Your SaaS business’s subscription billing data does more than just help you balance your books at the end of the month. In front of the right set of eyes, it can act as a road map—detailing customer activity of the past while informing your decisions for the future.
It’s a capital mistake, as Sherlock Holmes says, to theorize before one has the data.
Through the strategic use of historic billing information, SaaS business teams can:
- improve the ways they understand their current and potential customers,
- take better-informed approaches to product development, and
- revamp their pricing strategies to broaden their products’ appeal.
We live in a data-driven world. Businesses that know how to apply their subscription management data productively are at an enormous advantage.
Know your SaaS customers better based on their subscription billing data
Picture this. Company X is in pretty good shape. Its marketing and sales teams had a successful year, bringing in more new customers than the year before and almost double the new MRR.
Things are on track, but how can Company X take things to the next level?
By taking a closer look at data from its subscription billing platform, Company X learns its best-fit customers are A, B, and C. Not only do these customers provide some of the highest MRR of its customer base, but they also have some of the highest lifetime value (LTV).
Company X then determines these best-fit customers:
- operate within similar industries,
- have similar ARR and employee counts, and
- pursue comparable goals within Company X’s software.
By extrapolating this information—and comparing it against even more of its best-fit customers—Company X can take a more informed approach to crafting its ideal customer profile (ICP).
Which of its customers are sticking with the product, realizing value, and growing with the product over time? On the contrary, which customers are churning quickly, under-utilizing the product, or have multiple failed payments?
Businesses with well-defined ICPs have a 68% higher account win rate than those without. They’re also able to frame their offerings in ways that better appeal to customers that will derive the most value from them—in other words, more best-fit customers. This often leads to lower customer acquisition costs and a higher retention rate.
It’s also worth noting that looking at your customer spending habits can yield even more important insights.
For example, as Company X looks at its breakdown of recurring payments in its billing system, it finds that a disproportionate part of its total revenue is coming from customers A, B, and C.
Of course, it’s not uncommon for some clients to contribute more than others. “Loyal customers” on average can account for up to 80% of a business’s revenue on a recurring basis. However, Company X now knows its good year could turn bad very quickly if A were to churn or if B or C were to dramatically reduce their spending.
Thanks to this data, Company X can now not only refine its offerings based on the unique needs of its ICP, but also refine its search for new subscription billing customers that will be a great fit. And of course, better-fit customers will be likely to spend more, stick around for longer, and derive the most value from their product.
Leverage subscription billing data to maximize your product development budget
Time and money will naturally necessitate that certain product features receive more attention than others. Most businesses assume they know which features warrant the most attention—either because said features suit their idea of what their product is, because that’s where their competitors’ focus lies, or because these features have been revenue drivers in the past.
Whatever the case, unless a business is taking full advantage of its subscription billing data, it runs the risk of putting too much stock in guesswork. Or, as business management expert Geoffrey Moore more bluntly puts it, without data they are “blind, deaf, and in the middle of a freeway”.
- Businesses that are analyzing data from a modern subscription billing platform receive insights into which of their products and add-ons are the most popular and which are poor performers from a revenue-earning perspective. With this information, the product team may choose to focus the majority of its effort on the more popular products, thus ensuring they remain competitive.
- Conversely, they might also come to find that a once-popular product isn’t selling as well as it used to, suggesting it requires some innovation and enhancement.
In any case, the data tells a story that your team can use to both maximize the use of your resources and increase the appeal of your products.
As Othman Laraki of Mixer Labs puts it, “Products tend to succeed thanks to a single core use that really matters to users”.
Subscription billing data helps you identify that core use and maximize its effectiveness.
Revamp your pricing strategy based on proven results
Personio is an HR SaaS solution that struggled out of the gate with its pricing strategy. Like most startups, it had to rely on little more than intuition as it crafted its product packages.
The subscription business had a tough time coming up with offers that cast a wide enough net.
- Some of its plans were perceived as too cheap.
- Others, too expensive.
- None seemed to hit the sweet spot that Personio was hoping for.
Pricing strategies can have a big impact on revenue. In fact, a 2018 report indicated that the right adjustments can lead to revenue increases of up to 10%.
For Personio, the answer to the problem was data. By taking a look at how its features were being used, the company was able to craft plans with a higher perceived value metric.
Typically, SaaS businesses offer 3-4 plan packages with each containing between 5-9 features. But while rules of thumb may be enough to keep you in business they won’t be sufficient for taking your product offerings to the next level.
Taking a more granular look at your subscription billing data enables you to make much more educated product packaging decisions.
For example, your subscription billing data can tell you:
- what sort of subscription options your best-fit customers tend to select,
- what products tend to get purchased together,
- what billing frequency do your customers seem to prefer – monthly or annual?
With this information from your subscription billing solutions, you can then create packages and pricing plans, and push offers that are better suited for your ideal customers.
Data is everything when it comes to competing in SaaS
Businesses that take advantage of their data are three times as likely to make good decisions for business growth than those that don’t.
Sure, you’ll enjoy enormous value from your subscription billing software by simply allowing it to automate your end-to-end recurring billing operations—everything from customer signup to revenue recognition. But, if you don’t take advantage of its comprehensive reporting capabilities to derive invaluable insights for other areas of your operations, you’re leaving a lot of value on the table.
As business analytics expert Thomas Davenport puts it, “Every company has big data in its future, and every company will eventually be in the data business.”
The world of the subscription business model is complex and competitive. Good implementation of your subscription billing data helps you maximize the efficiency of your efforts while staying ahead of the competition.