By Brandon Banks
The SaaS community is still reeling after the sudden closure of Silicon Valley Bank. Software and tech companies are now scrambling to reevaluate their business model and cash flow strategies in order for them to survive these unforeseen circumstances.
Rather than being an optional extra, integrated payments are now a necessity for software companies looking to succeed in this new financial landscape. The ability to accept within your software can add tremendous value to your business by opening you up to new customer segments and yielding higher monetization opportunities than ever before. Integrated payments allow you to expand your services beyond what was once accessible, and increase your overall valuation.
When done correctly, integrated payments can give your customers an improved user experience while simultaneously boosting the profitability of your business. It’s a great avenue through which to drive more income and reach never before accessible heights of success.
But, how do you know you’ve implemented integrated payments correctly?
There are six components you need to consider to create an effective integrated payment strategy. If your current solution doesn’t perform in one or more of these areas, it may be time to make a strategic shift.
Revenue and profitability
Integrating payments can be an excellent additional revenue stream. However, many SaaS companies mistakenly believe that their payment solution will automatically be profitable. That isn’t always the case.
It is important to continually evaluate your payments infrastructure to ensure that you are maximizing revenue opportunities and not settling for less than ideal margins and terms with payment partnerships.
This means taking a deep dive into your current payments setup. This includes analyzing the fees and rates associated with your payment processing partner, as well as assessing the overall user experience for our customers. By taking this approach, you can pinpoint areas of improvement and discover how to effectively incorporate new technologies and partnerships that will bolster your revenue.
Settling for less than optimal payments margins and terms can lead to missed revenue opportunities and ultimately hinder your business’s ability to grow and succeed in today’s competitive market.
Operational efficiency
To maximize revenue growth, it is critical that your company’s internal structure is designed to be compatible with your revenue goals. This means ensuring that all departments, from sales to marketing to finance, are working in alignment towards a common objective. Inefficiencies and silos within the organization can negate the net value of your payments strategy, hindering your ability to achieve your revenue targets.
It is important to regularly evaluate the effectiveness of your internal processes and identify areas where improvements can be made to optimize revenue potential. This includes streamlining workflows, enhancing communication between departments (and your payment partner), and investing in tools and technologies that can help drive efficiencies and reduce costs. By aligning your internal structure with your revenue goals, you can optimize your payments strategy and achieve sustainable growth over the long term.
An ideal payment partner should act as a consultant to help you achieve operational efficiency surrounding your integrated payment solution. There should be clear and consistent communication between your team and your partner. If your payment partner is slow to respond or doesn’t provide clear answers to questions, your operational efficiency will suffer.
Conversion and lifetime value (LTV)
The success of a payment service relies heavily on effective positioning and sales efforts that drive high adoption rates. If your payment service is not marketed adequately or your sales team lacks the proper resources to sell it, you may find yourself dealing with low conversion rates and high customer leaving.
To improve adoption rates, it is important to clearly communicate the value proposition of your payment service and address any concerns or objections that potential customers may have. This requires a deep understanding of the customer’s pain points and the ability to articulate how your payment service can help solve their problems. You should work with your payments partner to properly train your team with the information they need to succeed.
Additionally, providing excellent customer service and support can help increase adoption rates and reduce churn. The financial industry is notorious for poor customer service, so you’ll want to research your payment partner’s customer support ratings and net promoter score (NPS).
By concentrating on strategic placement, marketing strategies, and client service initiatives you can not only drive adoption rates but also sustain reliable income growth for years to come.
Speed to market and onboarding
A smooth and efficient onboarding process is crucial for ensuring that customers can start using your integrated payments service quickly and easily. If the onboarding process is tedious and clunky, it can slow down time to revenue and frustrate potential customers.
To optimize your onboarding process, it is important to streamline the steps involved and eliminate any unnecessary friction points. You should work with your payment partner to:
- train your team when and how to hand-off clients
- provide clear instructions and guidance on the sign-up process
- leverage automation and technology to reduce manual efforts when possible
- provide excellent customer support during the onboarding process
Streamlining your onboarding will help you gain revenue faster and foster customer loyalty, paving the way for a continuous uptick in profits.
Control and portability
Most SaaS companies don’t understand how important the merchant portfolio is for their payment and growth strategy. A merchant portfolio refers to the collection of merchants that have adopted your integrated payments service. Owning your merchant portfolio offers unrivaled versatility and scalability, making it possible for you — or a strategic buyer — to adapt , pivot, and scale as required to keep up with ever-changing market conditions.
However, most payment providers refuse to give up control of your merchant portfolio. When you’re tied to a rigid, long-term contract with your payment processing partner, it can be difficult to make the changes required for success. You may find yourself trapped in an agreement that doesn’t give you much room to maneuver or innovate.
This aspect of integrated payments has been largely overlooked by SaaS companies. In the wake of SVB closing, investor capital is at a premium. Owning your merchant portfolio can become a key differentiator in a highly competitive market.
Data transparency
Integrated payments can provide businesses with valuable data and analytics to inform strategic decision-making. With integrated payment systems, businesses can track transactional data in real-time, enabling them to better understand their customers’ purchasing habits and preferences. This data can be used to develop targeted marketing campaigns, identify areas for growth and improvement, and optimize pricing strategies.
Without access to this data, businesses may be forced to rely on gut instincts or anecdotal evidence, which can be unreliable and lead to costly mistakes. Ultimately, the ability to access and analyze vital payment data is essential for software companies looking to stay competitive in today’s rapidly changing marketplace.
Finding the right integrated payments solution
It’s time to stop settling for mediocre payment processing solutions and start thinking strategically. Your integrated payments solution should excel at the six components outlined in this blog. If it doesn’t, it’s time to make the switch to a better payment solution.
Why choose Nexio?
As opposed to other payment models dominating the market these days, Nexio empowers you with an integrated payments strategy, not just a solution.
At Nexio, we believe in fostering a fair and equal partnership with our clients. That’s why you’ll always maintain ownership of your merchant portfolio. With us by your side, you’re able to craft tailored solutions that adjust at whatever pace works best for the growth of YOUR business, not ours. Nexio can help you create a modern payments program that meets all your business goals, raising your valuation in the process.
Take charge of your company’s long-term success today — contact Nexio now to see how we can accelerate your growth with an innovative integrated payments strategy.