Three Ways VoIP Providers Can Benefit from Prorated Subscription Billing

Managing customer churn is becoming an increasing concern for VoIP providers. Having customers cancel subscription renewals, de-link their cards just before a certain period of product use, or regularly switching providers due to enticing promotions is an all too common problem.

However, it’s important for VoIP providers to realize that boxing customers into traditional subscription models is ultimately impeding customer loyalty. We’re in an era where customers want the flexibility to pay for what they consume at the time.

So how can VoIP providers shift to these emerging needs?

One simple, but powerful pricing  mechanism that can be used is proration.

So what exactly is proration?

Empowering your customers with the option to suspend, cancel, pause or change a subscription and charging them for the service period used, is called proration. This allows your customers to test, try, upgrade and downgrade their packages with your business, but at the same time, commit to paying for the services they have used to date.

Prorating price plans can also imply multiple invoices and the need for greater  account management bandwidth to be deployed, however this is the most useful mechanism to entice new subscribers and maintain existing ones, as it gives them flexibility and autonomy in managing their interaction with your services. Furthermore, prorating your price plans for voice, broadband subscription or other services can help your customers use your services freely without much ado. For example, if a subscriber goes on a vacation or wants to suspend services intermittently, they can prorate and pay for their product or service usage to date, and then resume their subscription once they return.

Here are  three ways your VoIP business can benefit from prorating price plans.

1. Manage Risk Through Upfront Payments

One way to cover the risk of customers ending their subscription plan before the end of a billing period, is to charge a percentage of the fee upfront. By making this upfront payment mandatory, you can easily sift out the volatile customers who are not showing genuine commitment to utilizing your product or service.

However, keeping on top of managing upfront installments can be cumbersome if you’re using a billing platform that’s limited to just periodic billing. Therefore, it’s imperative to seek out an advanced billing solution where proration is possible to configure and can be customized to a customer’s stage in their product journey.

2. Reduce Customer Churn

Enabling customers to flexibly engage with your VoIP services according to their unique usage needs, ultimately drives customer satisfaction and loyalty. Why? Because at the end of the day, customers don’t want to be paying for something they actually don’t use during certain periods.

Hence, by providing customers with the option to suspend, cancel, pause or change a subscription, you might momentarily lose revenue from them, but at least you are maintaining their account. Moreover, by maintaining their account on record, gives you plenty of opportunity to re-engage and up-sell them when the time is right.

As a result, it is essential to have an intelligent billing solution that gives you the autonomy to easily suspend, cancel, pause, change or reinstate a subscription. Furthermore, the solution should have an automated ticketing system to help manage customer journeys and trigger reminders and follow up to prompt customers to re-engage.

3. Minimize Customer Acquisition Costs

Ultimately, by reducing customer churn, you can save on having to invest in filling up the acquisition pipeline. Once you’ve acquired an account, reigniting a service only requires a simple click of a button, rather than having to spend a good month nurturing a new prospect to back fill a lost customer.

To explore how you can effectively utilize proration as a pricing mechanic for your VoIP business, book a demo today with OneBill. 

Sharing is caring!