With thousands, or even hundreds of thousands of customers, subscription-based businesses need slick, automated, business processes to collect revenue, protect margins and keep customers happy. Manual processing might be okay in a few unique circumstances, but for core business activities, such as billing, it isn’t an option.
Some modern subscription business management systems go way beyond simple billing and provide features for order-taking, revenue collection, technical support, and — using APIs — additional tools such as tax calculators, accounting software, or domain registration. In this article, we highlight five benefits this degree of integration and automation delivers to a subscription business.
1. The customer onboarding process is quick and painless
A successful sales process can be badly let down by a poor onboarding experience, whether it’s important service information that isn’t sent to the customer, account details that are wrongly entered, or a delay in service activation.
The onboarding process should start when a quote is prepared. Information provided by the customer is stored; when the order is confirmed, it is carried into other business processes. This way there is no need for re-keying or contacting the customer — nothing is more frustrating than having to provide information a second or third time.
Tools such as automated fraud screening through MaxMind, or provisioning services through OnApp, limit the staff overhead for handling new signups, and electronic signatures remove the delay of paper exchange and provide an easily accessible legal record for both parties.
Once the order has been completed, service access is automatically configured, avoiding the need for manual handoffs between different teams. And a simple workflow process ensures a welcome email is sent, along with links to product tutorials to help make onboarding easier, and a follow up call or email from the post-sales team scheduled.
2. Accurate invoices are issued on time
While invoices for some customers are straightforward, comprising only one or two service lines and simple pricing plans, others aren’t: tiered rates, volume-based discounts, taxes that vary by country and perhaps by service, mid-cycle plan changes — the list goes on.
Permutations across different customer types and different sectors add to the complexity of sourcing, collating, and checking details to include in the invoice.
Organizations who can’t handle this automatically need dedicated invoicing teams to ensure details are correct and fix problems raised by customers. This means there’s a direct hit on their margins: labor costs typically account for over 60% of invoicing costs.
And, of course, accurate invoices coupled with efficient revenue collection makes the month end accounting process a lot quicker.
3. Revenue is collected on time
Alongside accurate and timely invoicing, effective revenue collection is a key element of cash flow management. One benefit of running a subscription business is the regular and predictable revenue stream. Customers can put a credit card or bank account on file with the service provider, and both client and vendor can relax knowing the payments will be received on time.
However, about 12% of credit card transactions are declined, typically because the credit limit has been exceeded or the card has expired. This results in lost revenue and lost customers — this involuntary churn can account for up to 40% of all churn.
Automated dunning helps manage the problem by notifying the customer when a payment is due; asking them to update card details if their current card is about to expire; retrying any declines; and sending repeat reminders to the customer if there is still an issue. Most times customers will be oblivious to the problem and gentle reminders are all that’s needed.
Where it’s not that simple, the system will, again automatically, suspend or cancel the account and move the customer into a debt management process.
4. Service changes are made quickly
Larger customers frequently change their service requirements. Depending on the industry being served, service changes might include:
- Changes to entertainment (TV or movie) bundles;
- Variable bandwidth, to address usage peaks or troughs;
- Power-circuit billing (usage, hourly, or seasonal);
- Bandwidth billing (tiered rate, port-based);
- New IP addresses.
Managing this through manual processes is complex, time-consuming, and error-prone. However, automated workflow can amend existing contracts, reconfigure service delivery, re-issue new authentication and authorization details, and update back-end revenue management systems.
5. Churn is reduced
Churn rates are an important indicator of long-term success. Reducing churn increases customer lifetime value and provides a greater return on acquisition cost. While excellent service delivery is the crucial element in building customer satisfaction, efficient technical support and regular communications are also important.
An automated service management process ensures a ticket raised by a customer is allocated to the right support team, enables the recording of steps taken to resolve the problem, and sends progress reports to the customer to keep them informed.
An integrated end-to-end process also means you can collect and store customer data — product holdings, support history, complaints, lifetime value, etc. — allowing you to send timely and context-sensitive communications such as service status, recent/due payments, or new product announcements.
We’ve highlighted five ways billing automation can benefit your business, with the full impact being quite significant for your customers and your business: Errors, which would otherwise lead to costly remedial work and customer complaints, are avoided; costs are reduced and margins improved; and staff can focus on sales, support, or customer management.
Ready to streamline your billing through automation? Contact Ubersmith today.
I can understand how a business could really benefit from getting the right billing to be more effective. Making sure that they can have the right management for their money, and billing needs could be really useful. It was interesting to learn about how they can reduce churn rates because they can collect customer data.