manage.

Introduce it as a payment option and they’ll soon be thanking you for making their lives that little bit easier. And you’ll be reassured that this slick CX is boosting conversion rates and loyalty levels.

2. Minimising Churn

One of the natural and very welcome consequences of offering great customer experience is its positive effect on churn rates.

A key metric for analysing past performance as well as predicting future revenue, keeping it as low and as steady as possible is essential to long-term growth.

Out-of-control churn is another potential SaaS fees issue. Too many cancelled subscriptions will dent profits. And if it overtakes your rate of growth, you’ll soon be slipping into the red.

Alongside focusing on customer satisfaction, there’s another remarkably simple way to regain control over churn: offer Direct Debit as a payment method.

How? A Direct Debit agreement won’t expire at regular intervals, unlike a credit card which expires on average every three years. This leads to around 5-10% of card payments failing, creating extra admin for both you and your subscribers.

And if your card-paying customer doesn’t provide their new details, despite your polite requests, then that’s a customer fallen by the wayside. The onboarding process has to begin all over again and you may not get the same positive result second time round.

Instead, Direct Debits instructions are based on bank account details which are significantly less likely to change. You can continue collecting fees month after month, retaining those precious customers.

For SaaS businesses, Direct Debit has the added bonus of flexibility.

This allows you to conveniently upgrade or downgrade subscriptions without any customer authorisation. Provided you give them advance notice of the change in payment amount, you can simply alter how much they pay you.

3. Reducing Failed Transactions

While a subscription model is great in terms of potential regular income, all those individual payments could add up to a major admin headache.

Missing out on one £20 payment may seem like a drop in the ocean, but over time missing out on 100 or 1000 £20 payments will quickly add up. Identifying every single failed transaction is vital to cash flow, customer satisfaction and comprehensive accounting. And identifying them quickly can boost forecasting accuracy and feedback efficiency.

Direct Debit delivers again here. Sign up with a bureau and they’ll manage everything for you. You’ll get a detailed overview of all payments received following your collections, including the rare occasions when one of them fails.

Armed with this helpful, timely information, you’ll be able to speak to your customer about the issue, resolving the problem professionally and reinstating the payment quickly.

With this effortless system, the number of failed payments will reduce and unpaid invoices won’t linger on your debtors’ list. There’ll be fewer hours spent chasing fees, freeing up time to focus on your core business and enabling you to chat to your customers about your product and not their payment.

Linking back to churn, with fewer failed transactions slipping through the net, the number of customers churning involuntarily will lower. Instead, armed with the knowledge that a great tool brings, you’ll see them paying their subscription over and over again.

4. Optimising Integration

Slick software is your speciality. You’ve dedicated many hours to optimising its functionality, usability and affordability to tempt potential customers and keep them happy.

When it comes to processing payments, you can enjoy the same level of digital convenience as your own product supplies.

Integration is key here. If you’re managing numerous payment methods, this can be a challenge, especially when you’re handling multiple small amounts from subscriptions.

Choose Direct Debit and you’ll be accessing an automated system that can be fully integrated with your accounts and CRM set-ups. Flexible APIs and compatibility with platforms such as Xero and Sage deliver smooth, streamlining that makes day-to-day management a doddle.

This quick and easy integration will get you up and running swiftly. From then on, automation will reduce admin time dramatically, simplifying essential processes and giving you a clearer overview of your business.

5. Establishing Security

Reassuring customers that they can pay you with an ultimate sense of security will bolster customer satisfaction and loyalty levels.

If they have any doubts that your payment system could expose them to scammers, they’ll question your professionalism and likely turn their attention to a competitor.

If you accept payments directly by card, you’ll need to ensure you have an SSL (Secure Sockets Layer) secured site and comply with the security standards set by the Payment Card Industry Data Security Standards (PCI).

All merchants who store, process or transmit card payments have to conform to these standards which differ depending on the size of the business. However, it can be a tricky task to establish what level of PCI compliance you must meet at different stages of growth: another task to add to your to-do list.

An easier option is to establish a Direct Debit scheme.

This way, your Bacs-approved bureau will ensure all necessary security requirements are met. They’ll have an SSl secured website complete with lock icon, green bar and https address. They’ll handle all your customers’ sensitive data, meaning you never need to touch it.

Handing this responsibility over to a trusted provider will give your customers peace of mind while relieving you of an administrative burden and the possibility of reputation-damaging security breaches.

They’ll also welcome the added security provided by the Direct Debit Guarantee and its unique set of safeguards:

• The Guarantee is offered by all banks and building societies that accept instructions to pay Direct Debits.
• If there are any changes to the amount, date or frequency of your Direct Debit the organisation will notify you (normally 10 working days) in advance of your account being debited or as otherwise agreed. If you request the organisation to collect a payment, confirmation of the amount and date will be given to you at the time of the request.
• If an error is made in the payment of your Direct Debit, by the organisation or your bank or building society, you are entitled to a full and immediate refund of the amount paid from your bank or building society
• If you receive a refund you are not entitled to, you must pay it back when the organisation asks you to.
• You can cancel a Direct Debit at any time by simply contacting your bank or building society. Written confirmation may be required. Please also notify the organisation.

Its security levels are unrivalled when compared to other forms of payment, making Direct Debit the safest payment method in the UK.

6. Collecting International Payments

Your product has universal appeal. The business problem it solves will be encountered across the globe. So if you’re targeting customers outside of the UK, considering how they’ll be able to pay your subscription fees is crucial.

Meeting their expectations for a frictionless payment method could easily elevate you above the competition. It can be a challenge to offer one that addresses a wide range of preferences, habits and rules across multiple countries.

The answer comes via the SEPA Direct Debit scheme, the European version of the UK system. Operating in 34 countries, both within and outside of the EU, it offers the same features and benefits with a dedicated service for B2B payments.

Offering a familiar payment method like this will encourage sign-up, bolstering conversion rates and reinforcing growth beyond your home turf.

Saas fees issues are commonplace and, if left uncontrolled, could stop your entrepreneurial plans in their tracks.

Smart solutions to accepting regular payments are out there. Keep Direct Debit front of mind when assessing your options. For flexibility, security, reliability and customer satisfaction, its benefits are unbeatable.