A Case for Aligning Marketing, Sales, and Billing Departments to Grow your Subscription Business

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When most people consider the Mongolian Empire in the 12 to 14th centuries, the initial thoughts could be about the savagery employed toward creating and protecting history’s largest land empire. During that period, the empire’s armies killed an estimated 40 million people.

However, Mongolia’s infamous leader, Genghis Khan, knew the importance of trade in the 12th century and offered his protection to merchants from both the east and the west along what later became known as the Silk Road. Beyond protection, these merchants also benefited from elevated status, exemption from taxes, and even loans.

In turn, the well-protected trade route allowed the flow of products from spices and tea to books, as well as technology and ideas.

The symbiotic relationship between the ambitious and perhaps ruthlessly efficient emperors and the merchants demonstrates the importance for seemingly unrelated groups to support and benefit from each other.

Mongol-Empire

The Pharaohs of Egypt, similarly, depended on armies of scribes to keep account of taxes and efficiently manage royal logistics that kept the palaces well stocked with royal indulgences. The scribes also allocated rations to ensure the workers on any large construction project were fed enough to complete their tasks, such as work on the great Mer-Wer Canal that channeled water from the Nile to create a gigantic water reservoir. This artificially fed water body reduced flooding and irrigated the entire Fayum region.

Those who did hard physical labor on the waterway, the scribes busy with stylus input of logistical data into papyruses, and the twelfth dynasty Amenemhat Pharaohs were all dependent on each other for the smooth running of their objectives of the time.

Egypte_louvre_Amenemhat111Amenemhat III  completed the Mer-Wer Canal. Photo Credit

Department symbiosis within a recurring billing business

Fast forward to the modern business world and the subscription commerce era, and the need to work together is just as important as it was in ancient civilizations. It isn’t always easy to appreciate the need to work as a cohesive unit.

In general, businesses silo into different departments: sales, purchasing, accounting, marketing, etc. This segmentation ensures that the dispersion of responsibilities to these integral components–sales is in charge of revenue growth, accounting focuses on billing and collecting payments, and so forth.

Unfortunately, the division of responsibilities too often results in isolated departments. When someone in purchasing, for example, focuses on procuring the correct material to build a widget, why do the people shipping out that widget need to care about the procurement process?

The same could be said for a billing team with their sales and marketing counterparts. More often than not, the billing system is a back-end system run by Operations and guarded by Finance.

If a customer is invoiced and pays on time, how does this impact the sales and marketing departments? Well, it validates that sales and marketing efforts are targeting the kind of customer that finds value with your product, and is willing to pay for it within a reasonable time.

In the case of a problem with billing though, for example a certain cohort of customers that never activated the SaaS product they signed up for, that is a problem not just for the billing team. The ripple effect of a potential churn impacts the client success team.

Sales and marketing too may need to know about the problem cohort earlier than later. If your business cannot empower the sharing of timely information between these departments, valuable opportunities and information on prospect targeting weaknesses or strengths may be falling through the cracks.

Marketing and sales teams require full and frequent access to data around churn and customer lifetime value in order to make successful business decisions.

When departments work together, though, this information sharing helps strengthen the health of a business and their ongoing customer relationships.

Enabling sales, marketing, and billing alignment

In the traditional sales model, after the customer makes their one-time purchase, their relationship with the salesperson ends. With few exceptions, there was no need for the two to keep communicating. 

However, the recurring billing business model means that there is an ongoing relationship between sales and customers.

A customer has to be supported by the business toward a continuation for the relationship through each recurring billing cycle.

The sales and marketing department relies on the billing department to pass on essential information regarding the customer lifecycle and churn to help better direct their sales and marketing efforts.

  • Are they making promises to their customers that the business is not delivering on?
  • Should they be targeting a different demographic?
  • Is a certain kind of customer a better fit for the business?

A lot of time, effort, and cost goes into customer acquisitions, so it is imperative that the sales and marketing department can target the customer that is most receptive to the perceived value of the product.

Another critical reason the sales team needs to work closely with the billing department is to manage potential sales revenue opportunities, such as subscription renewals, up-sells and other valuable add-ons.

Billing processes that don’t allow for account status implementation which links to billing status can become a difficult obstacle for your sales team to tackle. If your customer can continue to use your service (beyond a reasonable grace period), when they’re no longer paying (like when a credit card has expired), the customer has little incentive to pay.

Even with reminders, if there is no consequence for non-payment, payment is unlikely. Without the flow of billing related information to the sales team, the team has little leverage when it comes to renewals, upselling, add-ons, etc., for what could be a large portion of your customer base

On the marketing side–teams would want to launch special promotions, offer discounts and coupons, etc. Lack of direct access to the billing system restricts the flexibility to run these tests without an impact on accounting processes. The current billing and accounting processes may not be ready to handle these frequent changes that are required to steer an agile business. This lack of agility is often a common challenge for marketing teams.

Now consider that the same issue could also impact new product launches. Obviously, the growth of your product catalog should not be affected by billing practices.

Another aspect of billing has an impact on pricing. The information generated by the billing department can help determine price testing. There are different subscription pricing strategies:

  • Standard pricing. With this traditional pricing approach, every unit costs the same amount, whether there is one unit or a million units purchased.
  • Tiered pricing. A business generates different levels of pricing, giving customers a discount for purchasing a certain number of units. Customers would pay the same price for the first tier, such as 1 to 500 units. Then they would pay a lower price for units in a second tier, and so forth.
  • Volume pricing. Volume pricing is similar to tiered pricing. With volume pricing, when a customer purchases their units, ALL the units are assigned the same price, depending on what level the unit reached. This encourages larger orders.
  • Stairstep pricing. With this pricing approach, there are different price levels. However, the customer pays one flat rate depending on the bracket their purchase falls into, versus paying per unit. So, for example, they might pay $100 for purchases in that certain bracket, whether they purchase one unit or 5 units.

 

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When it comes to pricing strategies, with access to customer-centered metrics, the marketing department can effectively formulate the best pricing plan for their customers. These metrics include

  • the customer lifecycle value (the amount a customer will spend with your business from the time they sign up to the time the contract ends),
  • customer acquisition cost (the cost of sales and marketing expenses divided by the number of new clients),
  • and the churn rate (determined by the dollar value of a customer terminating their subscription).

Additionally, the marketing and sales departments need to work closely with their billing colleagues to generate value-add messages for their customers. These messages might be announcing new product features, or suggesting features that a customer doesn’t use but may benefit from trying.

With billing statements being viewed by 97% of customers for 2 to 5 minutes at a time, it is essential for marketing initiatives to leverage billing processes, to grow the business..

A complete recurring billing platform empowers business alignment at scale

An automated billing system can alleviate a lot of the misalignment between the billing/finance, sales and marketing departments.

  1. Automated billing provides valuable metrics on demand. At any time, the sales and marketing departments can access reports to view churn rates, customer value, cash flow, earned revenue, monthly recurring revenue and subscription sales. It is important that these are intrinsic metrics in the system and are accessible to the sales and marketing marketing people–and that’s different from the whole “how do I go and collect money from my customers” process.
  2. A complete billing platform can enable sales to block features when customers are delinquent with payments, and then quickly unblock those areas when payments are made.
  3. Pricing tests and pricing changes are easy to make with an automated billing system.
  4. Other pricing approaches such as discounts, coupons and free trials can be implemented easily and automatically turned off, preventing revenue leakage.
  5. The marketing department can easily add coupons or other promotions.
  6. Better communication enhances the customer experience and helps to build a rapport with customers, a necessity in a time when e-commerce is growing rapidly and competition runs rampant.
  7. A professional billing system increases customer satisfaction. In fact, one healthcare industry study examines the fact that hospital patient satisfaction ratings tumble by 30% from the time they are discharged to the time that they go through the billing process.

 

Automating your billing system makes recurring billing much easier to manage, which means your billing department doesn’t just stay behind the scenes, generating invoices. And with valuable customer information easy to access, the other departments can also benefit tremendously.

This, in turn, strengthens the company, increases customer satisfaction and allows businesses to scale more efficiently.

Whether you’re a marketing expert in a subscription business, the clerk that handles the billing, or the CEO–it’s critical to ensure that all departments are empowered to work toward the growth of the business.

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Tags: Subscription Billing Recurring Billing accounting subscription management SaaS Strategy

Jacob Varghese

VP of Marketing, Fusebill. Jacob is an experienced marketing executive with proven strategic and execution capabilities. Over the past 15 years, he has successfully developed and deployed various demand generation, lead generation, customer acquisition, and retention strategies that align with business goals.

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