As a subscription business grows, it develops and pursues innovative ideas. From new products or product versions, to new approaches for managing customer accounts and interactions, these pursuits are necessary for staying relevant and competitive.
One collateral effect of these efforts, however, is increased segmentation of a business’s departments. Each department uses different software to track its own relevant data—Quickbooks for accounting, Salesforce for customer relationship management (CRM), Netsuite for ERP (Enterprise Resource Planning) etc.
In such a scenario, it’s understandable that customer information winds up fragmented, or spread across teams in bits and pieces, without a unified source. This problem is only amplified the more complex a business model becomes.
Consider a traditional order-to-cash architecture: a CRM platform generates a quote for a one-time purchase, which triggers a linear process, moving from quote to order, fulfillment, invoicing, collecting, revenue recognition, and typically ending at an enterprise resource planning (ERP) platform.
A subscription business model is more complex. While the process still moves between CRM and ERP, there is an ongoing and constant flow between the different steps. New quotes are generated while, simultaneously, orders are fulfilled, invoices created, revenue recognized, etc. It’s easy to see the potential for data to get tangled in the process. When this happens, the customer experience inevitably suffers.
The lack of a Single Customer View (SCV)—where everyone in the business has access to all of, and the same, information about each customer—makes incorrect invoices and backlogged collection mechanisms inevitable. This creates billing disputes and customer friction.
Crucial revenue collection, generation, and recognition data need to come from a unified system in order to enable an accurate picture of the financial health of a business.
A comprehensive subscription billing platform achieves this necessary balance, providing a single source of truth (SSOT) for revenue generated, and also creating a seamless experience for the customer.
A robust subscription billing platform doesn’t just automate sign-ups, activation, cancellation, payments, dunning management, and more. Additionally, it provides valuable, useful revenue data to just about every business department, and unifies that source of information across the board.
Beyond billing subscribers
The consolidation of user account management with billing on an automated system means less room for human error, time saved, more power in the customer’s hands through a portal, and churn prevention.
But these platforms benefit more than just the billing department.
Let’s take a look at how other departments benefit from subscription billing software, and how those advantages are passed on to the customer.
Keeping sales informed to reduce churn
A complete subscription billing platforms track metrics like customer lifecycle and churn. This tracking and reporting can even be done by cohort, enabling a business to identify trends.
One particularly useful tool for the sales department is activation cohorts. Tracking customers based on the month they signed up allows the sales team to see long-term customers’ contributions to current sales volume. These reports also provide insights into how long customers typically stay subscribed before they churn out, triggering retention efforts at that stage of the customer lifecycle.
Sales can also benefit from the feedback received from automated cancellation processes or links to surveys on invoices. If customers are churning out and/or reporting that they didn’t experience what they expected after engaging with the sales team and signing up, it might be time for sales to adjust their approach and clarify expectations.
Clarity before purchase makes certain only good-fit customers buy the product, which ensures a positive experience and increased retention. Subscription billing software analytics help identify where those gaps between expectation and reality exist so that they can be addressed.
Empowering marketing to respond in real-time
Marketing can use a subscription billing platform’s tools to get to key markets quicker. An intuitive billing platform simplifies pricing management of new offerings, decreasing the time necessary to execute a go-to-market strategy. The platform also allows marketing to track results and make adjustments easily, all without IT involvement.
Comprehensive subscription billing software also provides the information necessary to identify and narrow a business’s target audience by showing which customer cohorts are most satisfied (above average lifecycle, upgrading subscription, purchasing add-ons, etc.). This helps to inform and shape marketing’s understanding of best-fit customers and adjust the target audience accordingly.
Modern subscription billing platforms allow for risk-free promotion and coupon testing without putting development efforts into business processes and “live” systems like accounting. This empowers marketing to both be creative with, and also fine-tune, their efforts for maximum benefit. And, once the right customers are on-boarded with the right messaging and terms, they’ll be more likely to stick around.
Easing the demand on accounting
It’s no surprise that subscription billing platforms are loved by accounting departments everywhere: there’s just so much they simplify.
Subscription business models have the potential to make accounting complicated. Upgrades and downgrades, add-on charges, and usage and hybrid pricing for multiple customers create ever-varying revenue information that becomes impossible to accurately track manually as a business scales.
Modern subscription billing solutions automate:
- Tax calculation
- Fraud management
- Accounting and financial reporting
- Revenue recognition
Revenue recognition in a subscription business is of particular importance. Comprehensive subscription billing platforms completely automate the recognition of “earned” and “deferred” revenue, in compliance with ASC 606 standards.
The ability to know mid-cycle what revenue projections look like enables the entire business to operate more fluidly. The detailed reporting subscription management software provides also benefits departments like purchasing, whose budget is based on financial reporting. These real-time revenue updates allow businesses to make timely decisions that benefit departments and customers alike.
A true bird’s-eye view for management and the C-suite
ProfitWell teamed up with Drift to create a guide on the pillars of being a successful SaaS CEO. They are:
- Create customer-driven products
- Price your products based on value
- Manage the right metrics for retention and growth
- Ensure you have a go-to-customer strategy
The guide also lists important metrics like MRR, MRR growth, and revenue retention—all easily tracked when comprehensive recurring billing software becomes the financial system of record. Additionally, this software can provide data to inform value-based pricing decisions.
It is the responsibility of the C-suite to ensure a business’s success. Modern subscription billing platforms acting as a SSOT provide important information for decision-making, managing expenses and budgets, and monitoring progress toward reaching goals. In summary, they provide a more complete view of a business’s advancement.
Unifying departments’ data source to benefit customers
Traditional ERP systems struggle to consolidate customer and financial information seamlessly outside of a general ledger. With an agile subscription billing platform, however, all departments have access to a single, real-time, data-producing source which easily achieves the SCV. This reduces bottlenecks and pain points associated with disjointed organization relying on too many input methods for customer information.
SCV is elusive, primarily due to unintegrated legacy systems, poor data quality, and organizational silos. This is especially true for subscription businesses, where customer relationships and their cycles are ongoing, creating continual, non-linear demand for accurate and actionable data in real-time.
A robust recurring billing platform can leverage its integration capabilities to improve data quality and dismantle departmental silos. They act as a shared source of data across a business, putting the customer at the center to ensure success.