Let’s face it: the subscription-based model provides you with loads of valuable customer data but, unless you hire a full-time data analyst, it’s impossible to make full use of them. Moreover, managing subscription plans of every single subscriber manually is a real nightmare. That’s why subscription management software has been created. What is it and how to make the most of it?
Subscription Business Models’ Challenges
When you operate in any subscription-based business model, you enjoy numerous benefits resulting from the prevalence of recurring transactions over one-off deals. Apart from revenue predictability and liquidity, savings in operational costs or increased customer retention figures (discover more benefits here: 4 Reasons to Migrate to the Subscription Business Model), you get an extra bonus in the form of detailed customer statistics. As subscribers stay with you for longer, they provide you with more information about themselves. Thanks to that, instead of, well, guessing, you are able to make data-based generalizations about your subscriber segments. And this, obviously, empowers your marketing and sales.
If you’re a newly-founded startup or launch a completely new service, handling the amount of data your customers deliver may not be problematic. If, by contrast, your business is already scaling up or have grown to a substantial size, this quantity might be overwhelming. In that case, it’s useless trying to calculate everything manually and draw conclusions as it simply takes too much time. Fortunately, payment technology is here to help: you can make use of subscription management software.
Apart from facilitating data usage, such solutions are a blessing for those who manage a number of diverse subscription plans and, logically, a much higher number of subscriber accounts. Again, doing it manually is extremely time-consuming and requires significant human resources. With a subscription manager, account management becomes easier and highly automated. So, what exactly is that?
What is Subscription Management? – Definition
Subscription management software (aka subscription manager or recurring billing software) is a platform that allows you to manage subscription plans offered by your business and your subscribers’ accounts as well as monitor the recurring revenue generated by your business. In a nutshell: it automates certain procedures connected with your subscription services and facilitates handling your subscribers’ data.
Subscription managers may be both:
- external software functioning independently of your payment gateway,
- an integral part of your payment gateway accessed through API and online dashboard.
In the first case, your payment service provider doesn’t offer you a subscription manager, the consequence being the necessity to buy external software serving exclusively this purpose. Apart from generating redundant costs, it requires your IT department to perform an extra integration, which always consumes much of their time. It’s worth adding that companies offering independent subscription management software can’t guarantee compatibility with your payment gateway. In fact, they usually enable integrating their product only with the most popular payment gateways although there are literally thousands of them on the market. All in all, it’s quite likely that you’ll have difficulties doing so.
In the second case, your payment gateway provider gives you access to their integral product. Not only does it save your money but also eliminates the necessity of integrating other software. Thanks to that, you can start working with your subscription manager much earlier. Additionally, you save much of your developers’ time.
Theoretically speaking, there’s one more option: developing your own subscription manager. It’s not recommended, though, unless it’s meant to serve enterprise purposes. When done internally with the use of one’s IT department, it takes much of the developers time (let’s not forget the cost of their work) and doesn’t guarantee undisturbed performance. In fact, one should expect many errors and integration problems at the beginning of the usage. Subscription manager development may be also outsourced but, believe me, it requires significant resources.
How Subscription Managers Work?
Numerous payment companies offer subscription managers with diverse functionalities yet not all the products available will meet your requirements: these, of course, differ from business to business. Nevertheless, there are several common denominators, i.e. basic features all quality subscription managers have:
- subscription plans definition: your subscription management software should enable you to create various subscription plans (e.g. basic, pro and premium) to be included in your offering; within the plan, you should be able to set the plan name, billing frequency and billing quote (if needed, also a free trial duration),
- subscriber account management: your subscription manager should let you manage your subscribers’ accounts, i.e. assign them specific subscription plans or cancel them permanently; it’s also convenient to be able to update a subscriber’s payment method (e.g. when their credit cards expire),
- subscribers’ transactions history: subscription management software should provide you with an overview of a given subscriber’s transactions and billing cycles within their current plan as well as the previous ones; it’s also a feature allowing monitoring your subscribers’ lifecycles,
- billing automation: your subscription manager should enable you to collect scheduled subscription payments automatically (commonly, through the use of card-on-file payments or direct debits) without the need to trigger collecting manually; additionally, it may give you the possibility to make refunds when needed,
- payments optimization: subscription management software should optimize your recurring payments collection, e.g. increase transaction approval rate (learn more: Optimizing Card Payments: Smart Retry),
- recurring revenue overview: your subscription management software should deliver meaningful statistics visualized in an easy-to-digest form (such as charts) that will facilitate making informed marketing and sales decisions on a daily basis; it should be both information about your subscribers and the revenue stream they generate.
Subscription Management Benefits
As stated before, utilizing subscription managers is connected with numerous, measurable benefits. They are connected with your operational activities, marketing planning, financial management and many other areas. Although these benefits are nearly infinite, the most important ones include:
- facilitated financial planning: subscription managers allow you to monitor your recurring revenue in an easy way thanks to clear data visualization; as you know exactly where your revenue come from (i.e. which subscription plans generate most income) and what resources you may expect in the following cycle, you may plan your operational spending accurately,
- marketing data delivery: customer statistics provided by your subscription management software are a great foundation for marketing planning: subscriber segmentation, customer lifecycle management, up- and cross-selling applying and much more; easy subscription plans management also enables A/B testing aimed at creating more profitable pricing,
- customer help support: subscription managers provide you with a clear subscriber experience history, so when a problem appears, you may access their transaction history easily; additionally, you can make a refund as well as subscription plan modification or cancellation right from the manager dashboard level,
- time and money saving: subscription managers delivered by third-party companies eliminate the need to create such a solution yourself which saves your IT department’s time (and your money spent on developers’ salary) or, in the case of outsourcing, much of your financial resources.
Our Approach to Subscription Management
Straal Subscription Manager is an example of a reliable, well-designed subscription management product. Merchants receive it in addition to our analytical-managerial platform Kompas, delivering meaningful payment statistics of one’s online business. It’s an integral part of our suite of solutions, including also payment gateway and risk management system so when contracting us, you can get an all-in-one package, which eliminates the need to integrate the subscription management software with external products. Thanks to that, once integrated with your website or product, our subscription manager is ready to use and it functions without redundant yet resource-consuming errors.
Our solution contains all the essential features of a high-quality subscription management software and, additionally, optimizes your payments collecting. This smart feature allows you to enjoy all the benefits of the subscription-based business model and take maximum advantage of the most popular payment method in the online world.
Should you have more questions as to how subscription management software works, our Sales Team is here to help you – just drop us an email and we’ll be happy to resolve your doubts!