Selling Digital Services: Payment Challenges and Solutions
Digital technology has created opportunities for merchants and service providers to digitalise a vast amount of different products. Whether that’s the digitalisation of existing products that previously were sold in other formats such as CDs, videos, tickets, subscriptions, and software packages; or the creation of entirely new digital products that have no tangible ‘real life’ equivalent.
However, while digital transformation is an enabler it also creates some unique challenges when selling digital products. Here we look at how to optimise digital sales.
An explosion of innovation over the last ten years is proving a blessing and a curse, for fans, content producers, and merchants. Although we live in a “digital age”, merchants who lack a physical presence are still competing for a relatively small slice of the retail pie. Everyone is aiming to capture enough online attention to convert a percentage of those who stumble across websites, social channels and into mailing lists into paying customers. It is not easy.
Challenges of Digital Sales
For every ten indie bands promoting music through Spotify, YouTube and NoiseTrade, there are global stars, like Ed Sheeran, converting customers at much higher volumes, with the support of marketing, advertising and PR teams across the world.
One of the biggest challenges when selling digital products and services is creating and sustaining a multi-channel pipeline that will support steady sales growth. In order to do this, digital producers and merchants need to identify the right channels for their brands. No one can afford to only populate a handful of channels; but at the same time, spreading yourself too thin can easily result in a dilution of effort and quality.
Brands need a keen sense for where their fans are, and where they are going. An ability to anticipate trends, such as the shift in the preference of younger audiences from Facebook to Snapchat and Instagram, is invaluable for long-term success.
For example, indie bands use Spotify, YouTube, NoiseTrade, and popular social channels, such as Instagram and Facebook. Whereas bloggers and vloggers, those wishing to emulate the success of Zoella, need a broader multi-channel presence (Twitter, Instagram, Facebook, Pinterest, Snapchat, etc.), supported by a YouTube channel and blog, with an e-commerce solution. Many also use e-commerce platforms, such as Shopify and Etsy, which can also incorporate a sales solution within other apps, such as Facebook Messenger.
Not only is the choice of platforms and channels somewhat bewildering, but the payment options customers need or want is equally daunting to the uninitiated.
Payment Solutions for Digital Merchants
Customers need choice, but they don’t want to feel overwhelmed when they reach the checkout. Far too many – around 69% according to the most recent studies – disappear at that stage. Ideally, merchants need a payment solution that can incorporate native options, such as the ability to purchase through iTunes and Facebook, whilst also ensuring mainstream options (Visa, MasterCard, etc.) are still front and centre.
PayPal is another popular mainstream option, although, for merchants, recent changes to the User Agreement mean that some digital goods and services – including gift cards – are no longer protected transactions. Merchants are at greater risk of incurring “friendly fraud” charges, so it’s worth trying to direct customers to other options, whenever possible.
Security should be a primary concern to digital merchants, especially with new GDPR legislation coming into force in May 2018. Now is the time to ensure your payment providers are going to be ready since merchants no longer have the option to pass-the-buck. Outsourced is not out of mind, and even with Article 50 fast approaching, UK data protection compliance is going to adhere to this new, more stringent, European legislation.
Merchants, especially those offering subscription services, can also offer the SEPA Direct Debit (SDD) solution, also known as an e-mandate. Providing merchants align payment solutions with the needs of the customers, securely, without overwhelming them with every option on the market, or delivering a poor checkout experience, the final stage in the sales funnel should serve to increase the conversion rate of fans into customers.
If you would like to discuss in more detail how to optimise your payment processes for digital goods, get in touch with a member of our team who will be happy to look at your options. Call +44 (0)808 301 8443 or email [email protected]