August 7 by Michael Carrell

If you have made the decision to grow your business leveraging a subscription business model (or a blended business model of product and services offerings), then it’s time to take a good hard look your systems’ ability to manage a subscription business from Quote-to-Cash (QTC) and across all selling channels.

In a subscription business, the critical point of the customer relationship is no longer limited to the original purchase—it lasts for the entirety of the customer relationship, which might include upsells, cross-sells, returns, add-ons, renewals, and more. A successful subscription offering must facilitate the end-to-end experience—from the initial sale all the way through to fulfillment, billing, and renewal cycles.

Organizations that try to use legacy systems to support new business models will find that these systems often lock away information from the teams interacting with customers and from the customers themselves. These legacy systems are often outdated, rigid, and lack the flexibility and agility to support recurring charges and long-term business needs to manage a subscription business. This bogs down day-to-day operations and hurts the customer experience with slow response times, inaccurate quotes, or billing errors. Often internal teams attempt to “fix” the problems with custom coding, workarounds, spreadsheets, and more manual intervention.

Additionally, because many legacy systems are focused exclusively on backend processes and financial reporting, they neglect the customer-facing piece of managing a subscription business. This is a critical mistake, as the customer relationship is the key to revenue in a successful subscription business.

So how do you know if your systems can manage the business model change? Here are four key questions to ask the IT and Finance departments to determine if your enterprise is ready for the subscription economy.

Question #1: Does our subscription management system support the full spectrum and complexity of modern business model needs?

Enterprises need to ensure they have a modern subscription management solution capable of supporting blended and modern business models. This is especially critical when offering a variety of products and services with complex pricing and deal time frames (e.g., physical goods, digital services, professional services, subscription services) or supporting milestone-based agreements, one-time fees, usage-based services, consumption-based services, pooled usage, and metered usage. Those that are capable will be in the best position to take advantage of the opportunities the subscription economy brings.

Modern subscription management solutions support:

subscription economy Subscription Products: Easily configure, price, quote, contract, and renew subscriptions including managing usage-based billing and revenue recognition.
Aftermarket Services: Recommend and link configured products with required or associated aftermarket services, easily configuring pricing and quoting for complex products, subscriptions, and aftermarket services in one quote, contract, and invoice.
Professional Services: Enable accurate estimation and execution for support teams, integrating Configure Price Quote (CPQ) with Contract Lifecycle Management (CLM) capabilities for subscriptions and professional services.
Complex Products: Manage the most sophisticated product catalogues, addressing advanced configuration capabilities for complex products and subscription services together.

Additional questions to ask:

Does our subscription management system support blended business models, with the pricing and packaging flexibility to change offers per region or per account to obtain and retain business?
Does our subscription management system automatically propagate contract changes and asset changes to billing schedules and revenue recognition schedules, all while keeping Finance compliant and all the stakeholders synchronized and informed?
Does our subscription management system support distributed order fulfillment for orders with multiple fulfillment systems or locations?

Question #2: Does our subscription management system work effectively from Quote-to-Cash across all sales channels, e.g., pure self-service websites, channel partner sales, full-service direct sales, and hybrids of these selling models?

In order to achieve consistency across all channels, your subscription management solution must be accessible by all stakeholders. It’s important to have a solution that can configure, price, quote, contract, capture, and orchestrate orders across all channels. This allows sales reps, partners, and customers (via self-service) to manage in-flight order changes, handle partial or distributed order fulfillment, or manage/add/change/delete subscription information as needs evolve.

Additional Questions to Ask

Does our subscription management solution leverage a single shared data model across quotes, contracts, and revenue management processes enabling data from one interaction to be available to all users regardless of channel?
Does our subscription management solution work effectively across all sales channels, so we can manage what the customer has ordered, orchestrate delivery and provisioning, then bill and collect payment without creating custom code?

Question #3: Can Our Systems Scale to Support New Business Models Without Risk?

In addition to evaluating system functionality to support modern business models across all channels, it’s also critical to evaluate system scalability, flexibility, and ability to integrate. You are setting Finance up for incredible amounts of risk if you aren’t thinking about how your subscription management solution integrates with Customer Relationship Management (CRM) systems, payment gateways, tax services, fulfillment, provisioning and licensing systems, and your enterprise resource planning (ERP) and accounting systems.

Additional Questions to Ask

Does our subscription management solution integrate with our CRM solution and ERP/AR/GL financial accounting system?
Does our solution integrate into critical downstream interfaces like payment gateways, tax computation services, and fulfillment, provisioning, and entitlement systems?
Does our subscription management solution automate compliance with GAAP standards like ASC 606/IFRS 15?

Question #4: Is our Subscription Management Solution Customer-Centric?

Most businesses have realized the importance of enabling buyers to browse, buy, and pay for a variety of products and services through multiple channels and modalities with agility and ease. But in a customer-centric world, it’s just as important for customers to be able to return and exchange items, update billing preferences, shipping addresses, or quantities purchased, or cancel their business–no questions asked.

subscription economy

Enabling this kind of personalized support at scale requires a subscription management solution that is innovative in its approach to customer success. It should it enable easy-to-use self-service options so customers can get exactly what they need, when they need it. The solution should also leverage automation, alerts, notifications, and artificial intelligence (AI) to drive revenue maximization and reduce costs, errors, and risks.

Additionally, to be truly customer friendly, you must know your customer. There is a lot to be learned from your subscription data. A modern subscription management solution doesn’t just process transactions or manage subscription revenue — it helps you learn more about your customer over time, and flows the proper information to the right departments to make better decisions about packaging, pricing, and more.

Additional Questions to Ask

Does our subscription management system provide actionable analytics into our revenue management process from Quote-to-Cash?
Does our system leverage applied AI to gain actionable insights about our customer relationships based on historical transactional data, then make intelligent recommendations to our sellers to shorten sales cycles, increase average order sizes, or improve close rates?
Does our subscription management system offer a conversational user experience to facilitate data entry, speed adoption, and simplify usage by all stakeholders?
Is our solution agile enough to respond to customer and market demands in real-time?

Learn More on Supporting a Subscription Business

When managed correctly, a modern subscription management solution enables you to extend richer product offers, delight customers with delivery, and effectively plan your incoming revenue with financial accuracy. It can also help you reduce billing disputes, reduce revenue leakage and renewal surprises, and materially increase your overall customer satisfaction.

To learn more about doing business in the subscription economy, read: The Ultimate Guide to Managing a Subscription Business.

subscription economy

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