5 processes for automating subscription sales
According to a Syntec Numérique/IDC study, SaaS publishers' revenues grew by 25% in 2018. This trend is set to accelerate in 2019, with growth of almost 30%. The subscription model is tending to conquer all business sectors. Once the preserve of the digital world, it is now a growth driver in all sectors. Users appreciate its flexibility, companies are opening up to new customers and capitalising on the durability of this model.
There are two possible models: the classic subscription model, where the consumer is given access to a product or service in return for payment of a fixed amount at a set time; and the pay-per-use model, where the subscriber is billed according to the use they make of the product or service, or according to their actual consumption.
Each stage of subscription-based sales (from subscription through to invoicing and notifications) requires a complete adaptation of transactional and contractual systems that cannot be improvised. Each stage also has to 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 contractualisation of a contract. As the first stage in the new customer relationship, it must inspire confidence, in other words, it must be :
- Complete, precise and integrated
There are a multitude of subscription-based and pay-as-you-go offers. Determining the right system for each business and making it seamless is the first objective of subscription selling. It is also essential that the customer understands the offers, without ambiguity, so that their purchasing process is fluid and seamless. Getting the future customer to leave the platform and the brand, particularly when it comes to payment information, can slow down the subscription process and reduce the quality of the customer experience.
The construction of the offer and its perception by the user are a key factor in the success of the subscription. A well-configured offer will reduce the subscription time and therefore optimise the conversion rate.
- Anticipate 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 guaranteeing 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, the way they are used and the tools used to combat fraud all need to be adapted to users' needs. The aim is to put in place tools that are perfectly suited to your business and your customers' needs, with a guarantee of security.
Optimising 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 offline payments (cheque or bank transfer). These two types of payment involve two different processes that the subscription management platform can bring together, as traditional payment solutions do not allow this to be done.
Another advantage of the management platform is that it can process cheque payments automatically. So there's no risk of losing customers paying by cheque, and no manual processing to consider.
- Optimising the dunning process
In the case of failed payment procedures, the start of the dunning process can be unpleasant, even vexatious, even leading to churn. Thanks to an automated "dunning process", the 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 dunning process, specific to the management platform, recovers up to 15% of failed payments.
- 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 one bank to another.
Regulatory changes to increase the security of various online payments are also regular and have an impact. For example, from 14 September 2019, Strong Customer Auth entication (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 increasing security through two-factor authentication for electronic payments.
For merchants who collect recurring card payments, the SCA will apply to the initial set-up of the transaction.
A subscription-based sales management platform guarantees security and regulatory compliance, while remaining within the brand.
3. Usage-based billing
The pay-as-you-go model is gaining ground in more and more sectors. At one time confined to the telephone or electricity, it is now spreading more and more, to 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
Pay-as-you-go 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 therefore 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 billing: 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-as-you-go billing models. It will help to define a more extensive offering from the outset, adaptable to both B2B and B2C, and will ensure that invoicing is always fair and justified.
4. Licence management or provisioning
Provisioning is the action of setting up user accounts (creation, modification, deletion, deactivation) and the associated rights.
The subscription-based sales management system enables real-time synchronisation between provisioning and the subscriber's overall 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 their user rights (failed payment, invalid card, etc.), the service is suspended. Similarly, users who stop a subscription without changing their access rights will be informed immediately. All this in real time, improving the commercial relationship and the user experience.
5. Notification
Subscription-based sales create a completely new customer relationship: a long-term, remote relationship. As a result, it's imperative that it's based on trust. With an automatic subscription management platform, a certain amount of information that is essential to the user is transparently available in real time:
- transaction history
- invoice archiving
- payment status (in particular upcoming or failed payments).
Refunds and payment information updates are also notified automatically. Taken together, these communication tools create a more responsive, ongoing and structured relationship between a brand and its users.
In conclusion...
Subscription-based sales are a powerful and sustainable business model. It is a definite competitive advantage that enables new customers to be won over. This new model requires real agility when it comes to automation, which can be time-consuming and, above all, counter-productive without the help of an expert.
You can't improvise this shift, and an expert platform will guide you along the path to growth.
Article translated from French