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Subscriptions used to be easy to manage. Users would buy packages for pre-determined prices and usually renew that deal every month or year.
However, since subscription models became the de facto choice for B2B software companies (aka SaaS), it’s no longer straightforward to manage customer contracts.
Discounting, 100’s of SKUs, multi-year deals, and usage-based pricing (among others) have all added challenges that require different types of tools and processes.
Some of the common ones are:
These challenges can significantly impact the revenue and growth of your business. Take failed payments, for example. They alone account for $145.9 billion in sales that businesses lose out on every year.
Effective subscription management is about creating a predictable, expandable, and profitable revenue engine.
In this article, we’ll discuss how to easily manage subscriptions for SaaS to make the whole process secure and efficient.
SaaS subscriptions present unique challenges that demand careful attention. Here are some specific factors that make SaaS subscriptions so difficult to manage:
SaaS businesses experiment with different pricing models to accommodate various customer segments and needs. Think about it:
Businesses also leverage special deals and discounts to attract new customers and upsell/cross-sell to existing ones. It adds to the complexity. These customers have various agreement details, such as payment schedules, renewal dates, and cancellation policies.
This creates complex billing scenarios that can be difficult to track and manage manually and is something basic billing tools cannot handle.
Manual processes are prone to time inefficiencies and errors and break down as you add customers. Tracking the subscriptions on spreadsheets leaves a lot of room for improvement.
A minor typing error or miscalculation can lead to loss of revenue or customer data. This approach isn’t simply feasible for any growing SaaS business.
The growth of your SaaS business leads to a diversified customer base. Managing different billing cycles, payment terms, and upgrade options becomes difficult. Let’s say you have to:
It is difficult for the team to manage, which leads to additional RevOps and Finance hires being needed.
When you store customer data, you're responsible for keeping it safe and using it according to the rules in place.
Laws like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) have strict requirements on how companies gather, store, and make use of customer data.
Managing customers and keeping their information secure gets tricky when you lack the right processes and systems.
Net revenue retention (NRR) is essential for SaaS companies and is determined by your product's value and renewal strategy. When it’s good, it's easier to sell expansions at renewal time. When it’s bad, customers churn that could have been saved.
When your customer base gets into the hundreds, you may find it difficult to keep track of renewal dates and stay proactive. You are required to send timely reminders and process payments without any delay. Otherwise, it may lead to missed renewals that contribute to customer churn.
Involuntary churn occurs due to payment failure, which leads to subscription cancellation. Since involuntary churn is avoidable, it requires additional resources that would help you deal with payment failures and help the customer update account information with ease.
All the burden that comes along when you try to deal with involuntary churn makes subscriptions difficult to manage. Since payment failures can affect your MRR, it is something you can’t ignore.
SaaS subscription management should integrate with your CRM and accounting software for a seamless flow of data and interoperability across your tech stack.
Incompatibility between different software can lead to delays and even loss of data. This results in missed invoices, over-charging customers, and ultimately, leaving money on the table.
There are a few tried and tested ways to understand how to easily manage subscriptions for SaaS with ease. Let’s have a look:
Manual processes, data collection, and maintenance are prone to errors and require effort. Automating error-prone and repetitive tasks can help you minimize the errors and free up the valuable time of your team.
Cacheflow’s advanced automation features offer a comprehensive solution that includes automated invoicing and payment processing, subscription lifecycle management, dunning management, and more.
Subscription management software offers features that help you manage every aspect of the subscription process. With Cacheflow, you can:
Proactive and transparent communication through the subscription journey is important for retention. You don't want to start talking about renewals only a month before the renewal date.
As the customer uses the product and you demonstrate product value, start talking about renewals then. You should have the first conversation no later than six months out from the renewal date and increase the frequency as you get closer.
[READ MORE ON HOW TO WIN SAAS RENEWAL DEALS]
Accurate and up-to-date data is important for managing subscriptions. Regular auditing of customer data helps you remove any inconsistencies or incorrect billing information that may lead to failed payments and cause frustration.
A data validation process during onboarding can help you out here. Have a system in place to automatically verify email addresses and payment information. Give customers the charges of their account details and encourage them to update the information with self-service portals.
Scalability is an important aspect to consider for successful SaaS subscription management. The billing process gets complex with varying subscription tiers, pricing models and billing frequencies as your customer base grows.
You also need to anticipate advanced features such as multi-currency billing, tax automation, or integrations with enterprise resource planning (ERP) systems when you plan for future growth.
A subscription management system provides the ecosystem that you need to track all the related components. Here’s how it helps improve the whole subscription management process:
Subscription management software automates the recurring billing process. It also helps your team move away from repetitive tasks like manual invoicing, payment processing, and subscription tracking that are prone to error. Reduced manual intervention can help the team focus on more strategic initiatives like customer acquisition and retention.
Automated calculations with subscription management software minimize the risk of human error. This leads to fewer or no discrepancies in the billing, which reduces the number of customer disputes. Accurate data collection and reporting contribute to better decision-making. It allows your business to optimize strategies and forecast revenue with better precision.
Customers get the autonomy to manage their subscriptions through self-service portals. They can select terms, payment plans, and methods, all within our white-labeled checkout. On top of this, automated communication features like personalized onboarding emails, renewal reminders, and notifications about upcoming changes keep customers informed and engaged.
The analytics dashboard in subscription management software provides real-time revenue insights, including MRR, TLV, delta MRR, churn rate, and other critical KPIs. These insights help you get a comprehensive overview of subscription health. You can use this data to identify trends and areas for improvement.
Scalability is an important aspect to consider for successful SaaS subscription management. As your customer base grows, the billing process gets complex, with varying subscription tiers, pricing models, and billing frequencies.
They can process high volumes of transactions and manage complex billing scenarios with ease. This scalability focuses on keeping your billing operations efficient and accurate even as your business expands.
A SaaS-specific subscription management platform helps automate each aspect of your subscription process, from customer checkout to invoicing and billing from a central location.
Get the power of automation, data-driven insights, and seamless integrations with Cacheflow.
Book a demo and see how Cacheflow can make the whole subscription management process a breeze.
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