Growing a business can be difficult and time-consuming, and managing a subscription-based business can be even trickier. After all, you have customers who are relying upon your service to deliver their goods as expected, and this is far harder to achieve than you may expect. Whereas a traditional ecommerce business only has to worry about single, individual purchases, subscription-based businesses are responsible for providing an ongoing service.
Customers who choose to commit to recurring payments expect a flawless experience, and it’s up to you to deliver it. In the early days, this may be simple enough, especially if you’re dealing with a small number of customers. However, as your business grows, the margin for error is likely to increase.
Luckily, there are subscription management software solutions available for small and medium-sized businesses that make keeping track of recurring billing easy. Read on to find out more about these tools, and why they’re a must if you’re using a subscription-based business model.
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What is subscription management software?
Subscription management software lets you create, manage, and track recurring revenue for your customers. It can help you increase your revenue, reduce your customer support burden, and automate billing. Depending on the solution you choose, it can also help you better manage your contracts, keep track of your billing cycles, track and report sales activity, and much more.
There are several subscription management tools on the market. However, the best ones should have the ability to help you manage recurring revenue while also helping you reduce your customer support burden. This way, you can focus more time and resources on growing your business. There are a variety of subscription management solutions on the market, but Chargebee’s website is a great place to start if you want to know more.
How can subscription management software benefit your business?
The best way to explain how subscription management software could help your business is by running through a few use-case scenarios.
- Scenario 1: Great news — you’ve just attracted a new customer! You’re starting to bring in fresh business after introducing a free trial period for first-time customers. However, there’s one small problem — many of your customers find that they’re still undecided about whether to continue using your service after their trial period has ended. You’re starting to receive requests to extend the period. Subscription management software will allow your customer service executives to perform these actions for your customers.
- Scenario 2: Your business is steadily growing, and you’re now managing multiple customers — marvelous! However, when customers are using your product, they need a range of billing-related services. For example, there may be a need to upgrade or downgrade. Does your System of Record reflect this change if it occurs during a recurring billing cycle? (Which is just a fancy way of saying "Is this data updated everywhere it needs to be in your master digital ledger?"). Could you initiate a conversation at this point, to establish credits, track ad-hoc charges, or offer discounts to a plan you want them to switch to in place of this one? Subscription management software can help with this.
- Scenario 3: Oops — a customer has decided to leave. Losing business is never a great feeling, but with a subscription-based business, you must remember that this loss is equivalent to the lifetime value of the account, not just a single sale. Consequently, the impact of churn is far greater. In these situations, it’s crucial to understand what requests were made, how your team handled them, and whether recurring billing was augmented with a layer of subscription management.
Subscription management and recurring billing are always tightly integrated — one offering automation and intelligence, the other flexibility and control. Customers lose trust in businesses when subscriptions are poorly managed, and if this is the case for your business, you’re likely to see high churn rates.
By proving that payments are secure, responsive, and seamless on your end, customers will forget about billing and focus on what you are providing. Building strong, positive customer relationships is the key to any recurring business' success. If you have a well-designed subscription management system, every signup can be the start of something beautiful, rather than an ongoing headache!
What are the most common subscription pricing models?
There are many different kinds of subscription pricing models to choose from, but some of the most common ones are listed below. No one model is better than the others; each one is designed to support specific product/service types and customer needs. Here’s how they work:
1. Static/fixed pricing: Customers pay a fixed price for a service or product. This style of pricing is commonly used by mobile internet providers, for example, where customers pay for the amount of data they expect to use.
2. Usage pricing: Customers are charged based on their usage — think of this as a pay-as-you-go service.
3. Tiered: Customers can choose between multiple subscription tiers, with each level offering differing degrees of functionality. The greater the functionality, the higher the price.
4. Block (or tier) pricing: A price based on quantity. This style of pricing is common in enterprise-level software, where customers can choose to purchase multiple licenses for use on several workstations.
Things to consider while choosing a subscription management software for your business
Selecting the perfect software solution for your business is never easy. Your choice should be based on the needs of your business, what the software needs to do, and how it will fit into your existing infrastructure.
To make things a little simpler, we’ve cooked up a few questions that you should ask yourself before you commit to buying a subscription management package:
- How does your chosen subscription management software deal with cancellations, pauses, or returns/refunds? Can customers perform these actions themselves?
- Does the software allow you to create discounts, add promotions and edit trial periods?
- Does the software allow changes in billing frequencies? How does the software manage proration?
- Can the software help with branding through personalized email marketing automation?
- Does the software allow for easy metrics tracking? Which metrics can you track?
- Can I test and compare different subscription plans or pricing tiers against each other?
- Does the software offer any protection against fraud?
- Are there any third-party integrations available? How can this software connect to my existing payment and billing systems?
All in all, you’re looking for a software package that will make the day-to-day management of your business as easy as possible, and improve your customer’s overall experience.
Subscription management software can help you manage recurring revenue and reduce your customer support burden. However, not all solutions are built equally. If you’re considering the implementation of subscription management software into your business, be sure to shop around.