Simplify Subscription Management and Improve Customer Service With Automation.

The shift away from transactional sales to subscription services in industries from software to entertainment has accelerated in recent years, with companies of all sizes and in most verticals either transitioning to a subscription model entirely or, at the very least, adding a subscription component to the goods and services they offer. 

The benefits of recurring revenue, like greater financial stability, are well established. However, subscription-based businesses also face challenges that companies with more traditional sales models don’t. A big one: Complex billing that makes automation a must.

Cost, Complexity and Customer Service

Moving from transactional sales to subscriptions changes the billing process. In a traditional sales model, customers may be billed once when goods are shipped or incrementally during a project, but the cycle has a definite end. In a recurring revenue model, customers are billed repeatedly, as often as once per month. This means more work for the accounting team, which has to generate more invoices more often. 

Managing this workload becomes more difficult as the number of subscribers increases, so companies must bring on additional finance headcount to keep pace with growth, resulting in higher operating costs.

Pricing complexity is also a concern for companies that offer subscription services. There are several different approaches — fixed-rate, volume-based and tiered pricing, for instance. Billing may even be based on consumption, like with mobile phone services, or include a combination of fixed and variable charges. Promotional discounts and trial offers introduce more complexity, as billing needs to reflect start and end dates. Keeping track of this information manually is next to impossible, and legacy billing systems aren’t designed to handle all of these variables. This can lead to billing errors and delays that frustrate customers and hurt cash flow.

To succeed with a subscription-based business model, companies must not only win new customers, they must also retain them month after month, year after year. This requires excellent service. In addition to answering basic questions, the customer service team is often tasked with managing subscriber-initiated change requests, such as adding new users to an account or temporarily suspending service. 

That high-touch approach helps build strong relationships, but it requires sufficient headcount to ensure a timely response to customer inquiries. This too increases operating costs, particularly in a tight labor market where hourly rates continue to rise. 

And because turnover is notoriously high in call centers, training costs are a concern.

Automated Billing and Subscriber Self-Service

Clearly, the subscription business model increases billing volume and pricing complexity. Rather than continually hire more accounting people in , companies should consider automating subscription management. Automation simplifies the billing process and, with the right system, puts subscription and billing data in one place, improving data quality and helping ensure invoice accuracy. 

That’s important because subscription plans that combine flat monthly rates with variable charges or one-time fees can create billing nightmares — and a negative, frustrating customer experience. An effective billing management solution should support a range of pricing options, including fixed and consumption-based rates, with the ability to customize plans for individual subscribers.

Companies can also improve the customer experience by giving subscribers a self-service option as well as telephone and/or email support. A cloud-based customer service portal improves subscriber engagement by providing greater insight into account details, such as list of service components, costs and number of users assigned to an account. Allowing customers to modify their details, like changing billing information, increasing or decreasing service components and adding or removing users, both delivers greater flexibility and reduces customer service workloads.