The Ultimate SaaS Conferences Calendar!
The SaaS industry is rapidly expanding, with the global SaaS market growing at an impressive 6.5 times the rate of the rest of the global economy. As a result, competition within this market has become fierce, making it essential for SaaS businesses to have a reliable and steady stream of revenue to survive and thrive. In this article, we are exploring various strategies that can be used by SaaS businesses to double their annual plan sales by implementing Buy Now Pay Later (BNPL).
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Contents:
Why is it important to offer annual plans?
How to double annual plan sales?
The answer is simple – not to miss out on substantial revenue. Typically, SaaS businesses offer customers the choice between two payment plan options: a monthly subscription or an annual subscription. If you still offer only monthly subscriptions, here is what you are missing out on:
Offering annual plans can provide an instant cash boost, because annual subscriptions provide a lump sum payment upfront, which can be used to invest in the business or pay for ongoing expenses. Moreover, by implementing the BNPL payment option via a third-party provider, you will get the whole sum upfront even if a customer chooses to pay in installments. A BNPL third-party provider collects installments from the customer, paying you upfront the whole sum minus their fee within a few days. For example, Comfi as a BNPL provider pays their vendor within 7 days.
By locking customers into a contract for a longer period of time, you can create a sense of commitment and loyalty among your customer base. It reduces the risk of your customers leaving for a competitor or canceling their subscription altogether. This can have a significant impact on your business’s revenue and growth potential.
When customers sign up for an annual plan, it provides an opportunity for your SaaS business to upsell them on additional features or services. It helps increase the average revenue per customer and further improve the lifetime value. Remember, it’s 4 times cheaper for SaaS companies to upsell an existing client than to invest in new lead generation. Thus, by offering annual plans, you grow revenue significantly.
According to UserGuiding, 41% of SaaS companies offer a 30-day trial, and 18% offer a 14-day free trial. But why is this customer acquisition model so popular? Offering a trial period can be an effective way to increase the sales of annual plans for SaaS businesses, because it gives your SaaS business great conversion rates. 62% of SaaS companies that offer a free trial report getting at least 10% of their business from these trials. Additionally, a staggering 16% of companies report getting more than half of their new business from free trials alone.
To implement a trial period and double your annual plan sales you can do the following:
Research has revealed that nearly 80% of SaaS companies are willing to offer discounts of 25% or more to attract new customers. According to SaaStr’s poll, almost 40% of companies offer an additional 10-20% discount for multi-year contracts. While significant discounts may seem like an effective means of acquiring customers in a swift and reliable manner, in the long run customers who are acquired through discounts are more prone to churn. In fact, the higher the discount they receive, the more probable it is that they will ultimately abandon the service.
Offering discounts to acquire customers is a powerful tool, but we strongly recommend keeping the discounts lower than 25% to avoid future churn. This way you can gain more customers now and get more renewals next year.
Here are some tips on how to offer discounts to your customers:
It is an essential element in increasing sales of annual plans for SaaS businesses. Create a pricing page that effectively highlights the benefits of annual plans and encourages users to choose them over monthly plans. This will help your business double annual plan sales and improve your overall revenue.
Here are our suggestions on how to create an effective pricing page:
Take Wistia for example. They’ve made a pricing page with two charts, Annually and Monthly, and it is super easy to toggle between them. They have made it clear to customers that annual payment plans have a 20% discount. On the Annually chart they’ve used monthly prices billed annually for a convenient comparison.
One effective way to increase sales of annual plans is to make them more affordable through BNPL payment options. BNPL allows customers to spread out the cost of the annual subscription over multiple payments, to encourage customers to choose annual subscriptions. For example, with Comfi, your customers can split the cost in 12 installments over 12 months. This makes annual plans more accessible to a wider range of customers, increasing your customer base. Additionally, providing BNPL payment options can set your SaaS business apart from competitors who do not offer such flexibility in their pricing. By making annual plans more affordable and accessible through BNPL, your SaaS business can double its annual plan sales and boost its recurring revenue.
Here are the main steps to incorporate BNPL as a payment option:
Conclusion
Your SaaS business can significantly benefit from offering annual plans to their customers. And BNPL plays a big role in encouraging customers to choose annual plans over monthly ones. We hope the strategies that we’ve discussed today will help your SaaS business boost cash flow and grow revenue.
Co-founder at Comfi
The Ultimate SaaS Conferences Calendar!
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