4 Ways Manual Recurring Billing Impacts the Customer Journey and Your SaaS Business

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Imagine a customer looking for a new software solution. After weeks or even months of vetting various software programs, the customer finally finds the one that’s right for them—and it’s your product!

They’re eager to get started, but they also come to the relationship with a set of expectations. Some of them are for your product: It needs to be dependable, and appropriate to their needs.

But so does your business. After all, if you can’t deliver on the promises that attracted the customer to you in the first place, why should they stick around?

At first, things go well. They think the product is excellent, it’s delivering value as expected, and they find your support staff to be friendly and helpful. Great.

But then the customer's first invoice arrives.

Imagine their dismay when it’s riddled with errors that need to be addressed. And when the second bill comes with some of the same mistakes, they start Googling your competitors.

While the customer had no issues with your business itself or the solution you're providing, they did have issues with being billed inaccurately.

The problem? Your outdated, manual-heavy billing process.

Manual and legacy recurring billing solutions introduce a wide range of errors and inconveniences that have a serious impact on your customers’ entire journey.

1. Inaccurate account data creates recurring billing errors

When that customer made the decision to subscribe to your product, they supplied your sales team with all the information needed to establish their account. Of course, this is pretty standard practice.

But then it came time for your billing clerk to transfer that customer’s data and subscription details from your business’s CRM over to it’s billing system—all by hand.

Error can rear its head right out the gate when a SaaS business is still using manual subscription creation and management processes. Humans inevitably make mistakes, and if one of those mistakes happens while your team is punching in a new customer’s data, chances are pretty good that first invoice won’t be accurate.

The mistake could be as small as a misspelled name or address, or as big as inputting the wrong subscription details. In the case of the latter, your customer won’t be pleased if they get assigned to the wrong plan or if they get overcharged on the first bill—or even the 51st bill.

Alternately, if you undercharge, your business’s revenue could be directly impacted simply because an erroneous series of keystrokes gave someone the wrong plan, price, or discount—especially if it takes a while for someone to notice.

Automated recurring billing platforms ease these early pain points in the customer experience.

  • They eliminate data error potential by integrating with your business’s CRM. Customer account data can be synched automatically to ensure nothing gets lost or mixed up during a manual transfer process.
  • They even help before account creation, during the sales process. Because adaptive recurring billing platforms offer catalog flexibility, your sales team can be empowered to present more customized plans and pricing offers to customers—offers that will be accurately transferred over to your billing team and that they’ll be able to deliver on with ease.

2. Unpredictably invoicing erodes the customer experience

A few months have passed, and the customer’s still around. There was a mistake on the first invoice—the customer got called the wrong name, and while they didn’t care for it, they’ve moved on.

That doesn’t mean you’re out of the woods.

  • Nearly 60% of customers will leave a business after several mistakes, and if you’re using a manual system to perform your recurring billing, mistakes have a fresh chance to show up each month.
  • Also, most customers expect to receive their invoices at roughly the same time each month—reliably, predictably. Not only does this build a sense of trust, but it also helps them plan their finances. But with a manual recurring billing process, it’s very difficult to invoice with consistency.

Recurring billing software automates the invoicing process ensuring accuracy and on-time delivery. Every. Time. And this benefit only becomes more pronounced as your business grows.

The more customers you have, the harder it becomes to manually bill with accuracy and consistency. An automated billing platform ensures your customers will feel well taken care of, regardless of whether they’re 1 of 100 or 1 of 10,000.

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3. Complex plan migration delays customers and creates revenue leaks

Let’s say things go well after that. So well, in fact, your customer decides to upgrade to a bigger plan. While this should be good news, it can also introduce several costly errors for a SaaS business like yours that’s still using manual billing processes.

Scenario one: You upgrade the customer's plan, but neglect to charge them accordingly. In this case, a very obvious mistake has been made and the result is needless revenue leakage. They’re getting more, but not paying more.

To add insult to injury, when your team eventually notices the mistake, you’ll need to bring that information to the customer. This makes your business look unorganized and unprofessional. The customer is beginning to lose trust and patience.

Scenario two: You upgrade the plan and adjust the customer account information accordingly, but it’s between billing periods. The customer won’t be charged for their upgraded plan until the start of the next billing period because your billing process can’t perform proration.

Scenario two is perhaps the most nefarious of all because no mistake has been made. Your business misses out on revenue simply because it doesn’t have the resources to get the money that’s owed.

It’s no wonder why. Businesses with manual recurring billing processes often have to take as many as ten different steps every time they upgrade an account, between:

  • processing the upgrade request
  • canceling the original subscription
  • creating a new billing schedule, and more.

A lot goes into each plan migration. And unfortunately, nearly every part of the process creates possibilities for human error, and none of it is quick.

Adaptive recurring billing software makes plan migrations much faster and simpler. With the click of a button, plans upgrade automatically. And customers can even be empowered to make real-time account migrations themselves through the use of a self-service portal.

Not only does automated self-service functionality help to eliminate human errors, but it also tears down a barrier to expansion MRR.

The likelihood of a customer purchasing again from a business is as much as 70%. The easier you make it for them to do so, the more likely it is you’ll expand your recurring revenue.

4. Manual dunning complicates the collections process

Your customer is checking their emails one day when they get a notification saying their service with your business has been SUSPENDED.

The culprit? Payment truancy caused by an expired credit card. Unfortunately, they didn’t even know their payment had failed…two months ago.

What now?

They need to either contact your business and go through the process of getting their account back into good standing, or they need to find themselves a new product.

A percentage of credit cards expire every single month. Based on this alone, your business will experience payment failure or delinquency pretty regularly. There are other causes as well—many of which are entirely accidental.

For example, the customer may have insufficient funds on their card the first time payment is processed. All totaled, roughly 1 in every 10 invoices aren’t paid on time.

Whatever the situation, trying to collect on aging receivables manually poses many challenges. Whether your process involves contacting the customer for new payment information or performing card retries, everything happens by hand.

Some of the time your efforts will be fruitless. Other times, you may retrieve your payment, but strain your relationship with the customer in the process.

Recurring billing software helps handle these pain points. The right solution:

  • automates collection reattempts of failed payments on a set schedule
  • sends email and SMS notifications to customers to let them know about failed payments (before their accounts get suspended), and
  • creates a detailed aging receivables report so you know exactly what’s owed, by which customers, and for how long it’s been aging.

These dunning management features make payment retrieval easier and more organized. They also increase the odds of account retention by creating a more pain-free experience for your customers.

Consistency is king in recurring billing

When it comes to recurring billing, customers aren't looking for an M. Night Shyamalan movie. There shouldn’t be any twists, breath-holding, or unexpected mistakes along their journey.

Your customers’ invoices needs to be accurate, predictable, and free of errors. And customers need to be able to update their subscriptions as and when needed with ease. In fact, they want every interaction they have with your business and your product to occur with ease.

And for your SaaS business’s purposes, billing shouldn’t be a source of revenue leakage. Account setup should be seamless, invoicing should be predictable, and dunning should be as painless as possible.

Automated recurring billing software takes care of these things for you, while also giving your customers a much better experience along the way.

Tags: Subscription Billing SaaS Billing

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