You tell someone you’re going to pick them up at 1:00 and you show up at 12:54, the nutritional info on the box of crackers says a serving is 9 and you have 10, you refer to both periwinkle and azure as blue –even the most pedantic of people probably wouldn’t notice, let alone call you on any of these things.
But then there are other things where being accurate is the only valid option. Frank Robinson coined what is probably the most famous quote about the importance of accuracy “…close only counts in horseshoes and hand grenades”, but considering his livelihood, Wyatt Earp’s “fast is fine, but accuracy is everything” may be even more apt when it comes to how accurate you want to be when it comes to the bottom line of your subscription business.
Unfortunately, close is as close as many subscription businesses get – especially those who are trying to manually take care of their billing. Subscriptions coupled with usage charges, coupled with taxes, coupled with change, introduce lots of different areas where businesses need to be careful that they are paid properly or even paid at all.
2 areas where accuracy is a huge challenge for subscription business:
The easiest way to explain prorating is by example: A customer who is billed monthly on the first of the month makes an additional recurring purchase on the 10th of the month. To align this new purchase to their existing billing date they should only be charged for two thirds of the first month. For some reason, when this calculation is performed manually people almost always get it wrong. They charge for the wrong part of the month or they do the math incorrectly, and more often than not, it’s the business that is shortchanged. These types of calculations are critical so you need to make sure their accuracy is driven into the collections so you know whether you’ve collected or not.
Most often the collection status drives either access to a service, or shipment of a product. You don’t want to ship a product to a customer if their credit card just failed, equally, you probably don’t want to allow your customers to login to their service if they aren’t up to date on their payments. Making sure downstream systems such as your shipping, service fulfillment, and provisioning systems, are notified of collections issues, and that there’s accurate account status management for customers is imperative to ensuring you aren’t inadvertently giving things away for free.
In future posts we’ll look at more areas where accuracy is a challenge when it comes to selling products services, or a combination of both by subscription.
To learn more about this topic, sign up for our free, live, webcast, presented by Fusebill CEO Steve Adams, taking place Thursday March 20th at 2:00 PM Eastern: Swimming in SKUs? Keep Agile with Subscription Pricing Register Now!