What can SaaS businesses learn from the fashion industry? You might be surprised.
Until recently, the quick and cheap production of fast fashion was all the rage. The process produces affordable clothing and the ability to release new lines quickly to meet new trends. As a result, competition within the industry has grown fiercer than ever, and consumers have endless affordable fashion options, creating a throwaway culture every new season.
For a while, few consumers had reason to consider pricier, more easily outdated fashion options.
However, market demand is beginning to change, with rising concern around sustainability and social responsibility. Slow fashion is coming back in style.
Today’s informed shoppers can inspect every part of a retailer’s supply chain for unsustainable or unethical practices. If found, they can demand change or shop elsewhere. In order to remain competitive and service new customer demand, fashion labels are being forced to evolve and transform their practices.
Rising to this challenge requires reconsidering everything from design and raw material sourcing to manufacturing and distribution. While many labels are still lagging behind the reignited slow fashion movement, the efforts others are making are resulting in more sustainable, functional, and durable clothing.
These products not only create better working conditions and eco-conscious practices, but also they lead to loyal, happy customers who keep the ‘everybody wins’ cycle going. This scenario is known as a virtuous cycle.
The SaaS virtuous cycle
Many SaaS business leaders are already familiar with the concept of a virtuous cycle.
Replace ethically sourced, produced, and distributed clothing with just about any pressing customer demand, and a successful SaaS executive will tell you how failing to meet it means failing to scale.
As an example, consider an older software product that transitioned into SaaS: Microsoft Office.
Before 2010, Office was only available as a single purchase. Customers would pay to download the software once—in some cases with the help of a CD-ROM or floppy disk—and then use the software until support for that version ended.
Today, while a one-time-purchase version of Office is available, Microsoft pushes customers toward Office 365—a subscription option with more features and support.
Office 365 is the result of a changing software industry standard: SaaS.
Before Office 365, Microsoft had little insight into how its customers were using its product or what issues they were experiencing. And when it came to resolving issues, the company was limited to rolling out each new version years apart, unlike the frequent updating made possible with today’s cloud technology.
For SaaS businesses—especially new ones—this level of insight and ability are par for the course.
Businesses can see what their customers need and want more easily and in real time. They can also be more agile in meeting those expectations, whether they relate to sustainability, functionality, or something else. Most importantly, customers expect SaaS businesses to do exactly that.
As a product improves, customer feedback fuels more improvement and growth, enabling a business to scale. The stronger it gets, the more customers benefit, and so on. No wonder Disney decided to take the SaaS leap with its streaming service Disney+; it’s simply good business!
By stepping into the content streaming market, Disney has become even closer to its consumers, learning more about their viewing habits and enabling ever-better tele-series and movie production.
The virtuous cycle demands insight, agility, and flexibility. And moving into the future with a digital transformation to a robust automated recurring billing platform can help SaaS businesses achieve all three.
How automated recurring billing activates the virtuous cycle
Recurring billing platforms automate subscription billing and collections, and integrate with CRM, accounting software, and other platforms you already use to maximize business agility and operational efficiency.
When it comes to tapping into the virtuous cycle, there are three specific areas recurring billing software activate.
1. Catalog flexibility.
As customers demands change, businesses need the ability to adjust their product catalogs accordingly. This includes altering, updating, adding, and removing products based on the demands of the market.
Being locked into a limited set of offerings simply because a billing platform doesn’t support catalog flexibility slows time-to-market, decreases competitiveness, increases churn, and can quickly turn into a vicious cycle instead of a virtuous one.
Agile subscription billing platforms enable businesses to adjust their catalogs in real time. Whether it’s recurring services, one-time charges, or even asset purchases, each transaction should be easily added, tracked, and clearly described on invoices.
Availability, agility, and clarity for both your customers and your team means everybody wins.
2. Pricing flexibility.
Product catalogs aren’t the only thing that affects time-to-market. Pricing also has a huge impact on a SaaS company’s success.
As Pedro Marzagao at The Startup points out, pricing has four times more impact than acquisition in a product’s growth. A pricing strategy based on a product’s value metric—backed by pricing experimentation—is the best way to leverage pricing for the most growth.
How does a subscription billing platform help? By enabling the implementation of pricing changes just as easily as catalog updates.
Straightforward and more complex subscription service models both benefit from the ability to respond quickly to the need for pricing change.
An adaptive billing platform also offers hybrid billing capabilities. SaaS businesses gain a competitive advantage when they can leverage sophisticated usage and rating billing strategies, including variations of recurring billing, one-time billing, discounting, and combinations of these to meet market demand and grow revenues.
From market demand to competitive analysis, and seasonal promotions to value alignment, a robust billing platform paves the pricing path to a virtuous cycle.
3. Process automation.
Many SaaS business leaders are unaware of everything billing automation entails and how it helps propel scaling.
Billing automation ensures new orders are processed and invoices are generated accurately and on time—possibly without ever lifting a finger. It ensures speedy revenue recovery on outstanding payments. It makes overdue customers easily identifiable. And it also reduces late and failed payments and with the help of automated dunning management.
Subscription upgrades and downgrades become seamless, and financial tracking and reporting are simplified for both real-time and monthly analysis. Truly robust subscription billing platforms even help you measure the performance of pricing strategies and marketing campaigns for improved go-to-market strategy and enhanced lead acquisition.
Eliminating bottlenecks and mistakes in billing and accounting means smoother customer experiences and reduced churn.
Additionally, the more a business can automate processes, the more time, energy, and resources can be funneled into more important objectives.
Automated billing: more than finances
Activating a virtuous cycle obviously takes more than getting billing right. However, getting billing right through an agile subscription billing platform certainly starts the journey on the right foot.
Thanks to their flexibility and automation capabilities, platforms such as Stax Bill make it easy to adapt to customer demands and leverage opportunities to scale. And with so much competition in the market—and consumer expectation levels at an all-time high—this agility is essential for SaaS billing success.
For SaaS businesses ready to start the journey toward their own virtuous cycle, choosing a billing platform and embracing this fintech digital transformation is a critical step. Get it right, and you’ll be able to focus on building the kind of relationship with your customers where everybody wins.
And that’s a look you’ll want to wear season after season!