April 14, 2020 | Authored by: Vindicia Team Blogs
How to diagnose an unoptimized subscription billing platform
The subscription business model has been widely adopted across the world. Businesses of all types are using subscription services to meet evolving customer preferences and capture recurring revenue. Not only have subscriptions proliferated in entertainment and sports streaming, fashion and consumer goods, but also financial services, auto, healthcare, and many more industries.
Yet while the subscription business model offers seemingly unlimited growth potential, companies must address the fundamentals of subscription payments to realize the benefits of recurring revenue. They need a billing solution that can seamlessly process transactions as well as support a flexible, responsive go-to-market strategy.
That's just the beginning of the list outlining the ideal platform — and many subscription-based businesses may be struggling with an underperforming or restrictive solution that doesn't meet their needs or facilitate scale.
Here are some red flags to help you diagnose a subscription management system that can't keep pace with growth, or drive customer success.
It struggles with demand spikes
In today's fast-paced world, one viral social media post can feel a rush of consumers toward your service. The same consumer interest can be generated by a time-based promotion, new product launch, or live event. Yet a surge in sign-up or checkout activity can stress a subscription management system that isn't capable of meeting demand at scale.
The consequences may include wasted conversions, consumer backlash, and lost revenue. To grow at scale, companies need to be able to depend on a platform that can win and retain paying subscribers when demand spikes.
It's down too often
Subscribers expect a 24/7 buying experience. Offer anything less and they may turn to competitors. An unreliable billing system is frequently unavailable for any reason, whether technical downtime or limited functionality. In any case, it means your business is losing revenue and actively fostering a negative customer experience. You might lose not only potential customers but also existing users who churn because they can't upgrade/downgrade or pause services at their convenience.
A solution's inability to support 24/7 buying may be indicative of something more troubling than limited functionality. It may be a sign that your billing system is designed for business relationships (B2B), rather than consumer (B2C) subscriptions.
It erects obstacles to innovation
The environment and economy can change direction quickly. Witness the current coronavirus crisis resulting in social distancing and work from home challenges. Such rapid changes demand innovation and agility from subscription-based companies. However, fueling growth and innovation at scale can be hard, especially when hampered by a restrictive subscription billing platform. Businesses need to be able to quickly bring new services and products to market, as well as manage flexible pricing and run multiple promotional campaigns.
It if takes too long or too much effort to introduce new plans, packages, and offers, or make pricing changes, you have to reallocate your development teams to recode or customize your billing system. The level of labor and resources needed to do this can become a serious burden in a rapidly changing subscription landscape.
It isn't a single source of truth
Subscription services often make use of multiple channels to reach customers. However, a billing platform that is not a centralized source of truth for every customer revenue stream can lead to disparate practices and operational inefficiencies that plague growth and subscriber lifecycle management.
For instance, mobile is an important channel for acquiring new subscribers and generating in-app purchases (IAP). Without a solution that acts as a single source of truth, you may encounter serious challenges in aligning channel strategies, coordinating entitlements, and retaining a single, unified view into all of your data regardless of consumer revenue stream (e.g., web, IAP, etc.).
It isn't designed to mitigate passive churn
When recurring payment transactions fail, you’re often losing subscribers who want to stay. A customer might have new payment information or a temporary lock on their credit/debit card — either way, that's revenue walking out the door. This involuntary form of churn is difficult to address without the right tools.
Account updates are often not enough, nor are a few haphazard retries to recover failed transactions. Businesses need a billing platform that was built with a nuanced understanding of passive churn and offers intelligence-based tools for mitigating churn.
It isn't optimized for compliance
There are several consumer data and payment regulations that affect your business. These include the EU's General Data Protection Regulation (GDPR) and Payment Service Directive (PSD2), the California Consumer Privacy Act (CCPA), and PCI-DSS. Ensuring full compliance with laws in each of the markets you serve can be a constant burden on teams and processes without a comprehensive billing platform optimized for compliance.
If your current billing system shows any of these signs, it may be worth investigating the competitive advantages you can gain from a professional-grade B2C subscription management system.
Vindicia delivers complete subscription billing and management across the entire subscription lifecycle, empowering you to scale consumer subscriptions with flexible pricing and billing logic. With Vindicia, you're freed to innovate and improve your service, instead of being tied down by time and cost considerations.
- Allow you to accept multiple payment methods — including credit/debit card, PayPal, Amazon, Apple Pay, Google Pay, SEPA/Direct Debit, local currency
- Work with over 40 payment providers globally
- Are specifically designed for consumer subscription payments
- Reduce involuntary churn from recurring payment failures
- Synchronize all consumer revenue streams (e.g., web, IAP, etc.) in one place for a single source of truth
Want to learn more? Contact us today.
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