06.16.09

Building a membership business (Part 1)

Posted in Business Builders, Direct Debit, Growing Membership at 10:36 am by matt

At PeopleHub, we service several different business types, but as specialists in recurring, direct debit type payments, it is usually subscription based services or clubs which have the greatest need for our products.  We refer to these businesses as membership businesses and while they operate in different fields and service different demographics, the successful membership businesses share a common set of qualities.

Membership businesses are generally built around the following concepts:

  1. There is a common purpose or interest bringing a group of people (for example sailing, breeding canaries, sport or reading)
  2. Members are willing to pay an ongoing fee to be part of this group
  3. Members are provided with some material which identifies them as part of the group (for example a shirt, badge, certificate or piece of equipment).

We’ve been fortunate to speak to a number of successful membership organisations over the past 5 years and the list below describes the key activities they’ve undertaken to build their memberships from 1 member to thriving communities.

  1. Identify the key common needs of the group and go out of your way to deliver on those needs.  Successful membership organisations are not built over night, but the fundamental element of any successful organisation or club is that they have identified the key, common need of the membership base and they deliver on it.  Remember people don’t have to be part of your club, so unless you are delivering on that thing that made them become a member in the first place - they will leave.
  2. Provide a group identity - this is important whether you are a football group or a member of an exclusive club.  Members like to be recognised by other members and other people who share their interest.  A strong form of membership identity whether it be clothing (an AFL club), a membership card (a golf club) or some other trinket that provides an identity for the club or membership organisation (for instance BNI provides a badge and business card holder) is a common element in all the successful membership organisations we have observed.
  3. Reduce the barriers to entry - The goal of most (and I use the word most rather than all) membership organisations is to grow their membership base.  Quite simply, the more members a club has, the greater its resources to fulfil the common needs of the group.  Make it easy to sign up for club, collect an ongoing subscription fee rather than a large upfront fee and reduce the time taken to process an application.

We will add to this list of the upcoming months, but would love to hear your thoughts on growing a membership business or club.  What strategies have you implemented, what worked and what didn’t.

Also if you have any questions about PeopleHub and how our direct debit and billing solutions can assist your club, please do not hesitate to contact us.

    06.10.09

    PeopleHub Online - it really is that simple

    Posted in Direct Debit at 1:37 pm by matt

    Ok, by popular demand I am posting a series of questions we are regularly asked through the various forums and communities we operate in.  This is by no meas an exhaustive list.  Please feel free to post any further questions or comments and we’ll answer them where we can.

    Q. How long has PeopleHub been in business?

    A. PeopleHub has been helping businesses around Australia for 5 years now.  During that time, our systems and procedures have been refined to give your business “MORE TIME, MORE MONEY AND MORE FLEXIBILITY.”

    Q. I need a custom report for my business, can PeopleHub develop them?

    A. Yes, we will gladly develop any additional reports you require at a small charge.  These reports will be automatically sent to you at the intervals required by your business.

    Q. I’m not really technically minded, how can PeopleHub help me with this?

    A.  PeopleHub’s online system has been built with you in mind.  You want to be up and running quickly, without having to read large user manuals.  If you are experiencing any problems getting started, simply call PeopleHub and we will step you through setting up your first 10 customers.  We guarantee you will become an expert in PeopleHub Online within a week of using the system.

    Q. Can I change payment and customer detail for individual customers?

    A. Yes it is a simple process through PeopleHub Online to make these alterations. You can debit accounts on any working day and at whatever intervals agreed to with your customer. All changes through PeopleHub Online are made instantaneously.

    Q. Can I alter a customer’s payment terms or payment schedule?

    A. Yes, PeopleHub provides you with a simple editing feature that will allow you to change the payment amounts, edit a single payment within the schedule or skip one or more payments.  We are committed to giving you MORE TIME and through our online system you can manage these alterations easily and simply.

    If the contract between you and your customer changes however, you may need to complete a new direct debit form.

    Q. When do I receive my funds from PeopleHub?

    A. PeopleHub clears funds to your account daily.  The basic clearance rules are as follows:

    • Payments collected on Monday - clear to your account on Friday
    • Payments collected on Tuesday, Wednesday and Thursday - clear to your account the following Monday
    • Payments collected on Friday - clear to your account the following Tuesday.

    At any time, you can log into PeopleHub and get live status updates on your payments.  Every time PeopleHub deposits funds into your account, you will receive an email containing the payment details as well as having the same reports posted to your secure PeopleHub payment site.

    Q. What happens if a payment fails?

    A. PeopleHub will notify you immediately through our failed payment report.  You will receive an email detailing the customer, reason for failure, how many times the customer has failed in the past and their contact details for immediate follow-up.  We can also notify your customer of the failure through our SMS facility.

    Q. Do You Charge for Defaults and Payment Failures?

    A. No, there are no additional fees when a payment fails.  At PeopleHub you will only pay your standard 88c transaction fee giving you more money to spend on your business.

    Q. Can PeopleHub integrate with my membership software?

    PeopleHub has a strong development area and have published a programming interface that will allow your software to integrate seamlessly with our payment system.  You will be able to update customer details and payment information in your membership software and it will be automatically updated in PeopleHub.

    Q . What kind of reports will I receive from PeopleHub?

    A. PeopleHub will email you important reports such as out “Payment Summaries” which provide detailed information on the deposit PeopleHub has made to your account and “Failed Payment Summaries” that detail the reason why a customer’s payments have failed.

    All reports are sent in a printable format as well as in a spreadsheet so you can also run your own analysis.   All reports are sent daily.

    Q. How quickly can I get my PeopleHub account set-up

    A.  We can have you set-up and ready to commence payment processing within 24 hours.

    Q. Can PeopleHub automatically send out payment reminders to my customers?

    A. PeopleHub can send both email and SMS reminders to your customers letting them know their payment is about to be made.  No only does this give your customer peace of mind, it also reduces the chances of your customer’s payment defaulting - saving you time and your customer from incurring fees from their bank.

    Q. Do I have to pay any set-up costs to get my clients on your file?

    A.  No, if you are creating customers in our system, you will never have to pay a set-up fee.  We will simply provide you with our easy to use online system and you create the customer file.  PeopleHub will only charge a small fee to enter the form at your request, otherwise it is FREE.

    We always welcome your quesitons - if there is anything we have missed, please do not hesitate to contact us for further clarification.

    05.22.09

    But wait….. there’s more - how to implement payment plans for your product

    Posted in Business Builders, Customer relationships, Direct Debit, Growing Membership at 11:12 am by matt

    We get enquiries from many different business owners about our payment solutions.  They suspect that we might be able to help them but don’t really know where to start and what the adoption of a payment plan type set-up might look like.  The truth is, payment plans have been around for years.  From placing a surfboard on lay-by when I was young to buying a set of steak knives from Tim Shaw, payment plans have been a simple and easy to implement strategy to make products more affordable.  PeopleHub’s direct debit system can make payment plans a real option for your business.  Below I’ll tackle some of the regular question.

    How do I make sure I get paid?

    You will note from a previous post on avoiding the pitfalls of direct debit that there are some risks of providing direct debit to your clients.  There are a couple of strategies that you implement as part of your payment plan or lay-by system.

    1 - Don’t provide the product until you have received full payment. This is obvious I know, but with the proliferation of rent to own products, many products are provided upfront with payment collected over a period of time, with the option to purchase at the end of the rental period many customers expect to receive their product prior to payment being made in full.

    2 - If you are in an industry where the product is supplied upfront and your costs recovered over time, it is essential for your business that you have your lawyer draft a clear set of terms and conditions that will protect your business from receiving part payment.

    3 - Remember a direct debit request form is not a payment agreement. Many of our new customers signing up for a PeopleHub account think that by having their customer sign a direct debit form they have a contract.  This is not the case.  A direct debit authority gives PeopleHub permission to debit your customer’s account.  Your customer can cancel a direct debit authority at their bank, however if you have a signed contract, they will still need to pay you through some other means.

    I survive on low margins, how can I afford PeopleHub’s direct debit solution?

    Our direct debit solution is very inexpensive.  There are no set-up costs or monthly minimums.  At 88c per transaction, it is not a costly system and if used correctly, it will not only save you money in your accounts receivables, but will also provide a tool to grow your business.

    You can actually implement PeopleHub at NO COST to your business.  Most people realise that the freedom to pay a product off over time will incur some additional cost and will accept PeopleHub’s transaction costs in order have that convenience.

    A final word on direct debit and payment plans

    Direct debit is a reliable means of accepting payment, but it is important you implement your system in a way that is also convenient for your customers.  You can do this by aligning the payment dates with their paydays and by providing email and SMS reminders of upcoming payments to your customers.  These simple strategies can asisst in reducing your failure rate and providing a lot of goodwill to your customer.  As a consumer, there is nothing worse than being overdrawn and then being debited.  Not only will you need to find the funds to pay your next installment, but you will more than likely have to pay a default fee to your bank for being overdrawn.

    PeopleHub can assist you in providing this flexibility as well as reminders to your customers.  Call us to discuss our system and how direct debit may fit into your business.

    05.12.09

    Customer Relationships - what are “terms of trade?”

    Posted in Business Tips, Customer relationships, Direct Debit at 2:41 pm by matt

    There are a multitude of small business transactions carried out daily without a piece of paper being signed. These are small exchanges where the goods or services are provided and payment is made at the same time. In most cases, these transactions pass without event. There may be instances where the product has a fault or the consumer believes the product does not meet its advertised standard. The Trade Practices Act provides the legislative tool to manage these instances when they arise.

    At PeopleHub, most of our clientele are either providing a service at a discounted price in return for the consumer guaranteeing their custom for an extended period of time (for example a gym membership) or alternatively they have provided a physical product and are collecting payment for this product over time (for instance a coffee machine).  These long term customer relationships, while also covered by the Trade Practices Act, generally involve some form of contract or terms of trade.

    What are terms of trade you might ask?  It is simply a contract between you and your customer which sets out the rules for the purchase of the goods or services.  It spells out the obligations of each party in the transaction and makes it clear what the implications are if these obligations are not met.  We regularly come across businesses who do not have this fundamental document when trading.  The most common reasons are:

    1. “I don’t want to pay a lawyer to develop my contracts”
    2. “I don’t need them because I am on friendly terms with my customer”
    3. “It is too much paperwork for me and my customers”

    While some people feel unconfortable getting contracts signed, they are essential should the relationship between two parties deteriorate.  This may be due to a customer paying late or the standards of the product or service dropping.  In either instance, a contract can provide the basis for moving the relationship back onto a positive footing.

    An example of this is, many small businesses expect to be paid within 30 days.  When you notice a client beginning to become a little tardy with their payments, pointing them back to the clauses within your contract can be a simple way to get things back on track.  It does not have to be used as a big stick, but people are sometimes forgetful and paying your invoice may fall somewhat down their priority list.  If your friendly reminders do not get you anywhere, then it may be necessary to refer to the contract.

    Remember - speak to your lawyer.  These standard terms and conditions can be written for under $2,000 and are a valuable part of your business.

    Does your business have terms of trade? How do you use them?

    05.04.09

    The unofficial top 5 tips for starting and growing a business

    Posted in Business Tips at 3:10 am by matt

    As PeopleHub enters its adolescence as a business, we thought we’d reflect on some of the key things that have got us to this stage and share them with you to assist you in your business.

    The mechanics of starting a business are well published on several Australian government sites.  So rather than reproduce some already excellent information and advice, we’d thought we’d provide you with our top five considerations when starting a business.

    1. Do something you love  - This is one old chestnut that gets trotted out by everybody who has written a motivational or self-help book.  It is almost a cliché, but the simple fact is there is no such thing as “Mondayitis” if you are doing something you believe in and are passionate about.  In all honesty, PeopleHub was not founded to be a payment business, we are passionate about helping small business and by providing a reliable and flexible direct debit solution we are achieving exactly what we set out to.
    2. Map out your business model - I cannot believe how helpful this is to a start up.  The business model explains how you take the inputs to your business, convert them into a product or service that is of value to a market and then get paid for them.  There is a great episode of South Park where the gnomes are starting a business selling underpants; their business model is reflected in this picture .  At the very least your business model will help you develop the assumptions with which your financial projections are based.  And the great thing about documenting your assumptions is that you can revisit them if your business is not performing how you expected it to.
    3. Put together an official board or ‘friends of the company’ - The Napoleon Hill classic “Think and Grow Rich” describes the establishment of a “Master Mind Group.”   In principle these are people who have specialist skills and knowledge in areas you do not.  At PeopleHub we have a group of mentors that we share information about our business and obtain their feedback.  This has been extremely useful in identifying other revenue opportunities, getting the company structured right and generating new ideas that we simply could not have developed on our own.  Through our mentor meetings, we discuss strategic issues and generate an activity list that we go away and work on.  We provide feedback on the progress that list of activities at the next meeting and then move onto the next part of our business.
    4. Understand whether you are selling plain milk or flavoured milk.  This was one lesson that took us a long time to learn.  Yes, you want to be a client focused organisation and yes you do want to offer good customer service, but all of these things need to be considered in terms of your pricing strategy.  Virgin understands that it sells white milk or a no frills product. If you want to watch the little TVs in-flight, then you pay extra and if you want to eat a packet of chips, you pay extra. On the other hand if you are flying QANTAS, all these little ‘extras’ both in terms of service and product are seemingly provided free.  The trade-off is, that you will generally pay a higher ticket price when flying QANTAS. In the end, you are not doing your customers or your business any favours by over-serving and under charging them. The reality is, in most cases, it is not sustainable.  We’ve found that when you offer your customers a fair price and are upfront about optional extras they may be interested in, both you and your customer wins.  You can earn a return on your effort and your customer enjoys that additional flexibility or utility of the product extension.
    5. Always look for ways to improve your business - The successful businesses of today were not the same 20, 15 or even 5 years ago.  While it is easy to poke fun at a business like Microsoft, they are embarking on a series change to their business.  They have dominated the desktop market for the best part of 15 years.  They are now focusing on ‘search technologies’ and web-based software products because they believe those areas represent the future.We are always debating what will make our customers more successful.  The 3 areas we focus on are; giving you more time, more money and more flexibility.  We are constantly developing concepts around these areas and the PeopleHub of 2014 will be much changed from the PeopleHub of 2009.

    What are some of the lessons you’ve learnt in business?  We’d love to hear your stories, so please take the time to comment on this blog and share your stories.

    Direct debit - A great tool for your business (Part 1)

    Posted in Direct Debit at 3:02 am by matt

    Direct debit is not a new payment method.  In fact it is a proven and reliable means of collecting fees and payment instalments across a number of industries.  In fact the number of direct debits has increased 10% annually for the past decade with approximately 2 million direct debit transactions being process daily in 2008 (Ref APCA).

    So why is direct debit so popular and why are businesses using it?

    1. Direct debit gives you more control over your debtors.  Often small business owners issue invoices, nominate payment terms and on the date they expected the funds the payment is not made.  Obviously people are busy but these delays in payment can seriously affect the cash flow of a small business.Direct debit significantly reduces the time it takes for your business to be paid.  Payments are made on the agreed date between you and your customers.
    2. Direct debit can also increase the attractiveness of your high value products.  Many of our retail customers use PeopleHub Online to sell their products by accepting instalments over time.  In this way they make their products more attractive and thus easier to sell.
    3. Direct debit can assist in automating the collection of regular payments amounts from your clients.  It can be time consuming to invoice and reconcile the regular the payments of your customers.  Direct debit and the systems that support this particular payment option can significantly save your business time in these activities.

    Stay tuned for part 2 of this series.  We would love to hear how you use direct debit and any questions you may have on the PeopleHub system.

    Avoiding the pitfalls of direct debit (Part 1)

    Posted in Business Tips, Direct Debit at 2:59 am by matt

    While it may seem strange for a payment company to spell out the risks of direct debit, we believe it important to provide a balanced view of some of the difficulties that can arise.  By understanding some of these issues, your business will be able to better navigate the traps of what is otherwise an excellent method for collecting your regular payments.

    The first and most obvious issue with direct debit is that the account you are attempting to debit may have insufficient funds.  This is logical given direct debit is a biller initiated transaction; it is not possible to know whether sufficient funds exist prior to debiting the account.  Not only does a default require some action from you, it can also mean your customer has incurred a fee from their financial institution.

    As a business there are several things you can do to reduce this risk, but they all essentially relate to communicating with your client:

    1. Ensure it is clear in the contract when payments will be debited and then provide a copy of that agreement to your client for their future reference,
    2. Send reminder messages to your client when a payment is about to be debited,
    3. Provide adequate notification of any changes to your direct debit clients, especially around public holidays when funds may not have been debited on the normal day the customer would have expected, and
    4. Align the payment date with your customers’ paydays.

    Now, there are several businesses that will manage customer defaults on your behalf by sending letters and calling your customer, but the easiest (and most inexpensive option) to avoid defaults is to keep the communication channels between you and your clients open.  Remember, your customer relationship is the most important commodity to your business, manage that relationship well and you will not only reduce your defaults, you can avoid employing a 3rd party to manage your customer relationship.

    One of the other drawbacks of direct debit is the payment or payments are contestable.  A customer can contact their bank and contest a payment on the grounds that (a) there is no authority to debit the account or (b) the transactions were not authorised (this could be the amount was not correct or there was a payment double up).   When this occurs the bank will request a copy of the signed direct debit authority, as well as any other supporting.  The most common issues experienced by our customers are:

    1. The customer has used their spouse’s account to make the payments without obtaining the spouse’s signature on the form.  Remember, it is the account holder’s signature that is required authorise a direct debit,
    2. The account details have changed and the business has not obtained a new authority for the new account details. By re-issuing the direct debit request form with the new account details, you are protecting business from having funds reversed from your account
    3. The biller is posting a reference to the customer’s bank statement that does not make sense to the customer.  Remember, your customer identifies money withdrawn from their account by reference on their statement, not the amount.  Keep the reference on the statement simple and relevant to your trading name or industry.

    In the upcoming weeks, we will look at some other pitfalls to direct debit.

    04.29.09

    Home

    Posted in Uncategorized at 6:52 am by matt

    Welcome to Direct-Debit.com.au! This site is designed to help you get the most out of your billing process in general, and direct debit in particular.

    Here you will find lots of information to help you decide what is best for you, and what to look for in your billing partner. Use the menu on the right to check out the helpful articles on the topic

    Please take the time to read this site now, because it will hopefully save you lots of time later on.