A glance at Spotify’s business model would lead many to believe it was built for a world where people were staying in more. But for Spotify, there was a problem.
As Covid-19 saw large segments of the planet shut down, it would have been reasonable to expect this music streaming company wouldn’t just remain steady, but actually experience growth. After all, such was the case with Netflix, which managed to pull in more than 15 million new subscribers in the early months of the pandemic.
However, unlike most of the other major streaming services out there, many of Spotify's users held free accounts. In the past, advertising revenue had made these accounts profitable, but as businesses worldwide were reducing or eliminating their advertising budgets to brace themselves for the pandemic, Spotify found itself in a real pickle.
The company pivoted hard and quickly into the realm of original content, uploading more than 150,000 podcasts in a single month.
Furthering this move, the business also began announcing exclusive partnerships, such as with podcasting giant Joe Rogan and the Joe Rogan experience, and one of the most popular esports, League of Legends—both of which bring huge active user bases to the table.
In a matter of weeks, the company managed to shift gears in a way that won’t just help it during a pandemic, but may actually improve its market position for many years to come.
The story of Spotify is one that many SaaS companies should take to heart. The ability to change business tactics quickly allows for adaptation to the unexpected and even creates a competitive advantage.
And for many companies, the pathway to ensure this is by moving quickly toward digital transformation.
Making a transformative digital infrastructure pivot
Creating a strong digital infrastructure at the core of your SaaS business ensures it will be agile enough to survive when the unexpected inevitably happens.
And adding modern digital solutions to your business’s revenue operations (revops) in particular is among the best ways to guarantee adaptability and efficiency across your entire operation—not just during a crisis, but every day of the year.
Consider the story of EnVue Telematics—a successful telematics business that made its own transformative revops pivot.
As a subscription-based business that manages asset and device tracking for its clients, its team often lagged for weeks and lacked the full insight it needed when it came to data management, reporting, and forecasting capabilities. Additionally, its complex billing process was taking about 24 business hours a month to complete.
EnVue Telematics quickly solved these challenges by integrating adaptive fintech into its digital infrastructure—a comprehensive automated recurring billing platform.
Its team members now enjoy significantly enhanced access to customer and financial data, and in real time for more immediate action and decision making.
With its platform, the business has a reporting dashboard filled with account and subscription information. This has made it easy to track important performance indicators like sales, subscription growth, and customer churn.
Previously, it took the company’s leadership up to a couple of months to pull together everything needed to perform budgeting and forecasting. After its digital transformation, that process was whittled down to half a day.
And that complex, 24-hour-long billing process? It’s now completely automated. Less time spent on billing means more time spent where and when it’s needed most.
Real-time business intelligence enables companies like EnVue Telematics to adjust budgeting and business strategies rapidly to keep up with changing times. And automation of recurring tasks creates a more streamlined, pivot-ready organization.
Read the complete EnVue Telematics case study.
The transformative benefits of an adaptive automated billing technology system
A comprehensive automated billing system is an adaptive digital solution that helps subscription businesses optimize their operations for agility in three key areas, including:
- pricing and catalog
- business insight and reporting, and
- revenue operations.
Enhancements in these critical areas enable companies to enjoy a level of responsiveness that allows for smart business decision-making and quick pivoting when necessary.
1. Pricing and catalog
Adjust your subscription business pricing as needed and without delay
The need for agility when it comes to pricing strategy may not be readily apparent to all SaaS businesses. If your catalog is relatively simple, a plethora of pricing options may seem superfluous.
But this way of thinking doesn’t take into account the many variables that can crop up.
For example, inflexible pricing makes it difficult to create tailored pricing plans and offer unique discounting options that can increase the appeal of your products or make them more approachable during turbulent economic times.
It’s similarly challenging to keep pace with what your competitors are doing, or even to reach customers that don’t easily fit into a “one size fits all” pricing plan.
Take Audible as an example. The audiobook subscription site usually starts at $15 a month. However, it periodically offers new customers a discounted rate of $7.99 a month for a trial period, and the company is also known for attempting to retain churning customers with further discounts on their monthly subscriptions.
Audible’s fluid and flexible approach to billing not only enables it to attract new customers, but also to better retain the ones it already has.
An additional benefit of a flexible pricing structure is the ability to easily try popular new billing models. For example, many SaaS companies are offering the choice of pay-as-you-go-type plans that see their customers being billed based on the amount, product, or features used.
Pricing inflexibility can be frustrating for customers and stifling for marketing and sales teams. At the same time, legacy billing systems are unable to provide the flexibility to deploy pricing changes on the fly. Finance teams are usually apprehensive about the impacts of pricing changes to accounting processes like revenue recognition, accounting ledger support, and forecasting.
But by making the digital billing technology transformation necessary to achieve agile pricing, it’s easy to turn on a dime to deploy multiple variations of usage-based pricing, one-time pricing, hybrid pricing, and any combination of these.
The flexibility allows for expansion and growth as changes in the market require you to adapt your business model. Quick pricing changes are accommodated without having to allocate sizable development resources to ensure that integrations with accounting technology and processes are seamless.
Hand-in-hand with being able to pivot your pricing on demand is the ability to introduce new subscription products and bundled plans without delay.
And for this, you require catalog flexibility.
Scalability with minimal overheads
Catalog flexibility gives businesses the ability to adjust their product and plan offerings in real-time so they can go to market exactly when they need to—and again, without having to involve a team of developers.
With a flexible catalog, your subscription business can change and bundle the products it offers—which could be any combination of recurring services, one-time charges, or physical goods—however it needs to. With legacy systems, these changes require the reallocation of development resources. Current integrations with ERP systems need to be re-adapted.
However, an adaptive billing system accommodates these changes within a few clicks and allows your business to make these strategic changes without the need for added resources and time-to-value overheads.
Catalog flexibility allows for pivots as big as Spotify’s, or as small as slightly tweaking a package to better suit the interests of a single potential customer that’s on the fence.
Seamless plan migration
Subscription-based businesses with legacy billing systems know full well that the very common occurrence of customer plan migration can cause headaches. It happens all the time: a customer likes your product but decides they need a bigger or small subscription plan. Or maybe you’re offering something entirely new they’d like to take advantage of.
Performing this process without agile automation can be complex and process-heavy. It also introduces the possibility of human error, which both undermines customer confidence and creates problems for your earnings reporting.
Fortunately, with an intuitive adaptive billing technology solution, this process can be broken down into a single step or two—enabling your support staff to handle subscription plan migrations seamlessly, with the press of a button.
And customers love when they can get exactly what they want when they want it.
2. Financial reporting and business insights
As shown earlier in the EnVue Telematics case study, having real-time access to your subscription business's financial and subscriber data can make a huge difference when it comes to business agility. In fact, it can have a strong end-to-end impact on every area of your revenue operations.
Comprehensive financial reporting provides your sales and marketing teams with near real-time account receivable revenue impacts of their efforts. Having the ability to create sales reports and compare them to historical time periods enables marketing teams to identify peaks and valleys that speak to the effectiveness of their actions.
And if something isn’t working, they can switch gears fast.
With effective reporting, marketing teams can also use can also real-time and historic data to continually evolve their ideal customer profile and to pinpoint products and plans that are most in demand.
Similarly, sales teams can use comprehensive business information to target best fit leads and to sell them on best fit products for their needs. They can also adjust their goals and forecasting based on real-time data, establishing a more accurate picture of the business’s overall health.
Finally, customer success teams can use comprehensive reporting to learn more about the customer journey as they go to increase retention and to drive revenue.
By tracking cohorts of customers, team members can identify common churn points to implement effective mitigation tactics precisely when needed. They can also determine when may be good times to upsell customers on additional features or plans.
3. Optimize your revenue operations
Transforming your subscription business’s revops infrastructure with recurring billing software creates agile possibilities throughout your entire business.
Unlike manual and legacy billing solutions that tend to require complex processes to work within your greater digital infrastructure, these platforms are API-driven and enable seamless integration with your business’s other critical software solutions.
Modern adaptive billing technology knocks down departmental siloes and allow for a holistic view of the entire customer journey.
When a business is prospecting for leads, these leads are often nurtured within some sort of CRM solution. Being able to seamlessly transition leads that become customers into a subscription management platform eliminates potential cracks in the customer journey.
It also ensures information and details are captured and communicated, maintaining a single, accurate source of information for your entire team to continue guiding the customer along their path to success.
From within your subscription management platform, customers can then be properly billed and maintained on a recurring and ongoing basis.
Everything from customer success software to usage tracking and even top accounting solutions can all be plugged in to ensure your business continues growing a satisfied customer base, scaling its recurring revenue, and maintaining best business practices.
Prioritize digital transformation of your subscription business
It’s true that subscription-based businesses are often well-positioned to enjoy consistent, predictable recurring revenue, even during times of uncertainty.
However, it’s also true that recent history has proven businesses of all types need to be able to pivot quickly to weather storms and demonstrate continuous growth.
Pandemics are atypical: the need for maintaining a competitive tech stack is not—especially an element of it that’s so directly tied to your cash flow.
Automated recurring billing software optimizes business productivity, increases flexibility and opportunities, reduces the potential for human errors, and improves data visibility. Furthermore, it provides the agility to pivot revenue operation on a dime to keep pace with business, customer, and market demands.
Inability to adapt to rapidly changing market needs and conditions results in a competitive disadvantage and puts your business at risk.
Committing to a digital transformation doesn’t just keep you competitive on rainy days. Rather, an automated billing system’s true benefits are experienced daily by many different facets of your business.