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Subscription management reporting and KPIs are all important aspects of a successful subscription business. In this blog post, we will explore the most important reports and metrics in more detail. Subscription management reporting is essential for understanding how your subscription business is performing. You need to track key performance indicators (KPIs) such as revenue, customer churn rate (the percentage of customers who cancel their subscription in a given period), average revenue per user (ARPU), etc., to determine whether your business is growing or shrinking and whether you are making money or losing money.Churn can be devastating to a subscription business - it can quickly erode profits and even lead to bankruptcy if not addressed quickly. There are several steps you can take to reduce churn: 1) identify the causes of churn; 2) address the causes; 3) track progress on addressing the causes; 4) repeat as necessary. Implementing these steps should help you keep more subscribers longer and improve your bottom line. Customer acquisition costs (CAC) is the total cost of acquiring a new customer, including marketing and sales expenses. By tracking your CAC over time, you can determine whether it’s increasing or decreasing and identify strategies to reduce it. There are a variety of factors that contribute to CAC, so you’ll need to track several metrics in order to understand it fully. The main components of CAC include: - Cost per lead: The amount spent on leads divided by the number of leads acquired - Cost per sale: The amount spent on sales divided by the number of sales made - Average lifetime value (LTV) of a customer: The average revenue generated from a customer over their lifetime with your company Once you have these figures, you can calculate your overall CAC ratio—the total cost of acquiring customers divided by LTV. This will give you an idea if it’s worth investing in more marketing and sales efforts to acquire new customers. Reducing your CAC ratio means increased profits for your business! Another one of the most important metrics for subscription businesses is Monthly recurring revenue (MRR). It’s a measure of how much money a company will earn in recurring payments each month. There are a few different ways to calculate MRR, but all involve taking the total value of all subscriptions and dividing it by the number of months in the subscription term. This gives you an average monthly payment amount. For example, if your business has 100 customers who each pay $10 per month, your MRR would be $1,000 (100 x $10 = $1,000). MRR is important because it can help you track your growth over time and forecast future earnings. It can also help you identify which subscriptions are most profitable and assess customer loyalty.   To get started with MRR tracking, here are three steps: 1) Identify your subscription types: There are many different types of subscriptions out there—from SaaS products to memberships—so it’s important to know what type of subscriptions you offer. This will help determine which calculation method is best for you. 2) Determine billing frequencies: Once you know what type of subscriptions you offer, determine how often they bill customers (e.g., monthly, quarterly). This will help determine when to run your calculations each month/quarter so that they accurately reflect your current subscriber base and revenue totals. 3) Collect data: The final step is collecting data on current subscribers and past invoices/payments so that you have accurate numbers to work with. Armed with this data, you can start tracking MRR for your business!   Are you interested in finding out more about these crucial KPIs? Would you like to have all this setup while you focus on scaling up your business? Get in touch with us below.

Do you know why customers are churning?   Churn is your customer giving up on their subscription, and hence a mission critical KPI to track. Understanding churn and customers abandoning your subscriptions is top of mind for all CEOs running a SaaS, XaaS or a consumer-based subscription business. When customers bail out of their subscriptions, it is usually based on 3 situations that drive the decision: The customer got a non-fitting subscription and see no value in it (anymore) During the onboarding and usage of the subscription the customer is not confident in your interaction with them (negative engagement) Competitors offer a better deal than you do  In general churn is different when you segment by type of subscription, you cannot always generalise between B2C box subscriptions or memberships and B2B SaaS. However, churn is still based on the perception that a customer does not see a future in receiving your subscription. If your customer is experiencing strong ROI, they are more likely to remain loyal and less likely to lapse.   3 actions you can take to prevent churn:   #1 — Understanding the opinion of the customer using a Net Promoter Score (NPS) To stay close to your customer and not rely solely on your customer services team feedback, a great and simple data point you can introduce is NPS. After you send a subscription invoice or when you collect a payment, trigger an automation to send a survey to the customer you would like to get the feedback from. Ensuring strong data management for customer contacts is of course instrumental. Usually, the average NPS survey response rate is between 10-30%. You could consider sending reminders and making the survey attractive to fill in by rewarding the contact. Once you have collected the data you can measure and validate the feedback to understand customer experiences. The less customer satisfaction, the higher your churn will be. #2 — Follow service or product telemetry and usage Another digital indication that helps prevent churn is monitoring the use of your subscription services. Depending on the services or products you offer, you can apply remote monitoring, IoT connection or simply check deliveries. Based on the use of the subscription services and products, you can benchmark the customer in terms of what you had expected they would use. If they are far under expected use, you might need to dive in and validate reasons of diminished usage. The less your customer scores on the expected versus actual usage, the more likely they will churn. #3 — Apply a ‘customer is king’ approach Ensuring timely renewal and preventing churn are not tied to specific dates. They happen throughout the customer subscription cycle and are affected by the overall customer experience. It is crucial that you carefully track customer behaviour day-to-day, week-to-week. Your customer success platform should pull in information from a variety of sources and analyse this data to produce understandings that guide your customer engagements. To scale your customer success efforts, the platform should include an early-warning system you can customise to alert you to any significant changes in customer health and satisfaction. The most successful way to reduce churn is to stay advised of customer behaviour. If you are informed of any harmful trends early on, you will be in a much better position to proactively connect to your customer. Observing customer success best practices will help reduce your churn rate. Churn occurs when value declines. Keep your focus on delivering real business value and you will have a loyal customer for years.   The churn management strategies outlined above are effective because they increase the value your company brings to your customer. If your customer is experiencing strong ROI, they are more likely to remain loyal and less likely to lapse.

Are you often confused why your delivery team do not deliver exactly what your sales team promised? Does your delivery team have the right information to allow changes in your subscriptions down the line? A seamless integrated experience is needed for your sales team using CRM with your delivery team using your ERP. At bluefort we focus on bringing a seamless experience for your sales and delivery team for subscription lifecycles using Microsoft Dynamics 365 applications and Power Platform applications. Let’s explore how these applications can run a quote-to-order process flow. Look at our product demo below to understand and experience how we bring this seamless experience using LISA Reach and LISA BusinessPro. Quote-to-Order with LISA Reach and LISA BusinessPro LISA Reach is a model driven app using Microsoft Dataverse. The process starts with understanding and defining the different subscription product offerings that you are ready to sell. Once the subscription item master data is in place, commercial elements are defined, such as price units, discount setup and pricing tiers and bundles. Once your commercial setup is completed, you can use Microsoft Dynamics 365 Marketing or other apps to generate leads for your subscription offerings. When new leads are captured the cycle proceeds by starting an opportunity. The opportunity captures the high-level budget, requirements and needs of a lead. Upon further qualification an opportunity in LISA Reach can be detailed into a more precise offer using subscription quotations. Each new customer and customer contact is directly synchronized with Microsoft Dynamics 365 Finance and Supply Chain Management. Once the quote is complete, send it to you prospect or customer with the click of a button. To complete the process, record if the opportunity is won, resulting into a new LISA BusinessPro subscription plan or if lost the cycle ends there. Using Dualwrite Dualwrite is a near synchronous integration capability that is available with Microsoft Dynamics 365 Finance and Supply Chain Management and Microsoft Dataverse to update data in both applications. You can find more details in this document. At bluefort, we applied Microsoft Dataverse to develop the below integration and make processes between sales, customer services, project operations and Finance and Supply Chain seamless. The integration model offers a near real time integrated flow from quote to order and allows a clear segregation of duties between Sales, Operations and Finance users.   Learn more about LISA Reach here.JTNDc3R5bGUlMjB0eXBlJTNEJTIydGV4dCUyRmNzcyUyMiUzRSUwQSUwOS5vdXRsb29rLTM2NS1pZnJhbWUlMjAlN0IlMEElMDklMDloZWlnaHQlM0ElMjAyMDAwcHglM0IlMEElMDklN0QlMEElMEElMDklNDBtZWRpYSUyMHNjcmVlbiUyMGFuZCUyMCUyOG1pbi13aWR0aCUzQTE1OTFweCUyOSUyMCU3QiUwQSUwOSUwOS5vdXRsb29rLTM2NS1pZnJhbWUlMjAlN0IlMEElMDklMDklMDloZWlnaHQlM0ElMjAxNTAwcHglM0IlMEElMDklMDklN0QlMEElMDklN0QlMEElM0MlMkZzdHlsZSUzRQ==[tabbed_section style="minimal_alt" alignment="center" spacing="default" tab_color="Accent-Color" cta_button_style="accent-color" icon_size="24"][tab icon_family="fontawesome" title="Contact Us" id="1660040694580-6" tab_id="1660040694582-8" icon_fontawesome="fa fa-envelope-open-o"][/tab][tab icon_family="fontawesome" title="Set Meeting" id="1660040694645-2" tab_id="1660040694646-7" icon_fontawesome="fa fa-calendar"]JTNDaWZyYW1lJTIwY2xhc3MlM0QlMjJvdXRsb29rLTM2NS1pZnJhbWUlMjIlMjBzcmMlM0QlMjJodHRwcyUzQSUyRiUyRm91dGxvb2sub2ZmaWNlMzY1LmNvbSUyRm93YSUyRmNhbGVuZGFyJTJGYmx1ZWZvcnQxJTQwYmx1ZWZvcnQuZXUlMkZib29raW5ncyUyRiUyMiUyMHdpZHRoJTNEJTIyMTAwJTI1JTIyJTIwc2Nyb2xsaW5nJTNEJTIyeWVzJTIyJTIwc3R5bGUlM0QlMjJib3JkZXIlM0EwJTIyJTNFJTNDJTJGaWZyYW1lJTNF[/tab][/tabbed_section]

Are you losing out on winning easy opportunities?   When offering subscription plans to your customers, many businesses still focus on bringing on new subscriptions, rather than expanding subscriptions for your existing customers. It is mission critical to find a healthy balance between selling net-new customer subscriptions, and generating more recurring revenue from current subscriptions.   It is natural to increase your revenue by winning new deals. As a subscription business you need to be able to keep up your net-new sales, but at the same time it is just as important to serve new add-ons or extensions to your existing subscriptions. As a business outcome you can set up a healthy mix of generating new and “add-on” recurring revenue. Smart companies can increase their subscription sales by an amazing 10 percent to 25 percent or more simply by effectively selling add-ons.   How to drive more subscription add-on revenue:   #1 — Start with the facts To get started with understanding your revenue composition, we recommend tracking your renewal ratio and definition of add-on sales, so that you can build an analytical view of the several types of revenue you are generating. Each subscription line should be linked to a reason code or revenue indicator for data analysis. Examples are new subscription, add-on subscription, downgrade or upgrade. Use reason code-based reporting to be able to segment your revenue in distinct categories. #2 — Innovate surrounding services and products for your core subscriptions As you invest in new subscription offerings, think about the customer’s needs. If you sell software, it would be great to supply access to eLearning portals or supply new reporting add-on packs to increase the value. Creating memberships or partner programs can also drive add-on revenue, for example: customers can opt-in to a membership offering them free support for deliveries, like Amazon Prime did. These new surrounding capabilities extend your core subscription offering and add more recurring revenue to the bottom line. #3 — Use technology to scale upselling capabilities Depending on your subscriber base of customers, B2C or B2B, you can use technology to generate new upselling opportunities. Let’s review a few options: Empowering Sales and Customer success or services users with the option to add on more sales to a quote. This can be achieved by guided selling showcasing which add-on products a customer could buy or showing surrounding service plans (support/maintenance/memberships) and letting the user add those easily to a quote. They won’t miss the opportunity to sell more as the CPQ flow guides them to ask the right up and cross selling questions in the moment of creating a quote and pricing it. Establish a process to generate new opportunities based on existing subscriptions where products or services that could add-on to that plan are prepared as an opportunity, which can then be sent to the customer as a promotion. Run a process that can get all subscription plans expiring in x days (keeping in mind the pre-invoice feature), with a renewal of e.g. 1 year, create an opportunity that quotes a 3 year plan with a discount or cash back option to motivate customer to renew for 3 years instead of 1 (more ARR), once the quote accepts we can turn it into a subscription chain automatically and run it. Smart companies can increase their subscription sales by an amazing 10 percent to 25 percent or more simply by effectively selling add-ons. Add-ons are a win-win. Customers often have an increase in satisfaction with the purchase as well as the increased convenience of one-stop shopping.   Then why don't most subscription businesses not sell add-ons regularly?   Many salespeople intuitively and correctly sense that pushing or even nudging a customer to make a larger purchase sometimes pushes the customer too far out of his comfort zone and they could end up losing the entire sale -- either temporarily or permanently. The gain for the sales team is once a customer has agreed to buy from you, getting him to make an additional add-on sale is far easier and more profitable than finding a new customer.

Are you taking local currency and customer requirements into account in your subscriptions?   When you are planning to bring your subscription business to new countries, new rules of play apply. SaaS and XaaS businesses are built for global growth. Companies like Dropbox and Spotify have shown a huge portion of their customers are global. The same counts for Microsoft and other SaaS companies. Going global means onboarding currency risks, dealing with new languages and regulations, and new customer pricing models.   A common recurring theme in the success that these companies have had, has been a thorough practice of Price Localization. Allowing a customer to pay in their native currency, with a preferred mode of payment, is indeed a big deal. Going international means new rules and regulations to deal with.   Guiding your internal processes and applications to support going global:   #1 — Build a roll out roadmap, do not apply a shotgun approach Pick one country at a time and ensure that there are common elements from one to the next.. For example, there are stronger commonalities between the UK and Ireland, then the UK and Germany. United Kingdom and then go to Ireland, instead of Germany. Language as well as other elements of business align better between certain countries. Nevertheless, it is key to understand any regulation in each country you do business in. For example in California you are not allowed to automatically renew subscriptions. Take each country or region one step at the time, explore all legal, financial and price culture matters alongside a clear business plan. #2 — Understanding different price levels in different countries or regions Significant effort is required to plan and price your subscriptions in a new region or country. Not all countries can afford the same rates and pricing levels. Also, cultural aspects can play into your pricing strategy. Ensure you test and validate your pricing models before assuming a ‘same size fits all’ approach. #3 — Currency is a headache With ever changing exchange rates, frustration can occur for you and your customers. Sharp fluctuations can be good for you, but it can raise subscription costs for your customers, in the worst case resulting in churn. For larger B2B customers, who might be spending tens of thousands of dollars a month, this monthly difference can be huge. From their perspective, this creates a budgeting nightmare. If you have ever bought something online from an international company, you will have seen the impact of foreign currency conversion fees. These exchange rate fees are charged by your bank or payment gateway, and in some cases can be as high as 3%-5%. For large-scale B2B transactions, though, these fees can add up significantly. That Australian customer that is paying you $100K a month? They would be paying as much as $60,000 a year in foreign currency conversion fees, making your subscription offering far less attractive. #4 — Prepare your back-end financials Going international means new rules and regulations to deal with and your backend applications and process must align. Think about items such as: Extending your VAT or Tax declarations Dealing with currency evaluations Setting up new legal entities Deploying new payment gateway and bank accounts Translating financial documents, such as invoices or payment reminders into new languages Adjusting reporting to the new setup, like cash flow per currency These are just a few critical items, per country or region others will apply. Besides ensuring your team and processes are in place, your business applications must have the functionality to cover requirements such as the ones above. #5 — Improve your speed-to-bill One tactic that speeds up cash in is pre-invoicing. Rather than billing on the renewal dates, setup routines to bill 30 or more days before. This will drive an earlier cash arrival improving cash flow.

Are you running out of cash before your subscriptions take off?   Getting started with a subscription business that is based on product innovations such as software and its surrounding services takes a large investment. Once you launch a subscription model for your target customers, you will need to plan significant sales and marketing investment to bring that subscription offering to market. Developing new subscription offerings or revitalising existing ones requires serious cash up front.   Once your business starts booking in its first subscriptions, clients will be looking for great customer service and continual new offerings or innovations for the services or goods they have subscribed to. Now you must foot the bill to run a customer service team, next to the sales and marketing team, R&D, and innovation teams, and of course we cannot forget the finance department and operations. Launching subscription models is a cash intensive operation.   Five enablers to improve your cash flow:   #1 — Capture all your subscription ARR and expenses Running a strong cash flow starts with collecting data from both billing input as well as expenses. In a subscription model inputs are based on recurring transactions on both revenue and expenses. Cashflow forecasting needs to be based on contract values made billable and paid to suppliers. It is critical to facilitate easy data capture of subscription billing data and expense data for the third party subscriptions you acquire and sync it with your cash flow forecasting. This business capability provides strong data analytical insights in cash flow. #2 — Use AI models to run better cash flow predictions Using the Microsoft Azure platform and Microsoft Dynamics 365 Finance together with bluefort’s LISA you can improve and finetune your cash flow. Intelligent cash flow is a tool within Finance insights that allows you to create accurate and editable cash flow forecasts in Dynamics 365 Finance. By using the cash flow forecast capability, you can compare forecasted cash flows with actual cash flows to improve forecasting over time. Read more here. #3 — Improve subscription sales using upselling and cross selling tactics Use sharply defined up- and cross selling techniques, such as collecting all customers using subscription product A and upselling surrounding products and services, possibly using offerings including cash back or discounts. Extend renewals to longer periods of time. #4 — Manage direct debits and online payments Just like credit cards, an online payment option—and an ecommerce shop in general—makes shopping and subscribing more convenient for your customers. It can also help you move services more efficiently. Connect your online sales portal or sites with a payment gateway, so you run efficiently, and get cash more promptly. #5 — Improve your speed-to-bill One tactic that speeds up cash in is pre-invoicing. Rather than billing on the renewal dates, setup routines to bill 30 or more days before. This will drive an earlier cash arrival improving cash flow.

Is your subscription time-to-quote destroying revenue generation?   Many scale-ups in SaaS and XaaS fall into the trap of not being able to process customer subscription quotes and orders in a rapid paced process. Consequently, customers have to wait, and take actions they shouldn’t need to.   If you still use email communications with your prospects and customers, you’re already on the back foot. Ping-ponging details via emails and meetings or phone calls back and forth is a tedious process that lies at the mercy of your team members. If they for any reason cause delays in follow up, the order flow gets stuck. Not to mention all the manual labour costs that end up as sunk-cost fallacy. Some companies take up to 30 days to process upgrades or subscription changes, resulting in frustrated customers.   3 actions you can take to change the dial:   Subscriptions can be complex to deal with in the back end, especially with subscription changes due to up- or downgrades, or new commercial plan transitions. The following 3 step transformation strategy can turn your process power up. #1 — Orchestrate the back-end process Very often the ball ends up at Finance, who need to clear up uncertainties during renewals, up- or downgrades, and add-on sales. Start with a clear view on your subscription line items, what are you selling and how is pricing set up? Focus on simplification where possible. Use logical subscription product master data with clean commercial models. Then design a process to set up a subscription order flow from first billing, change control on up- and downgrades or up- and cross sales, and ensure a strong data analytical capability is in place. Create a cross-departmental process flow from sales to finance to customer services. Use price strategies such as indexing. #2 — Automate everything using ongoing process innovation methodologies Once the business process flows are transparent, use the right application and technology to automate the lead-to-cash subscription lifecycle. Take out manual steps that are not adding value. #3 — Design a simple and clean customer and employee experience during the full subscription lifecycle With the process flow the experience for both partners, customers and your own internal team should be logical and clear. Involve the right people and ensure they understand how to process information throughout the subscription lifecycle.

Could your subscription business bankrupt you?   Subscription business models continue to rise in popularity, but many companies are struggling to transform these models into a profitable business. The major challenge is the underlying complexity and costs it takes to run effective and customer friendly subscription processes. Understanding your subscription business model and running it in a highly automated fashion is core to preventing bankruptcy and increasing profitability. At the centre of this model lies the complexity around different types of commercial options you can offer. The wider the offering to your customer, the more difficult it becomes to manage and scale your business. When your subscription scales up, the complexity multiplies. Consequently, you need more headcount to run the process, denting your profits. Businesses in this position would assume billing automation is not the simple solution in this scenario. With no two subscriptions exactly alike, there may appear to be no way around performing at least some manual billing work at every billing cycle. However, as more customers open accounts and the subscription business scales, manual billing quickly becomes untenable. At this point manual billing processes can even put a business at a competitive disadvantage. As a result many have had to abandon the subscription model completely. Thankfully, automation is an option. In fact, it’s an imperative.   At Bluefort we concentrate on providing leading solutions for SaaS, XaaS and Retailers. Based on Microsoft Dynamics 365 business apps and technology we provide: Hyper automation of process flows from lead to cash and from procure to pay. Full CRM and ERP use, as our solutions are native to Microsoft Dynamics 365. Complete financial control and transaction management. Data analytics and reporting. We can support you in transforming your subscription automation and business processes.