Unlock the full potential of your subscription business: 3 must-have reasons to use subscription management software

Metaphor: Subscriptions are more than just recurring revenue and invoices.

What is the first thing that comes to mind when you think of Usain Bolt? I’m pretty sure you’ve heard of him. He’s probably one of the most famous runners of our lifetime. Surely, you think of the records he has set. Perhaps the 2009 World Championships in Berlin, where he ran the 100 m in 9.58 seconds? Faster than anyone alive! The second thing you probably think about is the years of hard training it takes to achieve that kind of success. We’re good at looking at results. But sometimes we tend to ignore the long road it took to get there.
The same goes for subscriptions. The result of a subscription is a recurring invoice, but there is so much more to think about.

Reason 1: Gain Business Agility with Subscription Management Systems

Subscription management systems give you the agility to respond more quickly to change. We find that subscription businesses are more volatile than transactional ones. There are several reasons for this.
In a subscription business model, you put your customers at the center of your business model, which means that changing customer needs can mean a changing your business model. If your industry is new to the whole subscription business, you need to find a model that works for you and your customers, which can be quite challenging. Subscription businesses try to build an ongoing relationship with their customers – the model changes from ownership to usership – therefore you need to find a model that makes sense for both you and your customers.

Another reason is to decouple your subscription management system from your transactional one. Decoupling is something we do a lot in software development. Why do we use REST APIs? It’s because they’re loosely coupled. Why do we prefer microservices to monoliths? Because they’re loosely coupled. What are the benefits? Problems in your subscription business won’t have an impact on your transaction business, and vice versa. Let’s say your subscription business is generating more load. It will need to generate more invoices. You may be offering a subscription based on usage, so you will also have to mediate and evaluate rate the usage data. Overall, this could have a negative impact on your existing system. Another example might be that you’re working on your transactional business and your subscription business at the same time. Both businesses would cause the system to change. This could be a major headache. Some of our customers really understand the importance and benefits of decoupling. They’re using multiple instances of a subscription management system to handle their different types of subscription business.
Just a quick side note on agile software development: We think it’s a great way to get started with your subscription business. Aim for going live as soon as possible! It doesn’t need to be 100% feature complete. Accept some limitations. Rather than having a system that has all the features but nobody uses it, it’s more important to test your business model. Let’s take an example. Finally, all transactions must be transferred to the general ledger. Depending on your system, there may be different ways of doing this. You could either post a summary once a month or every single transaction that occurs. It may be sufficient to take the easy way out and use the better supported solution before implementing your desired solution.

Reason 2: Maximize Efficiency and Flexibility with Automated Subscription Management Systems

Automation is a major issue in many different industries. Whether you produce physical goods (car manufacturers) or digital goods (software): You want to automate your business as much as possible. The same goes for subscriptions. In “Reason 1: Agility”, we already assumed that we’d generate more load and therefore more invoices. I think we can also assume that their total billing amount will be lower compared to the invoices in our transactional business. The automation of a subscription model also makes us more economical. You can save a lot of time if you don´t have to modify invoices manually, and your colleagues in the accounting department can focus on other issues rather than making manual corrections to invoices.
The most successful subscription models offer customers the flexibility to choose between different plans. You should really embrace the flexibility of subscriptions because changes will happen. Now you’re facing issues that you may not have faced before in a business world based on single transactions. Can users upgrade or downgrade their plan? Can they change it immediately? Or only at the end of their term? Does their device – if a device is included in the subscription – support that plan? These are the questions that a subscription management system will help you automate.
Another example: Suppose you offer a subscription that includes a device and a digital service. Your main customers are workshops that belong to a large chain. So, it’s B2B. Sometimes workshops change ownership. The old owner still has a few other workshops that he runs, and the new owner already has a few other workshops that are already using your product. Nothing has really changed for you except that one of your customers now has an additional device and one customer has one less. This small change may only result in a 2-digit change. Nothing you want to do manually. You want to automate it.

Reason 3: Save Time and Stay Focused with a Dedicated Subscription Management System

Using a dedicated system that was designed with subscription businesses in mind will help you focus on your service or product. Leave as much as possible to the Subscription Management System. A dedicated subscription management system has an entire product team behind it. There are developers and consultants who can help with your particular case. You will probably get to a point where the system is missing a feature you really need, but it’s easier to develop a single missing feature in an existing system than to develop the whole system yourself. It could also be a sign that you have lost your way. However, this decision shouldn’t be dictated by a system, but you could use it as a hint to rethink your approach.

These are three reasons why you should use a subscription management software. Subscriptions are more than just a recurring invoice. They introduce a whole new level of complexity. A subscription management system will give you the agility and automation you need to grow your business to grow and make you happier in the long run. Almost as happy as Usain Bolt must have been when he set a new world record.