Customer loyalty and retention are primarily dependent on subscription management. Businesses must ensure that consumers receive the services they require and that their payments are correctly processed by monitoring their subscriptions.
Subscription models are becoming increasingly common in business, creating committed customers who stay with a business long-term.
For companies, customer subscriptions provide a number of advantages, such as:
- Steady cash flow – product subscribers provide a steady income stream because they will likely be around for a while.
- Client insights – tracking customer subscriptions allows businesses to access client insights and tailor their offerings to meet customer needs.
This article discusses subscription management and its significance to the customer lifecycle.
Subscription management defined
Subscription management is the process of managing consumers’ subscriptions. It begins when consumers subscribe to your goods or service and ends when they cancel their subscription.
Subscription management encompasses the technology (typically SaaS), procedures, and people that support the following functions:
- Subscription billing models
- Customer lifecycles
- Other factors involved in sustaining subscriptions for a firm
Additionally, it involves managing activities such as:
- Billing logic (e.g., schedules, prorations, discounts, and taxes)
- Free trials and promotional offerings
- Invoicing and other customer transactional communications
- Processing subscription changes (e.g., upgrades and downgrades)
- Taking and processing refunds
- Crediting customer accounts and calculating credits
- Reporting and analyzing customer data (on growth, churn, and financial health)
- Revenue and accounting reconciliation
- Reporting and analytics
- Customer history tracking
- Marking cards on file that are about to expire
- Processing new registrations and cancellations
Subscription management vs. Recurring billing
Recurring billing and subscription management are sometimes used interchangeably, but they are not the same.
Recurring billing is the technique of charging clients regularly at predetermined periods. It handles invoice generation, including proration and location-specific taxes.
On the contrary, subscription management is concerned with managing all aspects of a customer’s subscription lifecycle:
- Managing trials
- Offering discounts
- Coupons
- Credits or refunds
Subscription management also makes any mid-cycle subscription modifications like:
- Upgrading
- Downgrading
- Renewing
- Pausing
- Reactivating
- Canceling
7 ways subscription management handles customer lifecycle
Here’s how subscription management efficiently handles a customer subscription lifecycle:
1. Helps during the signup process
If your ideal customers don’t click the signup button, then no amount of product creation, financial analysis, or marketing will make your business successful.
You may employ various techniques (discounts or free trials) to draw in consumers; subscription management will help keep these customers.
2. Manages subscription plan changes
Some customers upgrade to a higher-tier plan or downgrade to a low-cost plan. The plan migration data must be changed in the customer’s account during the billing cycle.
Additionally, this sometimes necessitates accounting modifications like prorating the costs for the new subscription and removing certain charges. In some cases, it may need partially reversing the payments on the previous plan.
The entire procedure is automated if you’re utilizing a subscription management system, and bills considering any plan migrations are generated.
3. Empowers customers to adjust their subscription plan
An intuitive subscription management system goes above and beyond by allowing consumers to change their subscription plans and preferences via a self-service option.
Customers may use a self-service option to create and amend their membership details without contacting support. You may also allow them to upgrade or downgrade their subscriptions independently and suspend or cancel them.
4. Deals with payment failures
Now that we’re in the digital age, many firms are collecting regular payments online. Although modes of payment are optimized for easy and secure use, you may still encounter unsuccessful payments.
Payment failures can occur for various reasons, from technological errors to outdated card information. Following up on each card failure and payment refusal can be difficult and time-consuming.
Fortunately, a customizable subscription management system that tracks every action from lead generation to payment collection and provides a complete subscriber history.
5. Ensures payment security
Subscription management involves collecting clients’ financial and contact information to execute recurring payments.
As a business owner, you owe it to your consumers to ensure their information is handled safely. Customers should constantly have faith in your organization.
A solid subscription management system protects your customers’ data from payment fraud and information leaks. It keeps your organization compliant with world-class security standards like PCI-DSS, GDPR, and EU-US Privacy Shield.
6. Minimizes involuntary cancellation
Sometimes churn happens accidentally. Customers may neglect to pay for their subscriptions or be short on cash when renewing.
A subscription management system can track down these unintentional payment failures. The system will attempt to charge them again after a specific time frame instead of terminating their memberships.
This raises your chances of recouping the lost income and keeping clients that want to work with you.
7. Keeps customers’ accounts active
Customers occasionally return after canceling their subscriptions. It may turn your consumers off if you ask them to provide their information again for the same product they have subscribed to.
Subscription management keeps their account alive, making it easy for them to resubscribe in the future.
However, keep in mind that many companies have a policy of permanently deleting all the information of clients who cancel and don’t reactivate within a predetermined time frame. That’s when they must re-enter their information to buy a new membership.
Subscription management improves customer experience
Businesses always aim to enhance their customer experience. Through efficient subscription management, every touchpoint of the buyer’s journey is covered. In turn, it will encourage your consumers to pay for their subscription.
