Properly managing subscriptions leads to a whole host of benefits, such as subscriber growth, greater customer retention, increased lifetime value, more expansion opportunities and the ability to forecast revenue more accurately. Failing to manage subscriptions properly leads to different types of revenue leakage, like pricing errors, missed renewal, upsell and cross-sell opportunities.
Due to our unique position in the SaaS industry and the customers we cater to – for whom subscription business is a key part of their revenue model – we’ve identified the top 10 problems companies face in their subscription management process and how to solve them.
10 common mistakes with subscription management
1. Not using CPQ software
Maximizing revenue from your subscription model requires next-generation CPQ technology. By building accurate and strategic price quotes for subscription plans right from the start, you can ensure smooth renewals and optimize future opportunities for upsells and cross-sells.
Solution: DealHub CPQ helps you streamline your subscription management with a unified sales workflow that automates renewals and recommends timely upsells, cross-sells and bundle opportunities. Your company can easily standardize the terms and conditions offered to prospects and customers. And with automated discount approval workflows, sales leadership can protect margins while eliminating manual processes that typically slow reps down.
2. Mismanagement of co-term subscriptions
When it comes to pricing, your customers may want to change their subscription plan, products or services at any time, and in general, don’t want any complications or confusion in the billing process. Being able to unify several contracts properly, with the same start and end dates, reduces errors and miscalculations. Companies that can’t keep up with customer expectations, as well as their evolving business needs, may find themselves soon abandoned.
Solution: DealHub automatically unifies your billing into a single invoice within your CRM or billing tool. This way, companies can reap all of the benefits of long-term plans and bulk license discounting, without the headache that comes with trying to either charge for everything individually, or manually reconcile their payments.
3. No automated billing or invoicing
Businesses that don’t automate their subscription management are at a significant disadvantage. Without automation, sales reps are prone to miss out on additional revenue opportunities, make errors in billing and invoicing, and get caught up in manual processes that waste their valuable time and resources.
Solution: With DealHub, you can seamlessly connect your quoting and subscription processes. Provide every member of your sales team with a single source of information to automate subscription renewals and the terms according to the items the customer bought. Additionally, co-terming and revenue recognition become easily manageable.
4. Rigid billing frequency
Rigid billing frequency leads to frustrated customers. Customers want a personalized buying experience that is tailored to their needs and preferences – this includes how often they are billed for subscriptions. Flexible payments and billing options help to increase sales, increase your annual contract value, enhance customer loyalty and potentially reach new audiences.
Solution: Implement flexible billing that uses metrics like consumption, usage or number of users to generate an invoice. Invest in a billing platform that can support variable billing frequency and amounts.
5. Not offering trials, discounts or promotions
Not offering a free trial period, discounts and promotions makes it difficult to bring in new business and increase repeat business. Because these are typically most effective when they are time-sensitive, companies that rely on manual processes will be limited by the bandwidth of their employees.
Solution: Automate trials, discounts and promotions through subscription management software to not only better manage pricing changes, but also track information that will be relevant for future marketing campaigns.
6. Inconsistent or inaccurate pricing
Complex products and services can be hard to price accurately due to variables such as materials, labor, implementation, support, pricing tiers and usage. Errors and inaccuracies around can lead to incorrect pricing, which results in lost revenue. This can affect deals large and small, and is often part of a larger systemic issue.
Solution: DealHub helps you simplify the quoting process in your subscription business, even for extremely complex deals. Configure fully customizable quotes based on what your customers need. Sales reps can generate error-free quotes with consistent pricing across the entire organization, and easily change quantities and apply discounts without complicated calculations.
7. Missed expansion opportunities
Research shows that roughly 65% of revenue comes from existing customers. This makes upsells and cross-sells key sources of revenue – and much more efficient than having to acquire new customers. Without the right technology to recognize and automate these opportunities, you’re likely missing key opportunities to expand revenue.
Solution: To maximize expansion revenue and improve efficiency, you must build a strategic framework around upsell and cross-sell opportunities. This is achievable by investing in software that helps you automate and propose offerings that proactively address your customers needs and reflect your evolving product offerings.
8. Poor payment management
Counting on your team to manually monitor large customer lists, and then having to resolve missed or failed payments, is a waste of valuable resources. And it’s impossible at scale. Poor management of payments can also lead to frustrations with the subscription experience that cause customer churn.
Solution: Automation of the subscription billing automates the “dunning” process – or payment collection process – with a workflow for automatically contacting customers who have missed a payment. This way you can configure messages that will automatically be sent to customers. Advanced B2B payment software will reduce a range of manual tasks in the subscription billing process while making payments more efficient, with fewer errors.
9. Not providing language support and multi-currency options
Billing platforms that don’t offer accurate and automatic conversions between currency, as well as invoice translation, will disappoint potential customers and see their sales suffer. Your customers are global, but your company has a default language and currency.
“You may be tempted to fix the price in USD, keeping your income flow more stable and your CFO happy,” says an article in Forbes. “However, customers also like stability and may choose your locally sensitive competitor instead”.
Solution: Don’t put yourself at a disadvantage and miss out on great customers by failing to offer support for different geographies. Invest in a billing system that can process quotes and documents in multiple languages and currencies, and adapts to constantly fluctuating exchange rates.
10. Ineffective churn management
A failure to invest in mechanisms that will help you identify at-risk customers to proactively address their issues will result in higher churn rates. Without these mechanisms, it’s difficult to maintain long-term satisfied customers and high retention rates. When subscriptions are about to end, even satisfied customers may be tempted by competing companies who appear to offer something you don’t.
Solution: Purchasing decisions, especially large ones, often happen many months in advance. Make sure you build strong relationships with your customers by investing in tools that help you monitor their status and notify you if a customer hasn’t paid yet, which is an indicator they may be “at risk”. This signals an opportunity for you to check up on them and potentially offer a promotion or discount for renewal.
How can you improve the subscription management process?
In today’s subscription-based economy, missing out on untapped revenue potential due to poor subscription management puts you at a significant disadvantage.
By effectively managing subscriptions, you can better manage customer relationships and take advantage of opportunities to maximize and optimize subscription revenue. Invest in a top-notch and easy-to-implement CPQ with built-in subscription management, so you can easily solve many of the challenges raised in this article.
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