In today's connected and automated world, subscription models have become some of the most popular choices for
companies, yet they also come with new challenges and needs that may not be familiar to classic e-tailers.
SaaS businesses' main challenges revolve around continuously offering a product or service and being able to periodically collect online payments for these offerings. In this context, a subscription management software is at the very core of the business, allowing the company to automate billing, invoicing, communication, and customer management. And while the complexity of managing subscriptions may seem overwhelming for a business just getting started in the field, the right solution will significantly offload business hardships and offer the experience the customer is expecting.
What Is Subscription Management and
Why Do You Need It
This is where subscription management software comes in. The term is used to refer to a technological suite or platform, used by subscription companies, that handles recurring billing and collections processes, communication, and customer management. Recurring billing is an important part of subscription management, as we will see going forward.
Though there are multiple types of subscription management systems, some more lightweight and others richer in features, all of them achieve the same objective: allowing a SaaS business to manage subscription billing, by automating processes like:
Beyond recurring billing, this type of solution enables you to orchestrate the entire customer lifecycle from one system. All data - from when the user signs up or activates a free trial, through to product usage, and up until cancelation - can be stored in the subscription management software. Client actions and history is saved alongside full product catalogue and data, which we'll see is very valuable in subscription monetization processes.
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There are no alternatives for subscription management systems - in the absence of one, merchants have to revert to manual accounting, invoicing, and order management, which is very time-consuming and not resource-efficient. So, if you want to manage recurring payments, here is what you need to look for in choosing this type of platform.
Subscription Management Software Features
As we mentioned before, subscription software comes in all shapes and sizes. There's subscription management software for small businesses, with only the primary capabilities available, there's enterprise subscription management software, with more inclusive builds and capabilities, and there are even payment gateways with built-in recurring billing capabilities. To harness the benefits of a full subscription billing software, look for the following features in the software you're considering:
This feature allows you to accept recurring payments from and manage recurring billing for your customer base, charging the right accounts at the right time, making manual monthly payments a thing of the past. It also ensures that compliant invoicing and timely notifications related to payment aspects will be sent to customers. This capability is sometimes offered by payment gateways, as an entry-level alternative to the full subscription suite.
Optimizing for recurring revenue growth is an art, but our simple approach takes the crown. Review the tactics we've seen work best for our clients.
This capability encompasses all processes of storing subscription information, account history and changes, and pricing applied and its correspondent in your product catalogue. More complex subscription management solutions will also include options for customer portals, where subscribers can self-manage their own contracts and payments.
Invoices for subscriptions are not as simple as those for physical goods or one-time purchases, because the invoice document needs to accurately display all intricacies of the plan that is being billed. Billing details may involve data on usage, number of users, subscription upgrades, or tier transitions, which all have to be captured correctly.
Our invoicing capabilities ensure that easy-to-understand invoices are automatically generated and sent to your clients, in the intended format and with the desired information included.
A merchant's relationship with a shopper continues throughout the duration of the recurring contract, with an obligation for the former to keep the latter updated and informed. Your subscription management system, therefore, needs to include the option to set up automated email campaigns, to keep subscribers informed and your business compliant.
2Checkout's subscription management capabilities include versatile email marketing tools which will help you stay close to your userbase along their journey with your brand.
Churn Prevention and Dunning Capabilities
In order to maintain a successful subscription business, a lot of your efforts will involve fighting churn. To prevent revenue spillage from clients who intend to leave, make sure your subscription management solution includes tools to combat churning customers.
There are numerous options available to deal with voluntary churn - check if you have access to these with the provider you're considering. Use renewal campaigns (incentivizing clients with discounts to renew); auto-renewal enrollment campaigns (enticing users to turn on auto-renewals); show flexibility to your clients by allowing them to upgrade, downgrade, or pause their subscription; and don't forget to collect feedback on the subscription experience, especially among those considering cancellation.
Given the automated nature of renewals in subscriptions, when dealing with churn it's also important that the system have up-to-date data to work with, to successfully process a recurring payment. Tackling involuntary churn involves using automated processes to address failed payments caused by incorrect/ outdated user data. Simpler dunning tools notify a client directly when the payment fails, while more modern solutions can even preemptively ask the customer to update payment data which is about to expire.
2Checkout's voluntary and involuntary churn tools have got you covered when it comes to combating churn. Discover their uplift potential here.
This feature gives you access to real-time data and reports on how your customer cohorts and sales are evolving. Because a considerable part of managing subscriptions is doing retention correctly, as a subscription manager you're going to need a constant feed of metrics and insights to guide how to best retain and monetize users.
This capability makes it possible to automate some of the accounting processes of the sale, ensuring that revenue is recorded when the good/service is delivered, not when the payment is received.
2Checkout's all-in-one monetization platform offers full-stack subscription capabilities, including a payment gateway with 200+ currencies accepted; merchant account or PSP capabilities; subscriber management features; fully optimizable, brandable, compliant, and device-agnostic checkout; analytics and reporting; and dunning capabilities.
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Subscription Management for Customer Lifecycle Management
If analyzing feature lists does not make the decision easier, consider the customer journey and where in this flow you'll need help from the subscription management software. A full-stack subscription management software should have capabilities at each stage in the funnel, with proven benchmarks on how their tools make a difference.
Ask yourself which of these you'll need help with, then assess options in terms of supplier availability.
Subscription plan layout
Will you be testing new combinations or bundles or advanced rate plans? Do you need to set up variants of your subscription plan for different geographies?
Are you using free trials to get users to try your offering? Are you considering a freemium approach and need support to implement it?
Are you aiming for a branded checkout experience, optimized and localized? Do you want to offload PCI compliance?
Will you be using free trials or freemiums that need to be activated? Are you looking to automate onboarding?
Are you looking into a hosted customer portal to boost engagement? Will you require support for subscription management?
Are you allowing customers to upgrade or downgrade their subscription? Do you need user-automatic notifications to guide your users' journey?
We've got you covered for up-sell and cross-sell tactics: the 2Checkout control panel allows you to easily set campaigns for subscriber monetization. Promote upgrade offers through in-cart interstitials, post-purchased offers, and emails.
Are you planning to keep customers on-board via self-service support, assisted support, or a combination of both?
What payment methods do you need to tackle auto-renewals in your targeted markets?
Do you want to integrate a MyAccount area in your users' product dashboard?
How much are hard declines costing you? Have you considered revenue recovery tools to boost margins?
How do you go about subscription campaigns? Have you considered pausing subscriptions for users to avoid full cancellation? Will you be offering automated service incentives?
2Checkout's subscriber retention tools boast leading market benchmarks. See their impact on churn here to understand what we could be saving you in monthly revenue.
Answers to these directions will help you better understand what it is you actually need in terms of recurring billing management. You will probably need more and more capabilities as your SaaS business scales, so it would be worth exploring a subscription management software that has a modular design and will allow you to include just the features needed at a point in time.
Subscription management software is the competitive advantage that can help you stay relevant in the market and scale your business. Look for a full-stack platform solution that allows you to use capabilities in terms of business needs, one through which you can upgrade the customer's journey and increase their CLTV.
20,000+ customers trust 2Checkout to simplify modern commerce. Our subscription capabilities are
recognized yearly by market monitors, and we make subscription billing simple.
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