Ultimate guide to managing a subscription business
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Creating a connected customer experience
The B2B business world has changed forever. With a multitude of low-cost competitors emerging in almost every vertical and businesses with innovative revenue models competing for long-term buyer relationships, business buyers are in the driver’s seat.
This market shift, accompanied by advancements in technology, has enabled a variety of new sales and delivery options. Buyers can now browse, buy, and pay for a variety of products and services through multiple channels and modalities with agility and ease.
In this landscape, it’s no longer enough to have the best product or the lowest price. You must also be agile and easy to do business with throughout the entire customer lifecycle. Buyers want to purchase quickly, easily, and on their timetable. They also expect to be able to make updates, extend, renew and reorder—all without having to renegotiate their contract. Customers expect to get what they pay for and pay for what they get. This includes orders to be fulfilled, digital services to be provisioned, professional services/milestone services to be meet expectations, and invoices to be accurate.
If customers need to update a billing address, add or remove a new product or user to a contract, respond to new payment terms, or check on a delivery status, the expectation is that the interaction is hassle-free. This is true regardless of whether it’s done through a sales rep, channel partner, or website—whether it’s their first purchase or their 100th.
In today’s digitally connected world, this means it’s essential to offer a self-service buying and account maintenance option for your customers and partners.
For most businesses, it’s a challenge to deliver this level of digital engagement and operational excellence. Managing a connected customer experience through a lifetime of purchasing—from initial order through updates, extensions, and renewal—requires flawless orchestration. This becomes particularly difficult when selling a complex mix of physical products, digital goods like software, and services, which require billing against a variety of financial models and billing schedules.
As a result, savvy businesses are adopting new systems and processes that give them the agility to respond to changing customer needs, manage complex renewals for multiple product types, and support a variety of billing schedules—all in one place.
The Ultimate guide to managing a subscription business covers the challenges that today’s market and shift in buyer preferences have introduced. This guide recommends solutions for enterprise organizations looking to implement technology and approaches to manage end-to-end subscription business models and the complete customer lifecycle, thereby gaining a competitive advantage.
This guide is for organizations looking to adopt customer-focused business models and solutions for managing subscriptions. Whether looking to incorporate subscriptions into an existing strategy, or to become more agile without disrupting existing subscription services, technology should support the process, rather than stand in the way of innovation or growth. This guide is designed for businesses looking to deliver a seamless, end-to-end customer experience, while earning the maximum revenue from every customer.
Consumer preferences driving the subscription economy
In the age of Amazon and Uber, consumer-focused businesses have led the way in transforming the shopping and service experience. With a few clicks of a mouse or a couple taps on a smartphone, consumers can subscribe to have everything from shaving supplies to pet food shipped to their door on a regular basis—and can order a ride to come to them wherever they are.
This transformation doesn’t just impact purchasing—it impacts the customer experience across the entire lifecycle. Consider how painless it is to return and exchange items purchased on Amazon and how easy it is to update billing preferences, shipping addresses, or quantities purchased, no questions asked. The new customer lifecycle doesn’t stop at buy, it carries through add-on, reorder, renew, and—increasingly for successful companies—subscribe. Removing barriers and costs to sell, fulfill, and serve goods and services to the customer all adds up to top and bottom-line growth.
How the subscription economy benefits businesses
While the shift to more innovative purchasing models and consumer-friendly business practices clearly benefits consumers, businesses have realized that they can also reap the benefits of change.
From a pure cost perspective, the subscription business model is incredibly attractive. Not only does it deliver a higher return on acquisition costs by increasing the overall customer lifetime value—especially when you consider that the median cost of acquiring a new customer is $1.15 on the dollar, while the cost of an upsell is $0.57 and a renewal is only $0.15 on the dollar2—but it also gives businesses the recurring opportunity to connect with customers.
How the subscription economy changes the way we do business
Digital disruption has required organizations to explore new revenue models, like subscriptions, where long- term customer relationships are the foundation of revenue growth. Once a business has decided to grow its revenue through the growing subscription economy, it must understand how to manage the lifecycle.
In the subscription economy, the critical point of the sales relationship is no longer limited to the original purchase. It lasts for the entirety of the customer relationship, which might include upsells, cross-sells, returns, add-ons, extensions, and renewals. A successful subscription offering must facilitate the end-to-end experience, from the initial sale all the way through to fulfillment, billing, and renewal cycles.
Moving beyond ERP to enable subscriptions
With a blend of business models, including subscriptions, the process is fairly complex. A variety of activities that rely on data from prior customer interactions need to be orchestrated. In order to flawlessly coordinate all these activities, businesses must have the right IT infrastructure in place. If an outdated or inflexible system does not support the desired business model, sales will slip. An inability to bill can prevent a business from offering an innovative monetization model and go so far as limiting the growth of the organization.
Traditionally, revenue information lived within an enterprise resource planning (ERP) solution. In a world of one-time transactions this made sense, but in today’s world of subscriptions and blended business models, ERP systems are ineffective for handling the dynamic nature of revenue lifecycle data.
Home-grown solutions fail to scale
When looking to extend a classic ERP system to handle recurring revenue, some companies have tried leveraging their existing software engineering resources to develop a custom system, which is tightly integrated with their digital service or backend software or tied to layers of complex spreadsheets.
Conga understands the drivers that fuel the subscription economy. We’ve been automating and optimizing critical revenue and commercial relationship management processes for over a decade. In an age of unparalleled customer focus and business complexity, it is impossible to get the full view of the business, drive predictable results, and keep up with customer expectations without a comprehensive, leading platform for transforming commercial operations.
To learn how a true subscription management solution helps you succeed, download our full guide to get the whole picture.