June 26 by Eric Dreshfield
Digital disruption has required organizations to explore new revenue models, like subscriptions, where long-term customer relationships are the foundation of revenue growth. Once a business has decided to grow its revenue by taking advantage of the growing subscription economy, it must understand the way the lifecycle is managed.
In the subscription economy, the critical point of the sales 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, extensions, and renewals. 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 use legacy revenue management solutions ultimately lock information away from the teams interacting with customers and from customers themselves. These legacy systems are often outdated, rigid, and lack the flexibility and agility to support recurring charges and long-term business. This bogs down day-to-day operations and hurts the customer experience with slow response times, inaccurate quotes, or billing errors. 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 revenue management. This is a critical mistake, as the customer relationship is the key to revenue in a successful subscription business.
In a self-service, instant gratification world, customers expect transparency and ease of doing business. The ability to view the estimated delivery time for goods ordered, make changes to a customer profile, or update billing preferences is table stakes. If a business cannot provide this type of functionality, customers will think twice when evaluating their next purchase.
And in a subscription world, there is no such thing as a “done deal.” The customer relationship is ongoing, so being able to make changes to the order and automatically manage recurring billing is key. Remember—nothing makes a customer angrier than getting an incorrect bill, paying too much for a service, missing a month of delivery, or paying for a product they did not want.
It’s critical that the subscription management solution is both agile and controlled. Outdated, rigid solutions fundamentally cripple sales, marketing, and product teams, who are unable to create and launch innovative packaging, promotions, or new offerings when the systems don’t support them. And once products are sold, lacking the systems and oversight to ensure accurate order fulfillment, billing, collection, revenue recognition, and reporting can translate into fines from the SEC, months of unpaid bills, loss of shareholder trust, costly business inefficiencies, and major loss of revenue.
Subscription-based business models are becoming one of the preferred ways to do business, and failure to adopt modern processes and systems to support this new business model can severely undermine efficiency, effectiveness, revenue, and margins.
In a world where the long-term customer relationship is key, these challenges are no longer just an operations issue — they become a sales and customer issue, too. Businesses must ensure their customers are satisfied with the initial purchase, the use of the product and experience with the company, and the cycle or process to renewal or replenishment. Maintaining a positive impression of the business calls for excellent customer service, flawless deal execution, and a tight flow of data from the sales quote or self-service order to the contract, order, bill, and renewal. This requires a connected, agile, modern Subscription Management solution.