Selling Your Services as a Subscription: Expert Interview with Dodd Caldwell
Dodd Caldwell is the CEO of MoonClerk, a recurring payment system built around simplicity, flexibility, and power. With over 5,000 organizations using MoonClerk, Dodd is an expert in how to grow businesses with subscription & recurring payments. Here’s what he had to say:
Describe the growth, or shift, to businesses using subscription/recurring payments.
What I’ve seen since we launched MoonClerk nearly 7 years ago is that technology now allows more businesses to start and run subscription programs with recurring payments more easily.
It’s not just us and our technology solution. And it’s not just payment technology.
It’s the surrounding software industries that help with shipping, affiliate programs, marketing automation and a plethora of other activities that subscription businesses need to run smoothly. Those tools are now more readily available so it’s easier to run a subscription business.
In addition, over the last 7 or so years, people have seen the subscription model work in more and more industries. Most software went to the subscription SaaS model, physical products went to subscription boxes, coaches and consultants went to productizing their services in a subscription format, etc.
So, I think as more examples have emerged, more people in other industries are seeing how they might apply the subscription model to their business.
What are the advantages for businesses using recurring payments?
One of the biggest changes for most small businesses who start using recurring payments from scratch is just how much it automates their business and then enables other automations.
If you’re used to sending invoices every month, stuffing envelopes, getting checks, depositing checks, etc. then the move to recurring payments just opens up so much administrative time for you to focus on the core aspects of your business rather than the back-end.
Another advantage is the impact that recurring payments have on cash flow and forecasting. You still have to deal with churn (people canceling their recurring plans) but you’re better able to predict your business and your cash flow, knowing that you have a steady stream of recurring payments coming in.
What are common issues or pain points you see with recurring payments?
I would say one of the biggest pain points with recurring payment systems is when they lack flexibility in accepting payments.
For example, you might want to accept an upfront payment that is a different amount than the normal recurring payment and have the normal recurring payment start on a set date in the future. Does your system allow you to do that?
Every recurring payment system, including MoonClerk, has things that it’s good at and things it doesn’t focus on. So, it’s important to find one with the flexibility to do what you want it to do.
Another pain point is in the lack of flexibility after the payment has been accepted. For example, it’s pretty common for a payer to need to change their shipping address or to change the day their card is charged.
A lot of systems out there who just have recurring payments as part of what they do and not as their core focus, don’t allow for the flexibility you might need, particularly as you scale.
What should businesses take into consideration when using recurring/subscription payments?
You really need to figure out how you want your business to operate.
What is your specific use-case? Does the tool you use allow you to do that?
Sometimes people have an idea for how they want their business to run, but the tools don’t exist. They need to figure if that idea is necessary of just nice to have. We also have a lot of people come to us who are starting a business or starting a subscription aspect of their business and haven’t really thought it through.
They need to think through what is the workflow they want. Then look for the solution.
How can recurring/subscription models help grow businesses? Any examples?
If you have a service, the subscription model helps you productize those services. You can scale with a one-to-many model as opposed to one-to-one.
For example, if you’re a personal trainer, you can certainly charge your hourly rate to your clients and set them up on recurring plans. That will scale with the number of hours you have available. But, if you can create content and distribute it (say through our Digital Delivery system), then you’ve created it one time and have as many people as you can get subscribe to the content.
Even with a one-to-one model where you can’t scale, a recurring payment system frees up your time to focus on actually providing value to your customers. For example, you might not be able to scale your lawn care business past a one-to-one model but you can certainly save time by charging your customers once a month automatically.
Another area where recurring payments help you grow your business is that you don’t have to “earn” new business with every sale. You’ve got them as a customer on a recurring basis. If you can reduce your churn and keep people from cancelling, then you have a real opportunity to grow.
How can subscription-based businesses use affiliate marketing?
When thinking about your subscription business, you really have to think in terms of Lifetime Customer Value.
In my experience, most of the tried-and-true paid advertising channels like PPC with Google Adwords, social media ads, podcast advertising, etc. don’t have a great ROI because, unless you’re Lifetime Customer Value is high, those methods are saturated and you can’t pay for them, at least in a reasonable time-frame.
The nice thing with affiliate marketing for subscription businesses, in particular with recurring commissions, is that you can know that the ROI is there, regardless of the Lifetime Customer Value. And, recurring commissions provide an incentive to the referrers (the affiliate marketers), in that they also can know they will have a steady stream of income (say 30% per month, indefinitely) as opposed to affiliate marketing for something like e-commerce where they’re only getting paid once a single transaction.
Describe MoonClerk and how it can work for businesses.
MoonClerk is the “it-just-works” recurring payment system. We like to think that we provide a ton of flexibility without a lot of complexity. In that way, we are sort of a goldilocks system.
You can start small with MoonClerk but still scale with us. We’re not an enterprise solution. You can get started accepting payments in 5 minutes but still be with us once you’re doing millions of dollars a year in revenue.