What is Subscription Management?

Subscription Management – An Introduction

Subscription management means handling customer subscriptions and recurring billing on products or services. It involves the creation and management of diverse subscription plans, onboarding new subscribers, handling renewals, maintaining subscriber engagement, and more. Subscription management is essential for those businesses who operate on a subscription-based model. Examples of such businesses include SaaS companies (like Microsoft 365 and Canva Pro), streaming services (like Netflix and Spotify), and subscription-boxes.

Essentially, the goal of subscription management is to improve the service provision experience for both the business and the customer. It entails processes such as automated recurring billing, and invoice generation which ensure that the subscribers are billed error-free, and on time. Subscription management also involves integrating with payment gateways, or other external software such as accounting tools and CRM to upgrade a business’s functionalities.

Revenue optimization is the core objective of subscription management. A robust subscription handling software gives businesses insights into their key performance indicators, and customer activity. This data can be leveraged to make informed decisions, and maximize revenue. Moreover, subscription management deals with the changing customer needs and preferences. It involves managing any changes in the customers’ subscription plans, such as upgrades, downgrades, and requests for add-ons.

Subscription management platforms are also built to handle subscription renewals seamlessly. They provide consumers with a smooth and continuous service, while also collecting payment automatically. All in all, subscription management is dedicated to giving customers a stellar subscription experience to keep them committed. It also equips businesses with tools to react effectively to emerging customer demands, and dynamic market trends.

Why is Subscription Management Significant?

The current world is witnessing businesses of all sizes, and industries becoming increasingly subscription-based. Businesses offering cloud-based services, selling household products, and even food items are thriving on subscriptions. So what exactly is the reason behind the subscription business model gaining so much popularity? Some major reasons are listed as follows:

Recurring Revenue

Recurring revenue sets subscriptions apart from one-time purchases. Subscriptions get auto-renewed. This means that once a customer subscribes to a business’s services, that business derives revenue from that customer over their entire lifetime. Subscriptions render revenue more predictable and consistent as well. This financial stability is key in driving long-term business growth.

Customer Satisfaction

Subscriptions endorse long-term relationships with customers. Maintaining effective communication with customers throughout their subscription cycles not only leads to customer satisfaction, but also promotes customer loyalty. Excellent service delivery motivates customers to keep renewing their subscriptions. Customer retention is a much better way to achieve revenue goals than customer acquisition. That is because the former costs much lesser than the latter, while also promising consistent revenue.

Scalability

Since subscription-based businesses operate on cloud, it is much easier for them to scale alongside their customer base. That is because an efficient subscription management platform significantly reduces the administrative workload by automating processes.

Flexibility

Subscription-based businesses are highly flexible in nature. They have the choice to create multiple subscription plans, and assign a different price to each. Each subscription tier’s price reflects the value of the services offered in it. This flexibility empowers businesses to cater to a wide range of consumers, and develop a large subscriber base.

For a business to achieve these objectives to the fullest, effective subscription management is key. While good subscription management boosts business productivity and profitability, poor subscription management could lead to their loss, and ultimately to customer churn.

What is the Role of Subscription Management Software?

Subscription management software streamline subscription processes, and automate operations to make your employees’ lives easier. They deal with virtually everything that subscription management entails. Here are the main functions of a subscription management platform:

Automated Payment Processing

This software is in charge of automating the subscribers’ billing and invoicing processes. By letting such operations run on automation, it ensures that the customers are billed timely, and accurately. Similarly, it has in-built invoice generation and transfer features. In case of failed payments, it employs smart dunning to recover lost revenue.

Creation and Adjustment of Subscription Plans

Subscription management software enable businesses to conveniently create a range of subscription triers to suit their audience. They can always make modifications to these tiers according to customer demands.

Management of Renewals and Refunds

A subscription management platform facilitates smooth renewals, so that the customers receive uninterrupted service. It integrates with payment gateways to fetch payments from the customers’ accounts instantly. In the case of cancellations, it manages refunds where necessary.

Reporting and Analytics

An advanced subscription handling software provides real-time reports of a business’s key performance metrics. It also provides access to customer activity data, and trends in consumer behaviour.

Security and Compliance

Customer data and payment informed is stored in a secure way. The payments are processed via secure channels, and compliance to payment and tax regulations is ensured.

What are the Components of a Subscription Management Lifecycle?   

Customer Acquisition

Let us assume that a subscription-based business has launched. The first milestone for them to achieve would be customer acquisition. This is done though marketing campaigns, offering freemiums, and other promotional offers.

Customer Sign-Ups

The next step is to onboard the willing customers. A subscription handling platform ensures that the onboarding process is frictionless. Customer experience can be boosted via customized messages and emails, step-by-step tutorials, and proactive customer support.

Billing and Invoicing

The generation and transfer of invoices to the customers, and managing recurring billing throughout the customer lifecycle is a crucial aspect of subscription management.

Plan Changes and Discounts Management

Customers are likely to upgrade or downgrade their plans with time. They may also choose to include add-on features in their subscription bundles. Subscription handling platform facilitates all of these adjustments in a hassle-free way. Moreover, it also facilitates the management of any discounts and coupons that a business may offer.

Customer Retention

Another important step of subscription management is customer retention. It is possible by providing customers with a stellar service, and customer support experience. Moreover, it is important to personalize communication with customers, and keep them in the loop via updates so that they remain positively engaged.

Customer Renewals

It entails providing smooth and uninterrupted service to the subscribers as their subscriptions renew. Managing payment failures, sending timely reminders, and attempting payment recovery are also important parts of this stage.

Managing Cancellations and Reactivation

Cancellations are a natural part of the subscription management process. Keeping communication with lost customers alive, addressing their pain points, and offering them compelling incentives are key ways to win them back.

Service Improvement

It is necessary to take customer feedback, and incorporate it to enhance service provision, and remain committed to customer satisfaction.

How is Subscription Management Different from Recurring Billing?

Recurring billing and subscription management are two terms which are used in close proximity, but are not synonymous to each other. As mentioned above, recurring billing is just one aspect of subscription management.

Recurring billing tools or integrations ensure that the payment processing stage within the overall subscription management goes flawlessly. This includes operations such as invoice generation, safekeeping payment data, payment tracking etc.

On the other hand, subscription management entails a lot more than that. It represents all of those processes which get a subscription business running, and interacting with its customers.

How is Subscription Management Different from Subscription Pricing?

Even though both subscription management and pricing work together, they are entirely different processes. Subscription management refers to handling the entire subscription lifecycle from customer onboarding to customer churn. Subscription pricing on the other hand is all about allocating competitive prices to your services or subscription bundles.

Businesses often employ dynamic pricing to attract customers while remaining market competent. Some examples of dynamic pricing strategies are volume and tiered pricing, usage-based pricing, demand-based pricing and geo-based pricing. Implementing the right pricing model/s counts a lot when it comes to enhancing customer experience.

What are the Benefits of Proactive Subscription Management?

Improved Customer Retention

Providing subscribers with a frictionless subscription service encourages them to renew their subscriptions every time the payment is due. This translates into a consistent and reliable revenue stream for the business.

Revenue Optimization

Managing the subscription payment processes proactively minimizes the risk of revenue leakage, and boosts business efficiency.

Boosted Productivity

Smart subscription management platforms improve business performance by automating a huge chunk of subscription operations. It frees up the time of business professionals to focus on strategizing and upgrading service quality.

Data Insights

Businesses get access to detailed customer reports. They can identify the trends in customer behaviours, and their preferences in order to fine-tune their services according to customer needs.