More and more companies are turning to the subscription business model to generate dependable, predictable recurring revenue. Enterprise is the perfect example, offering unique monthly car rental subscriptions. Considering the car subscription market is expected to grow by 71% by 2022, it would be surprising if Enterprise didn't jump on this opportunity.
Leaders across other industries are becoming more mindful of recurring revenue models as well. After all, subscription businesses are growing five times faster than the average company. According to new research, 70% of businesses believe that membership and subscription models are key to future growth and expansion. These businesses include those in finance, retail, automotive, utilities, and leisure.
So, what does the future hold for your subscription business, and how can monthly billing software help you succeed?
Billing is one of the most critical components of any business. Of course, the most obvious reason is that billing drives revenue and revenue allows you to grow. However, there's another aspect of billing that is often overlooked — customer relationships. This becomes even more important when running a subscription-based business. Unlike one-off sales, subscription billing can be fairly complex.
Monthly billing or "recurring billing" software is designed to invoice and collect payments on a subscription basis. This will help you better manage the financial lifeline of your business. Whether you operate a monthly subscription box brand or own a fitness studio, monthly billing software will help you automate the entire billing process. This lets you take a step back so you can focus on the big picture — growing your business.
Besides generating invoices, monthly billing software can also help you better manage things like discounts, special offers, or free trials. The top platforms will also help you address everything related to billing and payment processing, including subscription management, accounting, fraud management, etc. When these processes are automated and operating at a high standard, you can focus your time and energy on the growth of your business.
There are dozens of options to choose from. However, not all monthly billing systems are created equal.
Although there are plenty of accounting software options and payment gateways available, these will not likely meet your needs. Operating a subscription business is complex, and if you don't want money left on the table, you need to invest in software that allows you to maximize profits and save one of your most valuable resources — time.
On that note, the most obvious reason to partner with a monthly billing system is to enable and streamline all aspects of the billing process. You will collect payments from customers with ease while offering them a range of flexible payment options. As Jeff Bezos, Founder and CEO of Amazon said, "If there’s one reason we have done better than our peers in the Internet space over the last six years, it is because we have focused like a laser on customer experience, and that really does matter, I think, in any business. It certainly matters online, where word of mouth is so very, very powerful."
While operating a subscription-based business, customer experience needs to be a top priority. Customer retention and churn rates significantly impact your business now and in the future, so the goal is to make the process of signing up and paying for a subscription as seamless as possible.
Recommended reading: Churn and the Subscription Model: A Comprehensive Guide
When it comes to the timesaving benefits, subscription billing software will eliminate any manual invoicing, which increases the risk of error. Advanced subscription billing services can also help automate the adjustment of subscription plans and the month-end closing of the books. The goal here is to support your finance and accounting department so that they can focus on projects that significantly impact the ongoing success of your business.
Next, consider the financial savings. When you work with a reputable subscription management software company, they will provide you with the metrics you need to make more informed decisions. These are the types of decisions that could significantly influence the direction of your business. By analyzing this data, you will better understand churn rates, new potential revenue streams, and add-on or upsell opportunities. Then there's the fact that subscription billing software will help you recover payments that may have otherwise been lost.
Before diving into the benefits of monthly billing software, it's important to discuss the advantages of monthly recurring billing. Being mutually beneficial for both you and your customers, this is an excellent business model because:
It reduces the risk of missed or late payments, as well as the administrative costs associated with chasing payments
You can avoid conversations about late or missing payments, focusing more on positive interactions with your customers
Accounting processes become much easier and less costly
There's a reduced risk of security issues
Customer retention may increase
Customers experience greater flexibility, simplicity, and gratification
It's clear that recurring billing is ideal for both you and your customers, which covers the why — but what about the how?
To make the monthly billing process efficient and secure, you need to invest in the best monthly billing software for your unique needs.
The benefits of monthly billing systems are vast. When you invest in this type of software, it will help you:
Automate the invoicing and billing process
Tracking plan upgrades, downgrades, and cancelations
Recover revenue from your subscribers who involuntarily churned
Increase privacy and security measures
Improve the customer experience by offering a seamless billing and payment process
When it comes to choosing monthly billing software, you'll want to partner with a platform that:
You likely understand the value of offering coupons and free trials, but it's easier said than done. That is why you should look for a software company that will easily configure these offerings so that your customers have the best experience and you can increase customer retention rates and revenue.
Speaking of revenue, your subscription business needs to stay on top of involuntary churn. To do so, look for a monthly billing software provider that prevents the loss of subscribers based on a proven revenue recovery process.
Your customers will have different needs and preferences, especially when it comes to payment. To thrive as a subscription-based business, you'll want to offer different plans and billing options. Learn more about which subscription billing model is best for your business. You'll also want to consider the capability of multiple gateways, supporting you and your customers based on geolocation and product type.
Your business needs to be a well-oiled machine. From your CRM to your accounting software, everything needs to integrate well with one another — and subscription management software is no different.
You should also consider:
How easy it is to get started. Monthly billing software may have all the features you could ask for, but if you can't implement them, what good are they? You'll want to invest in a solution that will be up and running in a matter of weeks.
The ROI potential. The key is to achieve a significant return on your investment. Meaning, the software you choose should recover more money than what you are being charged as fees. For example, in 2019, Recurly recovered over eight times the amount it billed its merchants.
The importance of gateway failover. Yes, having multiple gateways is important, but so is the ability to continue processing payments, even if there is an issue. For example, if your primary payment gateway is down, transactions will be routed to your backup or "failover" gateway.
Fraud prevention, which is something many do not consider until it's too late. Fraud and chargeback expenses account for 13-20% of operating budgets. Recurly is the only subscription billing software that offers an integrated, comprehensive fraud prevention solution.
If you currently operate a subscription-based business, then YES — monthly billing software will encourage sustained growth.
Whether you're in education, healthcare, retail, SaaS, or any other industry leveraging the power of recurring revenue, monthly billing software will save you time and money. When you have the support of a monthly billing system you can count on, the options become endless. Do something different to be the first in your industry to offer a specific product or service using a subscription model. Your creativity will allow you to position yourself as a leader in your space. From there, you can customize software features based on your evolving goals.
The software you choose must support your unique needs and goals. Before making your decision on who to choose, make sure you focus on where your company is and where you plan to go.
Recurly understands the complexities of recurring revenue and subscription business models. For over a decade, Recurly has fueled subscription innovation. Regardless of your greatest challenge or latest goal, our mission remains the same — keep subscription management and billing simple.
Although we are an all-in-one platform, supporting the unique needs of subscription-based businesses, our recurring billing solution continues to support growing companies around the globe. Learn more about Recurly's recurring billing software and book a demo to see how powerful automated subscription management can be!