9 KEYS FOR SUBSCRIPTIONS

A framework for successful subscription businesses

Through years of experience working with customers, the 9 Keys for Subscription Success were developed. These 9 areas serve as a foundation for building a successful subscription business in any industry, spanning from how you set up pricing to how you architect your ecosystem. Use these to kick start your own journey.

1. Pricing & Packaging

Can you quickly launch pricing, packaging, and offerings to drive growth and retention?

Pricing and packaging for subscriptions with a homegrown tool or a legacy system is tough. Without the flexibility to quickly iterate, you run into bottlenecks pretty quick – you can’t quickly adapt to new customer demands, you can’t quickly react to competitors, and you can’t quickly launch new promotions. Don’t spend months rebuilding this from scratch every time when you can easily spend minutes instead.

2. Subscription Management

Do you give customers the flexibility to sign-up, make changes, upgrade, renew, or pause their subscription? 

Companies that give customers the freedom to change their subscription over time grow 3x faster compares to their peers. So why doesn’t every company do this? Because it’s challenging, and companies struggle with downstream impacts on finance and technology. The fastest growing companies remove those bottlenecks and allow customers to make changes throughout a subscription lifecycle.

3. Rating & Billing

How do you plan to bill your customers, charge for usage, and send timely invoices?

In a subscription business model, recurring and usage billing introduces new complexities for the finance team. To scale with this model, Billing Operations Teams need to automate recurring and usage-based billing to stay efficient. Accurate and timely invoices requires automation across the full subscription lifecycle. 

4. Payments & AR

How do you manage payments, collections, and accounts receivable?

With recurring payment and a wider range of payment methods, your company needs greater automation to reduce the growing complexity that’ll surely come. It is more important than ever to let customers pay with preferred payment methods and put efficiency in place for the full collections and AR lifecycle. The best time to plant the seeds for tomorrow is today.

5. Revenue Recognition

How do you recognize revenue?

On average, every subscription has 2 revenue impacting events per year – and ongoing subscription changes build up revenue complexity for finance teams. Companies looking to transition to a new business model or adopt new revenue recognition standards are often held back by inefficient, manual revenue recognition. Too much is at stake to rely on error-prone spreadsheets.

6. Accounting Close

How do you efficiently close the books?

The inability to translate subscriptions into GAAP compliant accounting slows down your time-to-close. Every hour counts here. Your finance team should be able to easily manage financial controls, reconcile transactions, and integrate with your accounting system of choice so that the accounting close process is as smooth as possible.

7. Analytics & Reporting

How do you report on your subscribers and measure success?

While traditional GAAP metrics are backwards looking numbers, subscriptions metrics are forward looking. MRR, ARR, ARPA, Net Retention, Churn, and Customer Lifetime Value are all subscription metrics that help you analyze, plan, and make decisions.

8. Integrations

How do you integrate the entire order-to-cash ecosystem?

Your subscribers are the heartbeat of your business, so naturally subscriptions connect with a variety of solutions in your ecosystem – CRM, ERP, E-commerce, Payment Gateways, and Taxation just to name a few. Without a connected order-to-revenue ecosystem, subscription companies end up with manual workarounds that hurt your business and your customers.

9. Extensibility

How do you create a solution that can be tailored to suit your unique and changing needs?

Things will change, it’s inevitable. The important thing is how you’re going to be able to adapt to it. As companies evolve, hard coded order-to-cash solutions dramatically slow down time-to-market and create a bottleneck. It’s in your best interest to find a solution that can change and scale with you as you grow.

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