Billing management for traditional businesses and subscription businesses look very different. In the former, invoices and payments are made on a one-time basis. For the latter, they are recurring events. Subscription businesses also need to handle different stages of a customer’s lifecycle like signing up, upgrades and downgrades, issuing credits, and unsubscribing. Needless to say, manually performing these tasks is a nightmare.
In order to manage these functions seamlessly and provide smoother customer experiences, businesses need a powerful recurring billing and subscription management platform. While looking for a subscription management tool, it’s essential to check whether it has all the right features to fit your business requirements.
We’ve put together an article to highlight the important features to look for in a recurring billing and subscription management tool.
What to look for in a subscription billing tool
1. Recurring billing support
The primary function of every subscription billing tool is to send invoices to customers on a recurring basis and collect payments. Although this sounds simple, there are many challenges associated with it. Billing scenarios are unique from company to company, and businesses must ensure that their subscription management tool supports their needs.
There are a variety of different pricing models to fit different types of subscription businesses. Once businesses know what kind of pricing model they’re using, they will still need to decide on a billing type—anniversary or calendar. Anniversary billing is when businesses bill their customers on the same day of every month when they subscribed. Calendar billing is when they bill customers on a fixed day, irrespective of their purchase date.
2. Payment methods
It’s important for businesses to provide flexible payment options for their customers. This is especially true for subscription businesses since subscriptions need to be constantly renewed through recurring payments. To do this, the subscription billing tool should support online payment methods like cards, bank transfers, online wallets, and more while also supporting offline payment methods like cash and check.
3. Subscription management
Handling the stages of a customer’s lifecycle is instrumental in providing an effective customer experience. Subscription management applications must give customers end-to-end control over their use of your product or service.
- Upgrades and downgrades: When customers are content with a product or service, they might look to derive more value from it. Billing applications must allow for upgrades in the customer’s plan. Similarly, customers should have an option to downgrade their subscriptions without any difficulty.
- Reactivation and cancellation: Billing applications should allow customers to unsubscribe but also allow them to reactivate subscriptions without any hassle if they choose to come back.
- Pause and resume subscriptions: Customers might want a little break from a product or service due to various reasons. Instead of canceling their subscriptions and asking them to reactivate later, businesses should give their customers the option of pausing and resuming their subscriptions whenever they are ready to come back.
- Coupons and credits: Promotional campaigns with incentives are an organization’s go-to solution for driving sales. To do this, subscription billing tools must allow businesses to create and manage discounts, coupons, and credits to boost sales.
- Trial management: It’s important to be able to give customers commitment-free access to take the product for a spin before they subscribe. Businesses should be able to provide limited access to the product or service for a certain time period using their subscription management tool.
- Churn management: There are more transactions in subscription businesses since they involve recurring payments. With a higher number of payments comes more payment failures. A solution to this is dunning or churn management where the billing application makes repeated attempts to complete the payment. While doing all this, the subscription billing tool must also keep the customer in the loop regarding any failed payments.
- Prorated and consolidated billing: When changes are made to invoices in the middle of billing cycles, such as when a customer upgrades to a more expensive plan, the invoice needs to be prorated to ensure the customer only pays for what they use. If the customer has subscribed to more than one service, the billing tool must consolidate the items and send them all in one invoice instead of spamming the customer with individual invoices for each service.
4. Customization
It’s important for businesses to be able to customize and personalize their emails, invoices, and other customer touchpoints. This not only ensures brand recognition but also helps businesses provide a smooth experience for their customers.
- Email notifications: Email notifications are normally sent when the customer signs up, renews, is invoiced, cancels, or performs other account activities. Businesses should be able to customize these notifications to add their personalized organization logo, CTAs, placeholders, subject lines, and body text.
- Invoices: Invoices should be brand-specific and easy for customers to understand. Businesses should be able to change the format, theme, and layout of the invoice. Businesses should also be able to add extra fields like shipping charges, subtotals, and custom fields to the invoice if needs be.
- Checkout page: The payments page where the payment details and customer information are collected should be customizable. Businesses must be able to add new fields and change the layout to add headers, footers, and other important elements to the page.
- Pricing widget: Businesses should be able to display their plans on their website easily without the burden of coding. A powerful subscription billing application should help businesses create a pricing table, change themes, highlight the best plan, and review all the changes with just a click of a button.
5. Self-service portal
Having to get in touch with the support team for the slightest tweaks in a customer’s subscription is a thing of the past. Self-service portals give customers the freedom to view and make changes to their own information, allowing you to provide a seamless customer experience. This takes some weight off the shoulders of the support team so they can focus on more complex customer concerns. Customers should be able to upgrade, downgrade, cancel subscriptions, view and download invoices, make payments, change addresses, upload documents, and do much more by themselves.
6. Automation
The processes involved in subscription businesses by nature are often repetitive. Automation allows you to handle these monotonous functions quickly and more efficiently.
To illustrate how automation can help, let’s take the scenario of a new customer subscribing to a content streaming platform like Netflix:
a. Webhooks of the billing application will notify the streaming platform that the customer has paid and to allow access to the movies and TV shows.
b. The streaming platform’s APIs will check with the subscription billing tool about whether the customer information is authentic before allowing access.
c. Once access is given, the subscription billing tool will allow email workflows to trigger onboarding emails to help the customer get familiar with the features.
7. Integrations
Organizations often use applications to manage the other areas of their business such as finance, marketing, sales, and operations. Data from all these applications are often shared, and having an integrated system will help avoid duplicate data entry by syncing the information between apps.
For example, subscription businesses will need not just features for subscription management and recurring billing, but also an accounting system where they’re able to track their recurring income and generate financial reports like cash flow and profit and loss statements.
8. Reports
In order to get insights on an organization’s financial stance and make well-informed decisions, reports are key. Subscription billing applications need to have built-in reporting features so management can understand how their business is faring. Revenue reports like Monthly Recurring Revenue, Average Revenue Per User, Lifetime Value, and Churn Rate are often referred to as key performance indicators (KPIs) for subscription businesses. In addition to these reports, customer reports like sign-ups, new customers, renewals, and cancellations should also be available.
Takeaway
A subscription billing tool should be simple, yet versatile enough to handle different use cases. Consider the features above as essential while looking for a suitable subscription management tool. The right tool will be flexible enough to accommodate complex requirements and enable businesses to provide a smooth customer experience. It’s important for businesses to make full use of any free trials to find out if the application is a perfect fit for their business before making the purchase.