Subscription Management - Meaning, Components & How to Automate It

There’s more to running a subscription-based business than automatic billing and recurring payments. Learn more about subscription management and how to optimise it.

Part of the allure of the subscription business model is how it can automate billing, which reduces labour costs, improves billing accuracy, enhances payment security, improves sales tracking and monitoring, and creates healthier customer relationships.

But what isn’t immediately apparent when you first consider implementing subscription billing in your business is that not every process can be easily automated. The sum of these processes is what’s referred to as subscription management.

This article is a guide on subscription management. It discusses what it entails, why it’s essential to do it right, and the tools you need to succeed with your subscription business in Kenya.

What is subscription management?

Subscription management includes all the processes and tasks of handling customer accounts to successfully collect recurring payments, grow sales, and reduce churn. It encompasses every task between customer sign-up and subscription cancellation.

Typically, these are processes and tasks that can’t easily be anticipated and scheduled, like billing. The nuts and bolts of subscription business operation.

Essentially, subscription management is everything you do to build ongoing relationships with customers throughout their lifestyle or association with your business.

Subscription management aims to smoothen customer onboarding and ensure that the customer’s experience with the business is long and satisfactory.

Some of the tasks that constitute subscription management are:

• Managing free trials,

• Updating billing information,

• Responding to customer queries,

• Calculating discounts and issuing refunds, and

• Processing account cancellations.

The success of your subscription business hinges heavily on how well you accomplish these tasks. It determines whether you can nurture new sign-ups into loyal, long-term customers.

Before delving deeper into what subscription management is and how it works, let’s talk about what it is not:

What is the difference between billing and subscription management?

Billing refers to how you charge customers for your products and services. In a subscription business model, those customer payments will be recurring and automated.

On the other hand, subscription management is much broader and encompasses all the tasks involved, from when you onboard a customer to when they cancel their subscription, including how you manage free trials, discounts, upgrades, account profiles, and queries.

You could, therefore, say that billing is just one small part of subscription management. It is one of the many processes of running a successful subscription business.

Billing is only prominent because it is one of the parts of running the business that are easy to automate. It's that automation that enables recurring payments.

Subscription management is also not to be confused with subscription pricing, which is how you bundle products or features into a plan or subscription box and set a price for them. Subscription pricing is a subset of the subscription management.

Let’s now break subscription management down into its individual stages and processes to understand what goes into running a successful subscription business:

The components of subscription management.

The subscription revenue model turns one-time customers into recurring subscribers. But with that comes the work of servicing those customers.

Servicing customers means processing their requests and responding to their queries in a timely and professional manner so they can feel satisfied enough to keep subscribing.

Evidently, subscription management has many components. Let’s break these down below:

1. Customer signup.

Before you can collect recurring payments from customers, you have to sign them up. While there’s a lot of work involved in gaining the attention of prospects, the biggest task is nurturing them and convincing them to sign up.

Many customers will not immediately commit to a paid or long subscription cycle and must be enticed with demos and free trials. Getting them to commit to a paid subscription is the first stage of subscription management.

2. Discount management.

If you offer a SaaS product, free trials and demos are some of the best sales tools you have. Those, however, do not work very well if you sell a subscription box. Discounts work best, and they require a system to manage.

3. Up-sells and cross-sales.

The key to growing revenue is to sign up new subscribers. But since it costs more to attract new customers than retain them, and you can only grow your sales so much before you reach market saturation, it is easier - and critical - to get your current customers to spend more.

To get your customers to spend more, you can either up-sell by recommending a higher tier (pricier plan) of your product that offers more premium features or recommend a different product or service than they are currently subscribed to.

To ensure the customer experience remains a positive one, you want to ensure the process of upgrading a plan is seamless and fast. If it’s not, customers may cancel their subscriptions in frustration.

4. Payment information updates.

Customers change their banking information all the time. This typically defunds the debit or credit card you have on file and means the customer has to update their account by adding their new card.

If customers don’t update their payment information, it means any charges you make to their account will fail. That represents lost revenue.

So, it is part of account management to follow up with customers whose payments failed and remind them to update their payment information.

5. Refund management.

If your systems are manual or you use a CRM platform that does not integrate with your automatic billing system, it is possible to keep charging customers who have since cancelled their subscriptions.

That can annoy customers and either turn them off your brand for good or motivate them to talk negatively about it to potential customers. However, an efficient refund system may rescue the situation and protect your business’ reputation.

6. Account pause.

There are instances where a customer may be satisfied with and truly enjoy your product but have a valid reason to pause it.

An example is a subscription box for a hobby that a customer cannot practice because they will be too busy or have to travel abroad for work. Or they may have a box of materials they have not used because they were busy.

So, instead of cancelling their subscriptions, they would rather pause them. How you manage this circumstance and ensure the customer isn’t charged for the time they have their subscription on pause determines if you can retain their custom.

7. Subscription cancellation.

A subscription cancellation should not have to be a messy divorce. Successful subscription businesses know you must handle these as professionally as you do sign-ups.

A subscription cancellation may not mean deleting a customer’s information from your database. But it must involve disabling recurring payments on their account so they don’t get charged when their current subscription ends.

Cancellation may also trigger an email sequence to gather reasons why the customer cancelled and periodic check-ins to ascertain if the customer’s situation has changed so that they may reactivate their old subscription. Netflix is an example of a subscription business that does this well.

How to optimise subscription management with software.

Managing a recurring revenue business is a complex process. It involves so many steps that it is possible some tasks may get neglected if you have to do everything manually.

Subscription management is easier when your customer base is small. But as you add more and more customers, making sure every component of subscription management works together harmoniously gets increasingly harder.

The solution to this is to automate your operation with subscription management software. The software ties together the different parts of subscription management - billing and merchant, subscriber, payment, and analytics tools.

A subscription management platform like Intasend aggregates tools that work together to automate and optimise the entire subscription management function.

Without this software, it would be extremely difficult to manage subscriptions as your business scales and your subscriber base expands.

You will constantly be fire-fighting, fielding calls and suffocating under the weight of emails from angry customers who keep getting charges on their cards despite cancelling and those who didn’t receive their shipments because you sent them to their old addresses.

With a subscription management platform like the one Intasend offers for its customers in Kenya, creating subscription plans, updating customers’ payment and shipping information, effecting plan upgrades, refunding customers and processing discounts, attributing and forecasting revenue, and even making price changes only takes a few clicks.

Sign up for an Intasend business account to enjoy our business payments tools and book a demo to see how our subscription management software can boost your sales and make it easier to run your subscription business.