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Subscription as a Service is becoming increasingly popular in India. Subscriptions, a model once very centric to the software services industry, are now found in many sectors and domains across the country.
In fact, more than 80 companies in India now extensively work on a subscription model, including Hotstar, Country Delight, Jio Saavn, Netflix, Smitten, Furlenco, and more. The primary reason behind this is a shift in customer behavior. People do not want to own an asset, they just want access to a service the asset provides. They would instead prefer to subscribe to a service provider and pay a small amount regularly a premium. This is also great for businesses, which can turn one-time users into lifetime customers with subscriptions.
In this blog, we will discuss how businesses can get the most out of recurring payments with subscription management, its importance and benefits, how it differs from recurring billing and its related counterpart, and some industry use cases for a richer conceptual understanding.
Let us start by first defining what is subscription management?
What Is Subscription Management?
Managing recurring payments for customers at scale becomes difficult without a tech-enabled process that automates when, how, and how much your customer will be charged for access to the services you offer. Subscription management involves working with these levers to generate the most value for your business and includes:
- Managing trial periods
- Assigning credits (if opted for)
- Making mid-cycle subscription changes
- Issuing refunds, etc.
The automation enables you to offer a better experience to your customers across their buying journeys and, maximizes adoption, renewals, retention, and even growth.
Why Is Subscription Management Important?
Solves Recurring Financial And Accounting Needs
Subscription management is complex and challenging. Your customers may want to change their subscription plan several times during the course of their relationship with your business. And, each time this happens, you need to re-evaluate their finances and accounting. Doing this manually can be highly daunting. This is why subscription management comes into play. A smart system like this will not only help you to manage these recurring changes but simplify your business job and ensure customer satisfaction at all times.
Organises Large Subscriber Data
Managing the subscription data of 10 odd subscribers is a fairly simple job. Things change when you are dealing with hundreds and thousands of subscribers at the same time. Managing their data effectively and efficiently becomes paramount.
Businesses are best served with a solution that allows them to set up various plans for different customer cohorts, and gives you complete control and visibility on how your subscription-based business is performing. It also automates the process of changing renewal cycles or subscription amounts based on the user changing plans.
Improves Customer Satisfaction Level
Besides the above-mentioned points, subscription management also makes it easier for subscribers to do business with your organisation. Users can effectively take advantage of the automated functions and eliminate the need to expend manual operational effort. Hotstar, Netflix, and even Country Delight are excellent examples to quote here.
Quick Amount Calculation And Payment Capturing
Good subscription management also takes care of subscription amount calculations and payments.
To give you an example, if you have subscribed to Hotstar’s Super Plan and wish to upgrade to their Premium subscription plan, then the platform auto-calculates the amount you need to pay on a pro-rata basis.
These upgraded payments are automatically updated in the user’s profile in the dashboard and capture the payment received, eliminating the need for human intervention. The effective and transparent mechanism also helps instil a level of trust in the mind of customers.
What Are The Stages Of Subscription Management?
An ideal subscription management system or service provider offers subscription services across five stages. These are as follows.
At this stage, the subscription management tool helps display different types of subscription plans with various pricing models that your company supports. A customer can easily take a look at these plans, and the entailed services, and take the desired action.
Add-Ons And/Or Discounts
Many times, new customers need their push or persuasion to sign up for your business’s subscription plan. With subscription management tools, you can configure discounts or add-on deals to each of your plan offerings to make them more enticing for the customers to opt for.
As a rule of thumb, always take extra care of your existing customers and their needs. If any of your existing customers want to upgrade their plan, put in place a system that is highly streamlined and simple. Subscription management helps achieve this level. The system ensures that your existing customers are able to take the desired action without any hassle or second thoughts.
Renewals are highly critical to any business running on a subscription-based model. To ensure your existing customers renew their services, make use of subscription management tools. The system helps automate your subscription renewals, and even helps upsell, cross-less, and even bundled deals at the time of renewals. Meanwhile, you can also add incentivisation features that not only add value but accelerate buying decisions.
Apart from the above-mentioned stages, a subscription management tool also helps manage subscription closures. It auto-fetches the data of people who ended their subscription and puts it in a different folder. You can use this database for your marketing campaigns such as sending emails to revive subscriptions and so on.
Different Types Of Subscription Pricing Models
Ideally, five types of subscription pricing models exist in the Indian landscape of things. These are as follows.
This is the most common and simplest type of subscription model. Here, the customers pay for those services that they use in a span of a month or otherwise defined period. Since there is no such commitment attached to this kind of subscription service, customers can easily cancel it at any given time. Pay-as-you-go is very common among software companies and cloud computing service providers, where usage usually fluctuates from month to month.
With a flat-rate subscription, customers pay a set price each month for access to the product or service. This is common among SaaS products, where the customer base is relatively stable and usage is consistent.
A tier pricing model offers different levels of service at different price points. Customers can choose the level of service that best meets their needs, and businesses can upsell customers to higher tiers over time. This type of pricing is common among managed services providers, where there are a variety of service levels on offer.
With a usage-based subscription, customers are charged based on their usage of the product or service. This type of pricing is common among utility companies, such as electricity providers.
Features To Look For In A Subscription Management Solution
To effectively and efficiently run a subscription-based business, you need a good management tool by your side. Listed below are seven features to study before finalising a subscription management solution.
Cashfree Payments is an excellent subscription management partner that allows you to simplify your subscription-related needs and offers the most streamlined and intuitive payment system as well. Cashfree’s powerful dashboard allows businesses to set up multiple subscription plans and onboard customers with automated payment flows and reminders on those plans. It also allows businesses to set up ad-hoc plans, which is useful for lending and other service providers where the amount and payment schedule would differ from user-to-user.
Flexible Billing Options
Any subscription management platform that you choose must come with the ability to support multiple pricing models. That is because, as a subscription-based business, you would like to offer your customers the flexibility of choosing between multiple plans as per their needs and demands.
Moreover, the subscription management platform must also be easy to understand so that the sales and finance team can take advantage of the tool and manage deals in a better manner.
The next feature to look for is an advanced invoicing system. You are not dealing with a handful of customers, but hundreds and thousands at a time. Your team cannot manually generate invoices and ensure they are correctly sent to each customer. An advanced invoicing system can help streamline this process by automatically generating invoices, sending them to the client at the end of every billing cycle and giving your business the accuracy it demands.
Meanwhile, also check if the solution offers complex accounting features or integrates easily with your existing accounting system to prepare and generate separate and consolidated invoices.
Multiple Payment Options
Next on the list of features is the ability of the subscription management tool to provide you with the option to accept payment via multiple digital payment modes. These should include UPI, net banking, credit/debit cards, Pay Later, and EMI.
But, why does it matter?
This matters because people today are more inclined towards making online payments, however, with a payment method of their choice. If you fail to offer a vast variety of options, it is quite possible that a percentage of your potential customers may not subscribe to your services due to a lack of the right payment option on your website.
So, select a platform that provides multiple options. Cashfree Payments is a good example to quote here. The payment gateway company offers 120+ payment options ensuring every customer finds a payment mode of their choice.
Tax Compliance And Other Accounting Standards
Besides offering multiple payment modes, your selected tool must also have an automated tax compliance feature so that you can operate and scale your business smoothly locally and across borders.
With a handy tool with such features, you
- Need not worry about tax calculations and updates
- Remain compliant with the country’s sales tax norms, VAT, and other taxations, that may apply
The same applies in the case of accounting standards. As a business, you need to adhere to many accounting standards. So, find a solution that helps solve this issue for you.
Customizable Analytics And Reports
Every piece of information collected is critical for business use. That is because, it is this data that helps you, as an organisation, to study many customer behaviour trends, track essential subscription-based metrics, gather insights and gauge your performance, and take many crucial business decisions. So, find a solution that allows you to capture, analyse, and access such critical data.
Multiple Integration Options
This is another critical feature to consider for your subscription-based business. When selecting a subscription management tool ensure that it comes with the capability to integrate with multiple business tools. That’s because seamless integration with other business tools such as customer relationship management (CRM), enterprise resource planning (ERP), accounting, communication, etc., can help unlock many additional features beneficial for your business.
Notifications And Reminders
Last but not least, look for a subscription management tool that helps send automatic alerts and reminders to customers about their subscription plans and related information. The capability not only helps effectively communicate with customers but keeps them updated as well.
Services must include sending,
- Automated alerts to nudge people to subscribe after they have signed up on your platform
- Payment reminders at regular intervals
- Upgrade notifications to unlock more features
- Notifications to inform customers about any new feature launched and related communications
Subscription Management Vs Recurring Billing
These are apparently two of the most confused and usually interchangeably used terms across industries. However, there is a fine line of difference between subscription management and recurring billing. To state the fact, recurring billing and payment collection is a part of subscription management.
Most subscription management tools come embedded with features that help support recurring billing. While most recurrent billing tools only focus on offering features needed to ensure every stage of the billing process runs automatically and without a glitch.
A subscription management tool takes care of many other related functionalities as well including, an advanced invoicing system, sending reminder and notification nudges, complying with taxes and other regulations, offering multiple integration options, and so on.
Subscriptions are increasingly becoming the go-to models for many businesses operating across a plethora of domains. However, the success of such a model is only possible when it is backed by a good subscription management flow. Find a solution that best suits your business needs and assures scalability over time.