Is your billing process lowering your profits? It’s a question that many executives never ask since paid bills mean money coming in, but positive cash flow doesn’t mean optimized cash flow.
A traditional billing model involves one-time software purchases, multi-year licensing agreements, or paper renewal offers that customers have to sign and return. This leads to customers deciding not to upgrade, shopping around at renewal time, or simply forgetting that your company exists.
Cloud-based billing comes with a number of benefits that allow companies to provide a continually-improving product to their customers while maintaining an ongoing relationship that means less chance of losing an account.
1. Save Time for Your Customers
Think about all the days you never have time to get everything done. And there are plenty of things around your office that you’d like to improve but don’t have time to, and anyway, how it is now is good enough, right?
Your customers’ offices are no different.
Customer IT departments don’t want to spend time deciding when to upgrade software or searching for alternative bids every time a contract comes up for renewal. They also don’t want to spend time upgrading and maintaining software that they already paid for.
A subscription business model includes built-in, automatic updates so that customers are always running on the latest version and most bugs get fixed before they’re even aware of them.
2. Let Customers Pay for What They Use
Another key ideal of the cloud subscription billing model is paying for what you use. If customers buy an expensive software license and end up rarely using the product, they’ll feel they never got their money’s worth, won’t renew, and may be less inclined to do business with that company in the future.
- There are several ways to implement a pay-for-usage model.
- Multiple service tiers with the option to upgrade or downgrade at reasonable intervals.
- A base product with add-ons that can be added or removed as needed.
- Metered billing based on actual usage levels.
- A hybrid approach of any of the above methods.
Your customers will in turn benefit by getting the most value for their money and feeling that your services are better tailored to their needs.
3. Give Customers What They Need When They Need It
More than half of Americans pay their bills online. Six out of ten look for self-service solutions before talking to a person.
Those are the same people that buy from you.
When customers want a billing solution, they don’t want to wait for software to arrive or for a developer to write out code.
They want to start collecting money and getting off of their legacy system as quickly as possible.
4. Give Customers More Flexibility
One of the keys to giving customers what they need is flexibility. With traditional software, you may have a few different products, but customers have to pick one and stick with it until they decide to buy a different license.
A cloud subscription billing model allows unlimited flexibility. You can create various bundles of products and services or allow customers to shop by each individual feature.
Since everything lives on your own servers, adding and removing services is as simple as using an on/off switch. When a customer needs a change, they can log in to their online portal to get what they need and adjust their billing within minutes — all without ever having to talk to a sales representative.
5. Allow You to Constantly Adapt
Flexibility also helps on your end. In a traditional software model, your product is finished on release and any updates may come a year or more down the line in a version many customers may never upgrade to.
On the other hand, a cloud product is never truly finished. You can test, revise, and customize new offerings at any time. If you get negative customer feedback, you can expedite fixing it rather than trying to convince an unsatisfied customer to purchase a software update.
Finally, you’ll be able to smooth out your workflow. Instead of rushing to meet a hard release date, you can work incrementally over time according to what your customers have told you is most important to them.
6. Improve Customer Loyalty
Most importantly, by tailoring to your customers’ needs and improving the customer experience, you’ll build customer loyalty. Did you know that:
- Avoidable customer churn costs businesses $136 billion per year?
- Nearly half of all customers said they switched to a competitor that better met their needs?
- You’re up to 14 times more likely to sell to an existing customer than a new one?
With a one-time sale, you only get one chance to win that customer’s loyalty. By switching to an ongoing billing model where the customer sees continuing service and improvements, you’re building a customer for life and directly improving your bottom line.
Learn More About Cloud Subscription Billing
Our cloud subscription billing software practices what we preach. If you need a turn-key solution that can be custom-tailored to your business needs, talk to us now to find out how quickly you can get started.