How to Double Your Annual Plan Sales with BNPL for SaaS

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?

Instant cash boost

Reduce churn

Increased CLV

How to double annual plan sales?

Offer trial period

Offer discounts

Design your pricing page

Make it affordable with BNPL

Why is it important to offer annual plans?

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:

Instant cash boost

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. 

Reduce churn

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.

Increased CLV

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.

How to double annual plan sales?

Offer trial period

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:

• Determine the length of the trial period. For SaaS businesses, a trial period of 14-30 days is common.
• Tell your customers about the trial period. It can be done through your website, email marketing, or social media.
• Collect feedback during the trial period. This information can be used to make product improvements or to address any concerns potential customers may have.
• Follow up with users who didn’t convert to understand why, and if there are any ways to address their concerns.

Offer discounts

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:

• To make your discounts more effective, it’s best to keep them discreet. Consider using time-based pop-ups or small offers in drip campaigns.
• Use customer segmentation, and target your ads, emails, or website behavior at potential customers who may need a discount to finalize their purchase. 
• Set a time limit for the discount, so customers do not delay their purchase.
• Reach out to churned customers with a targeted discount. 

Design your pricing page 

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:

• The page should be easy to understand and should contain clear information about the features and benefits of the annual plans.
• The value should be clearly displayed on the pricing page to show the benefits of choosing an annual plan over a monthly plan.
• The pricing page should be visually appealing and easy to navigate to provide an excellent user experience.

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.

Make it affordable with BNPL

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:

1. Partner with a reputable BNPL provider, whose terms suit you and your customers. 
2. Set up flexible payment plans, so your customers can choose the one that works for them.  
3. Promote BNPL options on the pricing page and via other marketing channels. 
4. Make the payment process easy and convenient for your customers.
5. Provide excellent customer service.

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. 

Let’s talk your revenue together

Amal Abdullaev

Co-founder at Comfi

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