When you are managing a subscription business you will face many challenges. Customer acquisition and retention are normally the prime concern for many. However, numerous SaaS start-ups believe billing to also be a major concern that confuses them and lowers margins.
Your SaaS business depends on the subscriptions from users to generate the majority of your revenue. Without an efficient system to collect the subscriptions, you can expect high cancelations and poor uptake of higher level or add on services.
Therefore, you need to establish steps so users understand the recurrent billing pricing and are encouraged to pay on time to maintain your business’ cash flow.
The problem is that many SaaS businesses make several mistakes in their attempts to regularly bill clients. Here are some of the common mistakes made:
1. Making No Reference To The Charges
Customers need to know the reason why they are being billed, the amount they need to pay and when it should be paid by. If the charges are related to a renewal, upgrade or special offer, you’ll also need to inform the customer and this is best done via email.
It is best practice not to send billing charges through a generic email informing the customer that their credit card will be debited a certain amount. Instead, put your customer at ease by providing as much information as possible about the billing.
2. Sending The Receipt After Processing The Charges
You should always attempt to make the client aware they are being billed, before the payment is due to be charged to their account. This means that you should be sending a friendly reminder and an invoice prior to the renewal date.
If you don’t do this, then you could end up wasting funds processing refunds for clients who don’t wish to continue with the subscription. Alternatively, you could be given a chargeback request. You’ll also suffer from a damaged reputation as people will find this dishonest.
3. Poor Customer Support
Customers aren’t as price sensitive as some businesses make out. Many consumers will prefer to buy from a company with a good reputation and excellent customer service even if the service is offered cheaper elsewhere.
You need to put as much effort and funds into your SaaS customer service team as you would in the development, distribution and marketing. The customer service team can be worth the investment by helping to retain clients for longer, increasing their life time value and a contributing factor in clients deciding to upgrade or buy additional services from your subscription business.
To help with customer service, create guides on how to troubleshoot most problems and have them available on your website. You should also employ 24/7 customer support through all communication mediums like email, phone, online chat and even social media.
4. No Marketing Copy In Your Invoice
Finally, you should also promote other services and deals that you are currently offering customers on your invoices. This is a great way to build sales of complimentary services. It is far easier to sell to an existing customer than it is to a new customer and therefore your business can grow faster by offering great deals to those already known to the business.
There are several mistakes that SaaS subscription businesses are making in their online invoicing process. One of the best ways to combat this is to use a system that can process the subscription billing for you. Therefore, you won’t make the same mistakes as other businesses and you’ll see an improvement in retention and customer lifetime value without much effort.
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