Presently, subscription billing has become one of the best business models. It is attractive for different enterprises because of the better chances of earning revenue. Just like any other business model, subscription-based businesses have their opportunities and challenges.
Using efficient subscription handling software can streamline many processes, but there remain the pain points that you have to deal with. If you want to beat the challenges in the subscription business market then first you need to identify them.
Following are some of the common challenges that companies having subscription billing model face when their business is growing:
Pricing Strategy Improvisation
All SaaS retailers are aware of the reality that they cannot sell their SaaS products or services with a fixed pricing strategy or a fixed price. It is the age of innovation, and the SaaS industry is the domain where you can visually witness innovation all the time. The simplest example is the newer versions of software that you use on daily basis. Companies offering their SaaS products on subscriptions also modify these products.
They improvise their pricing strategies to launch a new SaaS product, relaunch a SaaS product in a new market, or launch the latest version of their existing SaaS product etc. It is a challenge for recurring billing businesses to decide the price for their products and services at the growing phase of the business.
If it is also difficult for you to improvise price for your SaaS product, then you can use SubscriptionFlow as your subscription management platform and contact their experts to help you with pricing strategy.
Failed Transaction Management
Even if you use the best subscription management software, you will have to deal with the failed transactions. There are varied reasons for payment failures, but the point of concern is it is a major cause of involuntary churn. Many subscription handling systems when fail to recover payments from subscribers they enlist these subscribers in the ‘payment failure’ list.
Your automated payment system has to be efficient enough to manage these payment failures. It should let customers try again and generate automated notifications for effective communication with your customers. Your system also needs a well-integrated dunning management system. It will help you keep your customer engaged and resolve their payment issues without any annoyance.
It is discussed earlier that some subscription management platforms cancel the subscription of customers when a recurring payment is failed. This cancellation of a subscription is called involuntary churn because in most cases neither the customer nor the merchant wants to end the customer journey.
As it is not possible to turn the clock back likewise you cannot bring back the gone customer. If you want to beat this challenge, you need to be proactive. One of the proactive methods is smart dunning. Your recurring billing management system needs an effective mechanism for dunning.
To put it simply, dunning is effective communication with your customers for customer retention. It is a solution to handle churn and failed transactions. However, it becomes a challenge if not handled, effectively. The tone to address the customer is the most important factor in the process of dunning.
Many SaaS companies, when replacing default dunning email templates with customized ones fail to follow a polite tone. Always remember, your improper tone can waste the time and energy that you spent to formulate a dunning management strategy.
Subscription billing is popular among customers because they can change their subscription plan when they feel the existing one is no more satisfactory. However, managing this change in the subscription plan for many subscribers is a challenge for the subscription merchant.
Difficulty in handling the prorations can cause billing & invoicing errors. Many subscription business entrepreneurs do not even give the option to switch subscription plans to avoid any complexities that occur in the process of billing because of proration.