Subscription management: a complete guide
While many companies operate on a traditional pricing model—with a one-time fee to purchase goods and services—it’s not the only way of structuring business transactions. With a subscription-based pricing model, customers get access to products or services for a defined length of time in exchange for periodic payments—for example, monthly, quarterly, or yearly.
The subscription model may not work for every business, but it’s become increasingly popular in recent years as consumers embrace the subscription economy for everything from streaming services to pet food delivery. Subscription pricing is also prevalent in the B2B world, where most business software providers use the SaaS (software as a service) model.
That said, subscription-based pricing is complex and may be difficult to manage without the right technology in place. That’s where subscription management comes in.
What is subscription management?
The term subscription management refers to the processes and technology needed to support a subscription-based pricing model. This includes every step in the subscription lifecycle, from the time a customer expresses interest in your product or service through order fulfillment and payment, ending with the eventual renewal (or expiration) of the subscription.
A modern subscription management solution can automate and optimize complex subscription processes, to increase operational efficiency, reduce the potential for errors, and improve customer satisfaction.
Types of subscriptions
Subscription pricing is incredibly flexible, making it an excellent choice for today’s complex, blended business models—and those that offer a wide variety of products and services. It can be structured to accommodate any combination of physical goods, digital services, professional services, and more.
As a result, subscription pricing models come in all shapes and sizes. Here are a few of the most common:
- Static pricing: A fixed price is assigned to each product or service.
- Usage pricing: Price is based on how much product or service is actually consumed. This structure is sometimes referred to as consumption pricing or metered pricing.
- Contracted pricing: Per-unit prices are negotiated in advance, and additional units can be purchased at any time without involving a sales rep.
- Block pricing: Pricing is based on quantity bands (for example, $100/each for 1- 5 items, $95/each for 6-10 items, $90/each for 11+ items).
- Tiered pricing: Products or services are offered at a variety of levels, each with its own price (e.g., good, better, best).
Bundled pricing: Multiple products and/or services are grouped together and offered at a single price.
A subscription management platform must be capable of handling all of these pricing models and many more—allowing you to take full advantage of the opportunities offered by the subscription economy.
Key elements of subscription management
Regardless of how your subscription pricing is structured, the subscription management process can be broken down into 10 basic steps. (You might notice that these steps closely mirror the quote-to-cash process.) In an automated or self-serve process, some steps might occur behind the scenes—but they’re happening nonetheless.
The key elements of the subscription management process include:
- Engage: A customer or prospect expresses interest, which may include a request for a price or quote.
- Configure: The correct combination of products and services is configured to satisfy the buyer’s requirements.
- Price: Correct pricing is established for the required goods and/or services.
- Quote: A quote is created and delivered to the customer for review.
- Contract: A contract is created and negotiated (if necessary), then signed to formalize the terms of the sale.
- Order: Details of the subscription are compiled into an order and delivered to the fulfillment center.
- Fulfill: The customer receives the goods and/or services they purchased. Depending on the industry, this step may include complex activities like custom design and manufacturing, software provisioning, equipment installation, and scheduling of services.
- Bill: The customer is invoiced for their subscription purchase, according to the terms of the agreement.
- Recognize revenue: Payment is received from the customer and revenue is officially recorded.
- Renew: Recurring revenue is critical to the subscription model, so it’s critical to know when customers are up for renewal.
Each of these activities must be carefully orchestrated, in order to maximize subscription revenue and deliver an outstanding customer experience. A subscription management solution should be able to coordinate these steps flawlessly, leveraging data from every previous customer interaction.
Benefits of subscription management software
Succeeding in today’s subscription economy requires sophisticated software with the ability to improve subscription processes, eliminate manual steps, automate workflows, and connect data from disparate sources. Finding the right solution for your unique business is no small task, but the benefits are well worth the effort.
When technology is applied to manage the end-to-end subscription process, companies are able to:
- Offer more flexible and dynamic subscription packages to meet the needs of more customers.
- Streamline internal processes and automate repetitive, manual tasks.
- Provide a seamless, convenient buying process that delights customers and keeps them coming back for more.
- Prevent billing disputes and reduce revenue leakage with accurate quotes, contracts, and invoices.
- Improve sales performance and accelerate the sales cycle.
- Improve customer satisfaction by minimizing delays and eliminating errors.
- Drive predictable, recurring revenue and develop more accurate business forecasts.
- Maintain long-term customer relationships, improve retention rates, and reduce churn.
Common challenges of subscription management
Subscription management is complex, and failure to streamline the process with technology can have dire consequences. Among the most common challenges you’ll encounter are:
- Lost sales due to slow quoting processes or a lack of self-service options
- Billing errors because invoices contain inaccurate order and pricing information
- Payment delays because invoices are sent out late
- Customer complaints caused by mistakes and delays at any point in the process
- Missed renewal opportunities due to a lack of visibility into subscription terms and renewal dates
An integrated subscription management solution can help you overcome these challenges, reduce churn rates, and enhance the customer experience.
Essential features of subscription management software
First and foremost, a subscription management solution should make the end-to-end subscription process as simple and frictionless as possible. Subscription-based businesses are often highly competitive, and today’s customers expect a dynamic, agile experience at every touchpoint.
Following are some key features to look for in subscription management software:
Deal management: Selling is a critical part of the subscription process, even if you offer self-service options. Deal management functionality can help move deals through the sales cycle quickly—and save deals that may be in jeopardy.
Self-service buying: Whether you’re selling B2B or B2C, customers want a buying experience that’s as simple as ordering takeout. A self-service model requires software that’s flexible enough to handle a variety of subscription pricing models—and automation to manage back-end activities.
Automated billing and payment processing: Every subscription sale requires an accurate invoice and a vehicle for efficient payment processing. Automating these key activities can help to eliminate errors, improve the customer experience, and accelerate time to revenue.
Unified data: Running a subscription-based business requires a lot of data. To manage subscriptions effectively, you need to be sure that data from every customer interaction flows seamlessly between your CRM, CPQ, ERP, CLM, and other critical software.
Dashboards, reporting, and analytics: A subscription management solution should make it easy to analyze business performance and make intelligent, data-powered decisions. Customizable dashboards, real-time analytics, and granular reports put actionable insights at your fingertips.
Streamline subscription management with Conga
Automation is the foundation of the subscription economy. Through automation, subscription-based companies can quickly and accurately execute all the phases of the subscription process—improving operational efficiency and delivering predictable recurring revenue.
Conga’s end-to-end revenue management platform includes a suite of powerful tools that can streamline subscription management. And all of our solutions integrate seamlessly, both with each other and with your Salesforce CRM:
- Conga CPQ eliminates manual quoting processes and drives better selling behaviors. It empowers sales reps to configure complex products and services, deliver accurate quotes, and create smarter deals.
- Conga Composer lets you quickly build customized, branded, and personalized documents. What’s more, it eliminates manual document tasks to reduce errors, improve tracking, and improve the customer experience.
- Conga Sign is a modern, compliant eSignature solution. It secures the electronic signatures you need throughout the sales cycle, while increasing security and efficiency.
- Conga CLM lets you streamline and automate contract processes to accelerate the revenue cycle, while also maintaining control over contract terms and clauses to mitigate risk.
Request a demo today to learn how Conga solutions can help you streamline subscription management and maximize subscription-based revenue.