Why Robust Revenue Management Is Effective Subscription Management

Whether a subscription management software works or not, ultimately boils down to its ability to effectively manage revenue—your subscriptions are worthless if the revenue generated by them is not being properly handled. And it is not only the job of a robust subscription management system to devise good subscriptions that you can dole out to your customers, but it is also their job to make sure that those subscriptions are effectively managed in a way that best boosts your business.

Recurring Revenue Stream

This is why an entire cycle of revenue management exists that begins with correctly billing your customers for their subscriptions and continues up until sending them an email if they so wish to cancel their subscription. In between these two points, a good revenue management system will flow through multiple points that will each bring the entire subscription management model one step closer to maximizing revenue to its fullest.

The first step in the cycle of revenue management is billing. Effective revenue management entails that the customer is billed properly—customers need to be told what they purchased, how much they purchased, and how much they paid for it in total (including external taxations). Doing so ensures a positive experience for the end consumer that will hopefully encourage them to continue their subscription.

Optimizing SaaS Revenue: Invoicing and AI-Driven Dunning

Billing is followed by invoicing which is also an important but relatively overlooked step of the process. A good invoice will be the last point of contact between the customer and the business after the customer has paid their subscription. Ensuring that at this point the invoice portrays the brand image of the business in as positive a light as possible is crucial.

Other aspects of effective revenue management constitute ways of reducing customer churn rate, flexibility in payment plans to allow for proration, and having secure and multiple payment gateways that ensure the uninterrupted flow of money. Doing all this ascertains that money keeps flowing without any leakages that reduce efficiency.

Though nearly all SaaS subscription management is automated these days, the one part that requires even the use of AI is that of dunning. Dunning is the process of reaching out to those customers who have failed to make their payments on time and so need to be gently reminded of paying their dues. A task of such potentially volatile sensitivity can most efficiently be handled by AI-generated email reminders in which the tone has been pre-configured to be gentle and not aggressive at all.

And when this entire process is repeated over and over and keeps on generating profit for the business, it is termed a recurring revenue stream with a maintained flow.

Unveiling the Hidden Aspects of Recurring Revenue: Revenue Recognition and Analytics

Yet this is not all. Two important points that are not usually taken to be a part of the recurring revenue stream are revenue recognition and analytics.

The former refers to the accounting of the monthly/yearly revenue that has been deposited in the accounts of the business. Often customers might subscribe to take the free demonstration of a subscription management platform or might not make their payments at all. In that case, revenue recognition will be the only foolproof way of calculating the actual revenue that a business is generating, and simply multiplying the number of subscribers with the individual cost of each subscription will not be an accurate measure.

Likewise, a robust revenue management system also entails incorporating analytics and then drafting a customizable report that the business may use to take stock of its performance over a given time frame to better plan for the future ahead. Studying patterns of its performance is crucial for any business to make sure that it not only understands its customers well but is also able to use this knowledge to draft a solid blueprint for its future growth.

This is ably assisted by good subscription management platforms’ ability to make reports based on their analytics that are easy to read by the technical experts of the business.

The Bottom Line

In this article, we have seen how good subscription management is good revenue management and vice versa. The core reason behind this is that all subscription management platforms justify their existence and subscription fees by promising to maximize another business’s revenue generation. It is the promise of automated revenue management solutions that bring businesses to subscription management systems like SubscriptionFlow and therefore it is essential for such platforms to be adept at managing revenue.