Retain customers with smarter payment experiences

Most businesses think of payments as a cost centre. The smartest ones see payments as a retention tool. For businesses that rely on regular, consistent payments from customers, this reframing is a necessity in order to grow. 

In this article, we discuss how embedded payment experiences can keep subscribers engaged and paying for longer. 

Why payment experience matters for retention

Subscribers are hard to win, but easy to lose. And they increasingly expect more than just a great product or service — they want a seamless experience across every touchpoint. Churn, whether it is voluntary or involuntary, is an ever present risk. But how can businesses get ahead of the problem? 

By weaving smart payment options into creative retention strategies, merchants can turn routine transactions into loyalty drivers and opportunities for deeper customer engagement. 

Three ways to retain and delight customers with embedded payments 

1. Supercharge smart payment plans with rewards 

A primary risk to recurring payments businesses is voluntary churn. 

Voluntary churn is when a customer chooses to cancel their subscription because they no longer want to continue their relationship with your business. The reasons for voluntary churn range from a customer having a disappointing experience to not seeing the value of the product or service they’re paying for. 

Recurring payment businesses can capitalise on the growing popularity of reward programs to get ahead of voluntary churn. 

By connecting benefits and savings to uninterrupted or long-term payments, merchants can demonstrate real value that will make customers feel not only more comfortable maintaining their payment, but also happy to. 

Idea starters: 

• Annual payment discounts that genuinely excite customers (10-20% savings)
• Premium features bundled with longer payment commitments
• Exclusive perks for customers who choose specific payment methods
• Rewards for uninterrupted payment “streaks” or on sign-up anniversaries 

Real impact: In a 2023 study of 6000 consumers, it was found that 48% of subscribers feel more valued when rewarded for loyalty and 82% would stay subscribed if they were given loyalty incentives. 

Some recurring payments businesses can benefit from running dual loyalty programs: a free program to reward past, consistent payments, and a paid program to encourage future payments. Paid loyalty programs generate value by changing customer behaviour; reports suggest that not only will customers who are a part of a paid loyalty program increase their purchase frequency but they will also spend more per basket. 

For example, Checkers offers customers Xtra Savings as a free loyalty program to reward shoppers. The immediate benefit makes Checkers an obvious choice, whether shopping in-person or online. 

This is combined with Xtra Savings Plus – a paid loyalty program designed to influence future payment behaviour by giving members rewards like unlimited basket sizes on Sixty60 (their on-demand delivery service) for a R99 monthly fee. This program pays off in the future as shoppers are more likely to choose Checkers to make the most of their subscription. 

Caution: Design your loyalty program with care. There’s only one chance to make a good impression and it needs to be valuable for both the brand and the customer. McKinsey's research on paid loyalty programs indicates that consumers expect at least a 150% return on their subscription fee through new offerings. 
‍

2. Turn cancellations into opportunities with personalised payment options

Sometimes things don’t go to plan so when customers hit the cancel button, smart payment alternatives can save the relationship.

Pro tip: A good business capability to develop is to conduct post-cancellation research. The feedback from your customers can be used to develop insights into where you should focus your efforts. 
‍

Idea starters: 

• Best for gyms: temporary payment holidays for customers facing short-term challenges such as an account pause 
• Best for internet service providers: flexible payment date adjustments to match customer paydays
• Best for streaming services: one-time discount offers at the critical moment
• Best for car rental or lease: split payment options for customers managing cash flow
• Best for insurance providers: switching to different payment methods that better suit their needs

Real impact: In PYMNTS’ Subscription Readiness Report 2023, some of the top drivers of subscription cancellations were: 

• Subscription was renewed without approval (31%)
• Misinformation about recurring charges (29%) 
• Inability to pause or skip subscription (27%)
• Inability to change subscription frequency (23%)
• Unavailability of digital wallet payments (22%)
  ‍

Transparent, flexible payment options are critical to preventing cancellation before it happens. Designing checkout experiences that clearly outline the terms of the recurring charge and offer customers multiple frequencies and payment options proactively address drivers of cancellation, ensuring resources are allocated to the most complex win-back cases. 
‍

3. Make reactivation as simple as possible 

Customers who experience involuntary churn may want to reactivate their subscription. The key is simplicity, ensuring a seamless pathway to payment.  

Real impact: Involuntary churn is when a customer’s payment fails, leading to the cancellation of their subscription. Unlike voluntary churn, the customer is not explicitly choosing to stop doing business with you. While it sounds like a glitch that seldom happens, involuntary churn makes up 20-40% of typical churn rates – making it a top priority for businesses to solve. 
‍

Idea starters: 

As with cancellation, it’s better to prevent failed payments than to recover them.

• Minimise involuntary churn with automatic updating of card-on-file information when a customer’s card is replaced or expires. 
• Partner with a payment processor that offers end-to-end redundancy and offers features like cascading and multi-acquiring to mitigate failures. 
  ‍

If reactivation is required: 

• Embed secure payment links directly in live chats or email threads so customers can reactivate without leaving the conversation. 
• Enable one-click reactivation with stored payment details. 
• Offer multiple recurring payment methods like card, EFT debit order, or Capitec Pay.
• Make switching payment methods seamless. A failed payment at this crucial moment might result in a customer lost permanently. Make it easy to update details or switch methods.

Real impact: Businesses using chat-integrated payment flows see significantly higher conversion rates. According to a Campaign Monitor report, if a visitor engages with a live chat agent, they’re 2.8 times more likely to end up purchasing a product. In fact, 38% of customers reported making a purchase after having a good session with a live chat agent.
‍

Tips for activating customer retention strategies 

1. Experimental mindset 
   
   • Pick one retention strategy to enhance with payment experiences
   • Test with a small customer segment
   • Measure impact and scale what works
     
     
2. Insights-led innovation 
   
   • Conduct frequent research with your customers to uncover pain points 
   • Look for sustainable rewards that are good for the brand and customer
   • Design rescue offers that solve real customer pain points
     
     
3. Simplify 
   
   • Audit your payment experience from sign-up to reactivation
   • Look for opportunities to reduce clicks and decisions
   • Make payment method switching effortless

The bottom line 

Smart payment experiences aren’t just about processing transactions efficiently, they’re about creating moments of delight that keep customers coming back. Happy returning customers means consistent recurring payments, and ultimately sustainable growth for the business. 

Take a look at your customer journey today: where could smarter payment experiences reduce friction and boost retention?

‍