5 questions that determine how well you're managing your subscriptions
by Niclas Lilja, on Aug 7, 2019
Running a business is hard. If it were easy, everyone would be successful at it. But with subscription based businesses, the recurring revenue model can make things go a lot more smoothly and easily - both for you and your customers.
However, some of us still manage to mess it up! That's because managing subscriptions has many moving parts that require your attention and when you focus too much time on the wrong parts, opportunities can slip through the cracks. Before you know it, you're floundering, and it's likely because you weren't managing your subscriptions properly.
How to tell if your priorities for subscription management are in order
To ensure that you are making the most of your subscription management, you should look to a few critical questions that should be addressed first:
1. How many systems do you have for managing subscriptions?
It's a rule of thumb that in general if you are using many different systems, you probably could be managing your subscriptions better. Too many tools often lead to too many disconnects and in some cases still can create the need for manual process and reporting.
When you need to physically compare your financial reports to your customer usage data, how efficient can you possibly be? Using all-in-one type solutions can ensure that subscription management becomes a much more streamlined process.
2. How do you treat the subscription lifecycle?
How you handle each of your subscription lifecycles can make a difference in how well you're able to manage subscriptions in total. Because it is likely that your contracts may change over time (hopefully due to renewals, upsells, added features, etc.) you'll need to think about versioning and the audit trail you have in place.
3. Do you use automated billing?
There are few things as time consuming as manual invoicing and billing, especially as you grow and start to handle more and more customers. Automating as many of your processes as possible will help to streamline your subscription management, but especially your billing.
With recurring revenue models, one of the benefits is having the ability to make recurring charges and receive standard payments. Of course if you have more complicated contracts that include usage rates or other changing factors, it becomes more challenging, but that's why you need to have a system in place that integrates all of your systems into one.
4. Do you automate revenue recognition?
With recurring billing, you'll likely conduct revenue recognition for your business to help determine growth, forecasting, resource allocation, and a host of other factors for managing your company. But if your process for revenue recognition is manual, it can present some challenges.
First, again it can be time consuming. Any process which takes a manual step also has room for error, or may not be done in a timely fashion. By ensuring that your billing process automatically integrates with financial reporting, you have better control over your subscriptions and your business.
5. Do you have automated data collection and clear KPIs?
And speaking of data, do you have tools for data collection for metrics that you measure against defined KPIs? How well do you have insights into your subscriptions, your customers, your usage, your churn rates, your marketing and sales conversions?
Without proper data reporting, and automatic analysis, you may find yourself missing opportunities for growing your business, preventing customer loss, or improving your products and services.
These are the five questions that really determine how well you are managing your subscription portfolio, and can indicate where you should make improvements that will immediately benefit your business.
Want to see how well you're managing your subscriptions? Try out our subscription growth calculator to see if you have the support you need to run a successful business.