How Price and Subscription Billing Contributes To The Customer Experience

1. How Price and Subscription Billing Contributes To The Customer Experience © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential. 1

2. How Price and Subscription Billing Contributes To The Customer Experience These days, businesses find they need a new way to stand out from the competition. As IT Wire wrote, today's environment is no longer just about creating and delivering a product. In a high-stakes world filled with all sorts of competition, consumers have their pick of quality options to choose from. These choices are no longer limited to what's nearby, either. Thanks to the Internet, shoppers can easily access businesses located across the globe. Companies can no longer rely on the strength of their merchandise or services alone to maintain sales because so many organizations provide something similar. That's why businesses began to reassess their priorities. In addition to offering an excellent product, they now focus on providing a first-rate experience. This tactic makes sense: If customers can choose between two seemingly identical products, they'll likely pick the one whose company makes them feel the best. "Billing is a way businesses can increase custo mer satisfaction." Using subscription billing to optimize the customer experience Payment practices are closely tied with the customer experience. Nothing gets a person's emotions charged quite like their money, which makes billing a key way businesses can increase customer satisfaction. Therefore, these organizations can't act recklessly when it comes to their payment setups. 2 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

3. They need to devise a system that supports innovation and profit yet still falls within consumer expectations. Devising a proper revenue method becomes exceptionally tricky when the service provided requires a consistent stream of revenue. Ongoing costs like maintenance and upgrades mean businesses in certain industries – for example, over-the-top content and the Internet of Things – simply can't operate on one-time charges. Thankfully, the subscription economy adapted to the modern age. Streaming content, wireless carriers and IoT devices have all successfully used recurring billing methods and paved the way for even greater payment innovations. The concern is for businesses to find a monthly price that matches the value of their product. Not only does this price have to support the company, but it must also agree with customer expectations. How price influences consumer opinions ConversionXL discussed the various strategies companies operating on a subscription billing model use to survey customers in regards to price. One method, called the van Westendorp Price Sensitivity Analysis, reveals how customer attitudes about a product vary according to its price. If the cost is too low, customers begin to doubt the quality of what they're receiving. If it's too high, they won't consider buying it, especially not on a month-to-month basis. Before hitting this mark, however, is the price at which consumers begin to feel the cost of a product or service is beginning to stretch their budget. 3 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

4. This uncertainty threatens a business' rate of customer retention, a value that is critical to operating on a subscription billing model. "Subscription billing's flexibility is perfectly primed to match consumer needs." While these concepts may lead one to believe subscription billing is too unstable, IT Wire noted that its flexibility is perfectly primed to match the needs of today's consumers. Subscription billing also reflects operating costs of businesses today. "As enterprises attempt to shift to new subscription and on- demand business models, they realize their existing business systems are wholly inadequate," MGI Research Analyst Andrew Dailey said to IT Wire. "In fact, in some industries, legacy business tools are delaying business model migration, creating an existential threat for some well-known companies." In addition, the van Westendorp analysis found there is a price at which subscribers generally agree they're getting a deal for their product or service. This price varies based on industry, competition and the perceived value of the product, but identifying it is key to a company's success. Subscription billing methods allow companies to thrive in an environment where revenue is just as important as customer satisfaction. When combined with the right price, the model's flexibility supports the needs of both businesses and consumers. 4 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

5. About the Author: Bryta Schulz Bryta joined Vindicia in 2013 and serves as Senior Vice President of Marketing. She is responsible for building brand awareness, creating go-to-market strategy and promotion, and driving growth. With over a decade of executive level marketing, product management and PR experience, Bryta has led marketing teams in enterprise technology and SaaS companies. Her experience includes heading product marketing at GoGrid, PGP, RSA and Symantec and business development and product management positions at Xcert, Thales, and Persistence Software. Bryta holds a MA in Translation from the Johannes Gutenberg University Mainz and an MBA from the University of Reutlingen. Visit our Blog for more information. 5 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

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