One of the most intriguing Business Model shifts in the past 10 years has been the emergence and success of Subscription Models. These models have crossed over from B2B Software to consumer services, retail, and even groceries.
For example Microsoft Office 365, Spotify, and Dollar Shave Club – what do they all have in common? The answer is much simpler than you think. They all have integrated sizeable businesses and revenue streams using a monthly subscription model.
It has already become the de facto business model for a multitude of businesses of products and services across various industries worldwide – transforming how traditional software companies like Microsoft and Adobe do business.
However, rolling out recurring revenue billing on a global scale brings its own challenges and some serious maneuvering. Given below are some of the common challenges your company may face and how you can overcome them.
Below we’ve provided some of the most common recurring subscription billing problems and you can effectively overcome them.
1. Managing your Customers can be Overwhelming
SaaS businesses typically have a large number of users at their end. It is one of the main reasons why companies need effective ways and strategies to manage their users throughout the customer journey from the very initial phase through keeping a continuous track and records of customers who sign up for their services.
Solution: There has to be a continuous need of management between your Marketing, Sales, Customer Success, and Customer service through every end-to-end business function and throughout every customer lifecycle.
A recurring subscription model that offers a billing solution easy enough to categorize Registrations, Sign-ups, activations, trials, upgrades, and downgrades will go a long way in improving the efficiency of your company.
2. Fixed Pricing + Currency Fluctuations = A Bumpy Ride!
As companies go global with recurring revenue models, businesses are often plagued with questions regarding pricing currency like “Should you fix the price of your service in U.S. Dollars (USD) or in local currency?”
For example, in Brazil, Microsoft prices its products in Reais, and in Mexico, Spotify prices its subscription in Pesos. Pricing subscriptions in local currency transfers the uncertainty to you, which may be fine, depending on your costs. But you may not be willing to stomach the volatility.
When scaling to a subscription model, businesses need an effective subscription billing solution that will only allow them to receive recurring payments but also reconcile and manage them at any given frequency.
Solution: The solution is to manage payments on a monthly, quarterly, semi-annually, or annually as per the requirements to achieve the flexibility to offer different prices catering to different terms.
3. Automatic Invoicing can be a Nightmare
As you go global with potentially hundreds to thousands of customers who are likely to signup, register for your services, invoicing at times can be a headache. The situation gets even worse if you are offering different levels of services to various customers or the customers sign up at different periods.
There are various opportunities to learn from your peers and moreover, you can give your customers what they need in the new normal. With the help of Dreamforce 2020, we all can succeed together.
Solution: To solve this, it’s recommended to look for a devised solution that can send automated invoices whenever they purchase a subscription for the very first time or during renewals, or right after making cancellations.
4. The Cultural Changes about the Customer
There are various operational challenges that get introduced when adopting a subscription-based model. Changes like cultural shifts are required to build and grow a recurring customer relationship.
The CFO Research/Salesforce survey also shows that, of the companies launching recurring revenue businesses, nearly two thirds (65%) face operational challenges in doing so.
- The entire business – right from Customer service to Finance needs to focus on how to drive customer success and grow the relationship over time rather than just relying on the sales.
- In fact, Sales and marketing become even more involved in the customer lifecycle and all of the potential transaction points so forth, not just customer acquisition. Nearly all of the non-sales groups in the company become customer-facing.
- Companies that launch recurring-revenue/subscription-based business models frequently have changed not only to the subscriptions but also to the look-alike exception events to back-office that often leads to extensive manual data entry, rebills, credits, cancellations, and various adjustments.
Solution: To remedy these challenges, the sales and finance team must look at their current systems to determine the best possible way to maintain financial controls while ALSO supporting dynamic contracts thereby managing sales speed and agility.
As it’s already known by now, recurring business models need clear collaboration between multiple departments and it’s imperative to leverage systems and processes that seamlessly work together.
Going global with a recurring revenue model is not trivial because every market has its own set of nuances. Address these challenges head-on with the appropriate solutions and your subscription program will mature in no time. When this happens, your company will become a competitive force in the subscription landscape by offering the products and services customers need in the subscription-based ways they want to receive them.
For an Effective Cloud Strategy that aligns to your Digital Transformation goals, Talk to one of our Certified Experts today.