The subscription-based B2B SaaS business model is incredibly popular since it creates predictable recurring revenue streams for businesses and excellent opportunities for growth. However, unless your business uses a very simple subscription model and you don’t plan to change that at any point in the future, subscription billing can become very complex, very quickly.
You might be thinking, “Well, my payment gateway/ERP/CRM has a recurring invoice function built in, so I’m all set.”
Let me ask you this: Can your ERP billing module accept all currencies, integrate seamlessly with any new software you might implement in the future, and handle one-time charges and complex subscription billing with ease?
If the answer is no, then you, my friend, are not in fact ‘all set.’
When your billing complexity eclipses what your current system can handle, the best solution is to invest in a standalone subscription management software that offers the agility, features, and scalability your business requires.
Otherwise, you could be opening yourself up to a plethora of problems, including artificially high churn rates, unhappy stakeholders, angry customers, taxation issues, overworked employees…the list goes on.
If you’re on the fence about whether it’s truly necessary to shell out for an extra piece of software, consider whether your SaaS business falls into any of these three buckets:
Businesses that offer multiple subscriptions or subscription types
Offering your customers the option to sign up for multiple subscriptions and/or a variety of subscription types is a great way to tailor your options to their needs. For instance, a customer might have two fixed-rate subscriptions, one usage-based subscription, and incur one-time charges now and again for customer service or activation fees.
However, this customer’s subscription billing situation can quickly become too complex for a subpar tool that’s only designed to handle one flat-rate subscription per customer. At that point, you’ll either need to develop manual workarounds or make the switch to a more flexible and agile subscription management solution.
Manual workaround can take tons of time, lead to errors, and result in frustrated customers. They can also artificially inflate your churn rates, which invalidates your data and will likely make your stakeholders unhappy.
This happens, for instance, when your sales team needs to charge a new customer a one-time implementation fee—but your system is only equipped to handle recurring subscriptions. So, your rep adds a new ‘subscription’ to the customer’s first invoice, for the same dollar amount as the implementation fee, planning to cancel it after the first billing cycle. Although the customer isn’t actually churning, it will appear as though a new customer churned after a single month of service, which will not look promising on stakeholder reports.
And if your team forgets to manually cancel the implementation fee after the first invoice? You run the risk of angering the customer, who will see a new subscription added to her plan without her consent—she only agreed to a one-time charge. So, she calls up your customer support team to get this squared away, taking their time away from other important tasks to explain how your inflexible billing system requires one-time charges to be run that way.
Not a good way to deepen customer relationships.
Oh, and you’ll have to figure out how to handle sales taxes on what was, depending on your location, likely a non-taxable professional service that was billed as a (in many instances) taxable subscription.
An agile recurring billing platform, on the other hand, allows you to set up custom pricing models and assess one-time fees without artificially inflating your churn rate, rankling your customers, or creating taxation quandaries. Plus, it can also effortlessly handle usage tracking, automate the entire billing process, and provide detailed reports on customer behavior—all crucial pieces of information that are necessary for making smart, data-driven decisions about your business.
Businesses that offer (or want to offer) self-service portals
These days, over 88% of customers fully expect to see self-service options that allow them to update their information, manage their subscriptions, and even sign up for new services without having to—god forbid—make a phone call to your sales or support team.
In fact, 53% of customers are likely to abandon an online purchase if they can’t find answers to their questions in a self-service portal.
Yikes.
But, setting up self-service portals and hosted registration pages from scratch can be tricky—you’ll need to build custom web pages, integrate them with your payment processors, and ensure everything is secure and compliant. Plus, of course, you’ll need to make sure it actually works properly.
It’s a pretty in-depth web development project to take on, unless you have the right software in your tech stack.
The best subscription management software can make the process a breeze by providing pre-built templates and integrations with popular payment processes. You’ll be able to customize your self-service portal with your branding, so your customers will trust the platform.
By creating a clean, seamless self-service portal, you can reap rewards such as:
- making it simple and quick for new customers to make a purchase,
- reducing the workload on your customer service and support teams,
- improving customer experience and satisfaction, and
- increasing revenue via cross-sells and upsells suggested in the portal.
Customers can easily access information about their current subscriptions, invoice history, and current bill as well as take quick and convenient action on tasks like making payments, editing their contact and billing details, and upgrading their plans.
With the cost of acquiring new customers steadily increasing over time, it’s in your business’s best interest to farm your existing customers to create expansion revenue. While making scheduled upsell calls to every one of your current customers and processing changes manually can take tons of time for your sales team, a self-service portal allows for effortless expansion revenue with just a few clicks from your customers.
Businesses with simple subscription offerings, but wanting to scale
As I mentioned above, not every subscription business needs a specific software solution for recurring billing and subscription management. If your subscription offerings are and always will be simple, there’s no need to reinvent the wheel by switching to a beefier system.
However, if you plan to scale your business substantially, add more complex subscription offerings down the line, or offer promotional or discount pricing, your needs may quickly outgrow basic tools like the one that came with your ERP. In that case, you shouldn’t pigeonhole yourself with a subpar tool that can’t accept funds from any possible location, integrate with any possible software, or handle all types of charges.
It’s best, as they say, to keep your options open.
Consider the fact that according to RIS data, “one in four shoppers will leave a website if their preferred local currency is not offered.”
A clunky, outdated billing system could be losing you 25% of your revenue from international shoppers.
Ouch.
A modern, flexible subscription billing system can provide the scalability and agility that your business needs—even if you don’t need it right this minute. By investing in the right subscription management software early on, you can save yourself an expensive, time-consuming headache of a migration down the line.
An agile, standalone subscription management software can support and help grow your SaaS business
By automating billing, tracking usage, offering pricing flexibility and self-service options, and providing detailed analytics, a standalone subscription management software solution can free up your team to focus on higher-level tasks that will ultimately scale your business. It can set your business up for success in the future, whether you decide to add more complex subscription options, expand to international sales, or grow your business exponentially.
If your subscription business matches any of the descriptions outlined above, turn to an innovative digital subscription management platform—like Stax Bill—to take your business to the next level.
