Payments-Led Growth: Diversify Revenue Beyond the Subscription
Stax Connect’s Kim Schwendeman, SVP of Payments Adoption, and Ray Lau??, VP of Marketing, came together to kick off the first-ever Vertical SaaS Summit, where vertical SaaS leaders joined to share strategies, perspectives, and insights to grow beyond the subscription.
Hosted by Stax and Sweetfish Media, the Payments-Led Growth session informed vertical SaaS leaders about the keys to success in today’s macroeconomic environment. By integrating payments into their technology, vertical SaaS companies can build a new pillar of revenue and incorporate a valuable feature for their users.
What is Payments-Led Growth, and Why Should Vertical SaaS Leaders Consider it?
Kim and Ray explain at the beginning of the session that, put Payments-Led Growth is thinking beyond the subscription. It’s a strategy for vertical SaaS platforms to drive revenue by integrating payments into their product offerings. That #integration of payments does a lot of things for a #saas company’s #customers but primarily reduces friction. Integrating #payments makes it much more straightforward for customers to conduct their business, says Kim.
Not only does Payments-Led Growth benefit your customers, but it also creates company-wide alignment across revenue teams, from product to sales to marketing. Payments as a capability drive significant, scalable, and sustainable business growth. “When you think of it, payments are just a natural complement to a SaaS platform’s product offerings.”
So, why should more vertical SaaS companies consider incorporating payments within their platforms?
From Explosive Growth to Today’s Macroeconomic Climate in SaaS
Since 2010, the industry has seen unprecedented growth in SaaS, with evolutionary changes in innovation across the ecosystem. Since the beginning of the pandemic, however, there’s been a slowdown in the economy, and SaaS is said to be experiencing its first-ever recession.
During this time, Kim recalls her experience in a previous financial organization, where she and her colleagues would have countless Zoom meetings to figure out how they could help their business owners and consumers lift the slowdown. Many businesses needed to incorporate more digital technology, including digital payments, to comply with COVID-19 restrictions and adhere to social distancing. Consumers were also more adaptable to digital changes, including those that may have been less inclined to before the pandemic.
This pull towards a digital economy lent itself to larger IT budgets and an emphasis on innovation in how goods and services are consumed and commoditized.
Today, we’re facing massive macroeconomic headwinds, with many signs of recession: inflation, rising interest rates, and decreased demand. As a whole, the SaaS industry drew down by 53% from Q1 to Q3 of 2022, and over 150,000 tech workers in the U.S. have been displaced.
Kim advises that growth and efficiency combined to create profitable growth will be critical for companies to thrive in the current economic climate—and that’s where Payments-Led Growth can help.
How to Succeed With Payments-Led Growth
As Senior Vice President of Payments Adoption with Stax, Kim recounts her experiences with partners from all ends of the spectrum in payments integration. Her most significant takeaway is that you must commit to driving revenue through payments to succeed.
While integrated payments are a great way to get to parity with competitors, that alone as a driving factor often doesn’t lead to success. Without a financial imperative with the intention of driving profitable growth, post-implementation can be stagnant.
Partners that successfully implement the Payments-Led Growth framework:
- Bake the financial reward into their AOP.
- Recognize that integration is just the beginning of their payments journey.
- Hire individuals to support driving adoption for new and current users.
- Don’t look at payments as a mere feature or product offering but as a priority and driver in profitable growth for their business.
Using Adoption Expertise to Leverage Payments
As mentioned previously, the initial integration is just the beginning of the Payments-Led Growth journey. Adding a feature such as payments can widen your product offerings; however, if it’s not marketed or part of a customer’s onboarding process, payments can often fall flat. Kim says, “It’s one thing to have a thousand customers and a payment capability, but if nobody’s using that capability, then you’ve got unrealized potential.”
That’s why many partners of Stax Connect lean on our team of adoption experts. Sales representatives are well-versed and highly competent in their software, but they’re not always payment experts. That’s where a strong payments partner, such as Stax, can come in—educating marketing, sales, and leadership on how to sell payments and drive awareness of payments as a capability.
Payments-Led Growth Success Stories
Integrating payments with Flexible Technology can dictate the path that makes the most sense for your business solution. With a white-labeled API and pre-built enrollment workflows, accepting payments can be done within days. For more advanced systems or platforms that want to own and monetize costs fully, fully ingesting an API with multiple payment capabilities is also a solution.
Stax also can provide partners with custom fee structures, surcharging, and other strategies to monetize their payment capabilities. Shelterluv, a platform for animal shelters and foster-care programs, uses custom fees in their checkout process to leverage payments for their non-profit business.
Final Word: Diversifying Revenue Beyond the Subscription
Many companies that consider incorporating payments into their products need to ask themselves three key questions:
- What payment capabilities do you need? Many payment methods are available for transactions—including ACH, split payments, Text2Pay, tokenization, and more.
- Who offers these capabilities that you can integrate into your SaaS platform? Some partners may have all the capabilities you need but offer limited support.
- How can you monetize your payment capabilities in the right way to drive growth for your organization and benefit your customers?
We believe that all companies are payment companies; they don’t know.
Typically, most software enables consumers to consume goods and services that must be paid for. If you don’t have a payments component to help, then you’re effectively pivoting your customers outside of your solution somewhere else, which creates friction for them in the long run.
Payments-Led Growth is about thinking beyond the subscription and how you can leverage payments to drive sustainable and profitable business growth. It is the key to success in the current economic climate.
Fuel Your SaaS Platform With Payments-Led Growth
Our experts are ready to help you launch into Payments-Led Growth. Ready to board? ?