5 processes for automating subscription sales
According to a Syntec Numérique/IDC study, SaaS publisher revenues grew by 25% in 2018. The phenomenon is set to accelerate in 2019, with growth of almost 30%. The subscription model is tending to conquer all businesses. Once reserved for digital, it is now a growth driver in all sectors. Users appreciate its flexibility, companies are opening up to new customers and capitalizing on the model's longevity.
There are two possible models: the classic subscription model, in which the consumer is given access to a product or service in return for payment of a fixed amount at a given time; and the pay-per-use model, in which the subscriber is billed according to the use he or she makes of the product or service, or according to actual consumption.
Each stage of subscription-based sales (from subscription to invoicing and notifications) requires a complete adaptation of transactional and contractual systems, which cannot be improvised. Each stage must also fit in with the new parameters of the customer relationship , which, from subscription onwards, becomes a long-term, remote relationship. So, what are the key processes you need to master to make the strategic shift to subscription-based sales?
1. Subscription
The subscription stage is a decisive step in the contractualization of a contract. As the first stage in the new customer relationship, it must instill confidence:
- Complete, precise and integrated
There are a multitude of subscription and pay-as-you-go offers. Determining the right system for each company and making it seamless is the first objective of subscription sales. It's also essential that the customer understands the offers, without ambiguity, so that his purchasing process is fluid and seamless. Getting future customers off the platform and away from the brand, especially when it comes to payment information, can slow down the subscription process and diminish the quality of the customer experience.
The construction of the offer and its perception by the user are a key factor in successful underwriting. A well-configured offer will reduce subscription time and therefore optimize the conversion rate.
- Anticipatory to generate more business
Faced with the complexity of changing marketing conditions, too many companies give up on opening up their business to new targets, new packages and new pricing conditions. Anticipating different subscription paths means increasing attraction and guaranteeing a business that remains open to the future and to development.
A robust subscription sales management system offers expertise and a ready-to-use solution to guarantee the first stage of a successful user experience.
2. Payment and billing
The payment and billing function has a significant influence on the conversion rate. The type of payment methods offered, their mode of operation, and the tools used to combat fraud must be adapted to the needs of users. The aim is to implement tools that are perfectly suited to your business and your customers' needs, with guaranteed security.
Optimizing a payment strategy therefore requires a very specific approach, which offers a number of advantages:
- Reconciling initial and recurring off-line payments
The subscription sales model generally involves online payment with the customer. However, some businesses may offer off-line payments (cheque or bank transfer). These two types of payment require two different processes that the subscription management platform can bring together, as traditional payment solutions are unable to do so.
Another advantage of the management platform is that it can automatically process payments by cheque. So there's no risk of losing customers paying by cheque, and no manual processing to consider.
- Optimize the dunning process
In the case of failed payment procedures, the start of the dunning process can be unpleasant and even vexatious, even leading to churn. Thanks to an automated dunning process, payment representation, sometimes multiple times, is automatic and, above all, discreet. This guarantees a good relationship with the user, and is also an excellent way of preventing non-payment. This platform-specific dunning process recovers up to 15% of payment failures.
- Guaranteeing security and regulatory compliance
A reliable subscription management solution helps companies to remain compliant with current accounting rules and standards. Card payments or SEPA mandate payments are intrinsically different processes, but they can also vary from bank to bank.
Regulatory changes to increase the security of online payments are also regular and impactful. For example, from September 14, 2019, Strong Customer Authentication (or SCA), a new way of authenticating online payments, will be rolled out across Europe as part of the second Payment Services Directive (PSD2). The aim of SCA is to reduce fraud by strengthening security through two-factor authentication in electronic payments.
For merchants collecting recurring card payments, the SCA will apply to the initial setup of the transaction.
A subscription-based sales management platform guarantees security and regulatory compliance, all while staying within the brand.
3. Usage-based invoicing
The pay-as-you-go model is gaining ground in more and more sectors. Once confined to the telephone and electricity industries, it's now spreading to other, sometimes unexpected, industries. It's a win-win model that, once automated at the billing level, is excellent from a commercial point of view: pay-as-you-go billing delivers the right price, transparency and agility.
- Competitive advantage: good pricing
On-demand billing closes the gap between different price offers. The price becomes fairer for the customer, which is a competitive advantage, but not the only one. Invoicing on demand also means selling usage rather than the product, and thus enhancing the value of innovation through usage. In terms of perception, it's more satisfying, and enables companies to adopt up-selling strategies and restore their pricing power.
- Usage-based invoicing: complicated? Not necessarily...
Many companies give up on pay-per-use billing because of the complexities involved. A subscription management solution can automate all pay-per-use billing models. It will help to define a more extensive offer at the outset, adapting to B2B as well as B2C, and will accompany invoicing that is always fair and justified.
4. License management or "provisioning
Provisioning is the action of setting up user accounts (creation, modification, deletion, deactivation) and associated rights.
The subscription-based sales management system enables real-time synchronization between provisioning and overall subscriber usage. A change in provisioning is immediately taken into account by the subscription sales management system, with no risk of error or omission, and in an efficient manner.
This secures the commercial relationship in both directions: if the user has not paid his user rights (failed payment, invalid card...), the service is suspended. Similarly, users who stop a subscription without modifying their access rights will be informed immediately. All this in real time, improving customer relations and the user experience.
5. Notification
Subscription sales create an entirely new customer relationship: a long-term, remote one. Consequently, it must be based on trust. With an automated subscription management platform, a certain amount of information essential to the user is transparently available in real time:
- transaction history,
- invoice archiving,
- payment status (including upcoming and failed payments).
Refunds and payment information updates are also notified automatically. Together, these communication tools create a more reactive, ongoing and structured relationship between a brand and its users.
In conclusion...
Subscription-based sales are a powerful, sustainable business model. It's a definite competitive advantage that enables us to win over new customers. This new model requires real agility when it comes to automation, which without expert help can prove time-consuming and, above all, counter-productive.
You can't improvise this shift, and an expert platform will guide you along the path to growth.
Article translated from French