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What is Subscription Management?
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Subscription management refers to customer lifecycle operations like managing trials, assigning credits, issuing refunds and making mid-cycle subscription changes.
How Does Subscription Management Work?
Subscription management is the process of managing business models where products or services are sold recurrently for monthly or annual revenue, with the use of a subscription management software. Recurring billing is possible through employing a subscription management solution alongside a payment processing solution, which handle the automated billing processes.
The popularity of subscription models has increased with growth of the software-as-a-service (SaaS) market and with more and more businesses and investors being drawn to the idea of collecting recurring revenue in exchange for a product or service offered continuously. Unlike one-time purchases, subscriptions have the benefit that they can be renewed automatically – the buyer’s pre-authorized credit card or checking account saved on file is charged monthly or yearly, guaranteeing a steady stream of revenue for the business.
Subscription management allows operations like the following to be performed by merchants: making updates to customer information; updating or downgrading their subscriptions; managing of trials or trial-to-paid upgrades; customer service; communications with customers and dunning management; and reporting based on revenue and subscriber behavior.
Subscription management offers many benefits to both the customer and the merchant. It is cost-effective for businesses because the substantial costs of building and managing their own system are eliminated. With subscription management software in place, businesses can offer their customers’ flexibility in pricing plans and access to different product price “tiers” to meet their needs, building their trust and loyalty.
Subscription management software helps your business meet strict revenue compliance standards, especially concerning revenue recognition (which means that payments are not immediately recorded as revenue, but instead are applied over time).
Other benefits include security for the customer, as subscription management software must be PCI-compliant to protect their private information, as well as a wide offering of payment options. Subscription management is automated, freeing up the merchant to focus on other matters, like marketing and customer service.
Additionally, reporting functionality allows the merchant to obtain real-time reports that provide vital information that will help guide business decisions. Another benefit is that subscription management software offers self-service portals, so your customers can make some of their own changes. Finally, a comprehensive subscription management platform can be designed to interact with other integrations, in order to access or share information from other platforms.