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The Economic Impact of Subscription Models in Pharmacies In response to financial challenges such as rising costs, unpredictable revenue, reimbursement issues, competition, and regulatory complexities, pharmacies are increasingly adopting subscription models. This strategic shift from traditional prescription-based transactions to recurring service offerings transforms customer engagement and unlocks significant economic benefits. Subscription models provide a reliable revenue stream, enhance customer loyalty through personalized care, and improve communication, leading to better treatment adherence. Additionally, they optimize operations by streamlining inventory management and supply chain logistics. Success stories from CVS and GoodRx illustrate the substantial growth and stability these models can offer, making them a crucial innovation for the evolving pharmaceutical landscape. In this article: The Financial Hurdles Retail Pharmacies Face The Subscription Model in Retail Pharmacy One Solution for the Subscription End-to-End Case Study: CVS Pharmacy’s Success with Subscription Loyalty Programs Case Study: Good Rx Builds an App for Subscription Discounts In the ever-evolving landscape of the pharmaceutical industry, pharmacies are embracing innovative business models to drive revenue growth, foster customer loyalty, and optimize operational efficiency. One such transformative approach gaining momentum is the integration of subscription models—a strategic shift from traditional prescription-based transactions to recurring service offerings. This paradigm shift not only revolutionizes how pharmacies engage with their customers but also unlocks a multitude of economic benefits that ripple across the entire healthcare ecosystem.  As things currently are, what are the biggest financial challenges that retail pharmacies face? The Financial Hurdles Retail Pharmacies Face  Anyone involved with a retail pharmacy knows it’s not easy to stay competitive. Some challenges can threaten your economic stability, as well as your growth and profitability.   Do any of these sound familiar?   Increasing costs of medicine and supplies: Costs have been escalating especially since the beginning of the pandemic. These costs are caused by fluctuations in drug prices, bigger demand for niche and trending medications, and disruptions in the supply chain. All these strain your budgets and kill your profit margins.    One-off purchases: Much of the revenue that comes from selling medication (and supporting supplies) isn’t reliable because although there are prescriptions that are ongoing, many prescriptions aren’t. They’re one-off, which means financial projections are difficult because they aren’t predictable.   Reimbursement problems: Chasing late payments from customers, third-party payers, government agencies, and insurance companies, can be a time-consuming (and never-ending) nightmare for retail pharmacies. It’s less money in your account, but it’s also a hurdle to you paying your suppliers on time. You might be forced to find money or cut back on operations just to stay afloat.   Competition: Larger online pharmacies and retail giants have better brand recognition and reach, as well as crucial leverage in negotiating drug prices. They also have the money to offer better pricing and options like direct-to-door delivery.   Regulatory Compliance: Retail pharmacies have to operate in complex regulatory framework, and there’s no room for error. Ensuring you follow compliance requirements, and quality standards is expensive and time-consuming. On top, you have to keep your licenses current and protect customer data. And if you fall out of compliance, you have to pay expensive fines.   All of these are a lot to handle.   Which is why retail pharmacies need to find solutions to these problems, and revenue streams. So what possibilities are out there to turn things around?   The good news is that there is one solution that can consolidate everything: the subscription model.   The Subscription Model in Retail Pharmacy   Over the last few years, some retail pharmacies have given the subscription model a chance.   It’s no wonder because it offers customers a healthcare experience that’s reliable, personal, and convenient.   The subscription model can look different in how it’s used. A pharmacy subscription could involve patients signing up for anything from weekly or monthly medication deliveries to supplementary or preventative wellness packages, and education and management programs that are tailored to individual needs.    Let’s have a look at some of the benefits that subscriptions can bring - to both the customer and the retail pharmacy.   A new, more reliable revenue stream Subscriptions generate a revenue stream way beyond any one-time medication purchases.   And subscriptions don’t have to just be tied to the medications themselves. Any products or services that a retail pharmacy offers can be available on subscription as well, so you’re not just tied to the medication needs of customers.   Subscription plans for medications, wellness products, or personalized health services, will secure a predictable, stable income flow.   They also boost customer lifetime value, because they continually address multiple health needs of customers in a reliable way.   That’s long-term value for everyone involved.   Boosted customer loyalty and engagement Close, long-term relationships with customers is the dream.   And a subscription-based approach gives the perfect opportunity to build a strong relationship with trust, reliability, and convenience with each customer by using personalization to tailor the experience.   Personalization helps your retail pharmacy meet your customers’ individual needs, behavior, lifestyle, and preferences. Specifically, they enable:   Customised medication management that’s based on treatment goals, complications, health conditions. Medication schedules provide clear dosage instructions and tracking, and reminders so that it’s easier for customers to adhere to their treatment.   Evolving wellness program that meets their treatment and preventative needs. It can target specific health concerns, lifestyle, and circumstances, bringing in nutrition plans, fitness recommendations, and personal consultations.   Individual services (on top of the products) can be delivered, including chronic disease/challenge monitoring and management, inoculation schedules, and therapy management.   Targeted health education will empower customers to understand why the treatment is what it is, and where they’re heading. This can include anything from apps, to classes, consultations, leaflets, videos, and other resources.   Better customer communication   Retail pharmacies need communication with customers (as well as doctors and other healthcare providers) to be absolutely clear. When it comes to health, there’s no room for error.   Things like relevant health updates, relevant promotional offers, personal messages, and reminders about the services available empower customers to know more about their health journey, what’s available and what should be done.   The more they know, the more they will comply with what they need to do. And when they know they can trust you, why would they go anywhere else?  Cut costs and optimize operations  Subscription models give the retail pharmacy a much better idea of their pharmaceutical needs, which gives more leverage for price negotiation, cuts waste, and boosts the advantage in prepping for upcoming shortages.   They can also give massive cost savings by streamlining inventory management, optimizing any supply chain logistics (even with multiple suppliers) and drastically cutting repetitive admin.   Subscriptions also give information about customer behavior and needs that can help more accurately forecast future demand. That helps cut waste too. And those savings can be passed on to customers.   While there are plenty of benefits, there’s no doubt there’s a lot of work involved. So how does a subscription model not further drain your resources?  One solution for the subscription end-to-end   The answer is remarkably simple - by not doing the lion’s share of the work yourself.   Bringing in the right software solution will handle the process for you, freeing up your time and people to focus on higher value activities.   What does it do?   Streamlines your operations and cut costs   Subscription management software handles these tasks with ease:   Creating flexible pricing models and tiers to maximize customer attraction and meet needs. These have the ability to change once conditions change, and get as specific as possible, down to individualised circumstances.   Identifying and creating add-on and cross-selling opportunities that compliment your customers’ care needs.   Ensuring that all contract term information flows freely between procurement, sales, marketing and invoicing departments.   Correct invoicing and streamlined payment processes thanks to automated billing cycles, payment reminders, customizable billing schedules, and hassle-free payment transactions that meet customer preferences.   Reconciliation of payments back to the books, boosting compliance.    Real-time financial analysis and reporting which enable the best strategies and decisions for future-focused growth.   Optimized inventory levels thanks to real-time monitoring. Optional integration with suppliers helps keep accurate stock levels in check. Analysis creates reliable forecast demand patterns. The cuts the incidence of stockouts and excess inventory costs.   Boost customer loyalty and lifetime value (CLV)  A subscription management solutions’ solid personalization experience involves:   Facilitating tailored medication management by coordinating information flow from healthcare providers  Delivering targeted health education that helps with adherence rates and improves the health of your customers.   Suggestions for complementary care, lifestyle products, etc. Suggestions for not only treatment, but preventative care.   Personalized targeted marketing, tailored promotions, and interpersonal communication with customers.   Boost revenue and compliance  You can get a comprehensive approach that:   Drives recurring sales and reduces customer churn thanks to accurate and holistic personalized experiences (as well as loyalty schemes) that keep them on board.   Identifies and offers customers add-ons, further driving satisfaction and revenue.   Data protection that protects your customers’ sensitive information.   Financial compliance including accurate records, constant redness for audits, tracking regulatory changes.    Cut risk and avoids expensive fines, lawsuits and reputational damage.    Streamlined supply procurement (including leveraging real-time data for price negotiation) and optimized inventory management.   The reliable revenue stream beyond the one-off purchase leading to better financial predictability.   Instant scalability no matter how fast your customer base grows.   It’s all automated. That’s a lot more free time for you. No more struggling to keep up. No more subscriptions or invoices falling through the cracks.   It can all be yours  The retail pharmacy landscape keeps evolving and your competitors know this.   That’s why it’s so important to not only adapt, but take advantage of everything you can gain by changing. The great news is that subscriptions, which help bring in more stable revenue for you and boost your customer loyalty, isn’t a drain on your time and resources.   In fact, with the right software, it frees it up.   Take this opportunity to innovate. Differentiate your brand and please your customers.   It all starts with a 15-20 minute chat to tell us about your circumstances and what you want the future of your retail pharmacy to look like.   Case Study: CVS Pharmacy's Success with Subscription Loyalty Programs  In 2019, CVS added a subscription program called ExtraCare Plus to its existing ExtraCare loyalty scheme.  Both have helped the retail pharmacy meet their customers’ needs in a far more personalized manner.   Here’s the current difference between the two:   ExtraCare  Discounted prices  Tailored deals offered through email, text, and app notifications   2% given back in the form of CVS store credit.   $3 birthday reward + $50 in regular rewards   Credits for filling prescriptions, getting vaccinations, adding pets to the plan, and joining the prescription management scheme.   ExtraCare Plus Free shipping  Free same-day delivery of prescriptions and other CVS products over $10   20% discount for CVS own-brand  $10/month bonus reward   Pharmacy helpline 24/7  + all ExtraCare perks  Both ExtraCare and ExtraCare Plus offer a fully personalized customer experience from the time they register. They are free to upgrade to the ExtraCare subscription whenever they want for $5/month or $48/annually.   Throughout the schemes, customers receive large cumulative discounts, text updates before deliveries, recommendations, automated prescription refills, and desired substitutions.   Thanks to the streamlining of these tiers, memberships are easy to understand and navigate, which is essential in healthcare.   The scheme is extremely popular. They now have an incredible 80 million members from 1 out of every four households in the US.   Those are the types of numbers that speak to the need for retail pharmacy subscriptions.   Case Study: Good Rx Builds an App for Subscription Discounts  The retail prescription discount company Good Rx offers both a free model (which provides a database price comparison search) and free coupons for prescription medicines.   But the subscription Good Rx Gold model offers a lot more.   For $9.99/month or $89 annually ($19.99/$179.99 for the family plan), customers are entitled to these benefits:   Up to 90% prescription price savings  Track and manage prescriptions   Free home delivery   Dedicated support team  Rewards program  Additional members  Pet prescription discounts  Good RX Care telehealth visits from only $19  According to their website, Good Rx saves individual plan members an average of $3,961 annually, and families an average of $5,177.   The subscriptions are extremely popular. having grown from 1 million subscribers in 2021 to over 25 million by the end of 2023.   They’ve partnered with other businesses as well- for example, large retailers like grocers Publix and Kroger have offered the scheme across their pharmacy locations.   According to their financial report for 2023, Good Rx has earned $760.3M adjusted revenue, with a 28.6% adjusted EBITDA margin of $217.4 million and $138.3 million net cash.   No bad for a discount pharmacy app.  

The Damaging Effect of Silos on Subscription Businesses Revenue recognition can put your subscription business at risk of multiple problems related to revenue leakage, unreliable numbers, compliance, and churn. Fortunately, there is a solution that can consolidate all the recognized revenue processes, and streamline them into a simple solution that's accurate and saves your business untold hours and money. Recognized revenue is not for the faint-hearted.   In fact, it can be a critical concern for businesses because it doesn’t have a margin for error. But most SaaS businesses suffer from silos blocking the information that’s necessary for accurate and reliable revenue recognition.   That puts a huge amount of pressure on a financial team and their company. It’s pressure that no one needs.   What makes the silo situation even more dangerous is that they cause chaos for the entire revenue recognition process, with extra general damage on top.   Here’s what you could specifically be at risk for: Revenue Leakage Leakage describes the unnoticed or mistaken loss of revenue that snowballs into a real problem over time. It’s shockingly common in a siloed environment because you need reliable information to spot leakage. Crucial data related to customer usage, pricing and terms, and billing can be isolated in different departments including sales, customer service, maintenance, finance, etc. When accurate data doesn’t freely flow, there will be errors in billing. Things will slide between the cracks. Upgrades might get unnoticed. Customers will be undercharged or not charged at all.   Invoice Mistakes When teams operate independently, mistakes in billing are going to happen inconsistencies and errors in the billing information. This can lead to frequent invoicing errors, which doesn’t just hurt customer relationships and cause churn. Mistakes demand additional resources and higher operational costs.  With recognizing and reporting revenue, errors in calculations mean errors in allocation. This complicates the revenue recognition process further because there’s no accurate view of your company’s finances.  Unreliable Numbers and Bad Forecasting Reliable numbers are the foundation of a company’s health because they’re essential for reports and forecasting. But the unreliable data that silos cause throws off recognised revenue.   And the knock-on effect of that is you don’t have the insights from recognised revenue to feed into reporting and forecasting. You don’t have an accurate picture of trends, product and service popularity, profitability, etc. That makes it hard for stakeholders and decision-makers to develop effective strategies and make informed decisions. In the long run, this can hinder growth and profitability.  Regulatory Compliance Issues All financial reporting (including revenue recognition) is under regulation (with standards varying depending on where you operate). Audits need accurate financial numbers. So do tax liabilities.   Running against non-compliance with standards puts you in the firing line for hefty fines, penalties, and even legal action. You’ll also set alarm bells ringing for stakeholders and investors. The financial health of the company is at risk.   Scalability Is No Longer Possible Subscription companies can experience only experience so much before they hit that point where they can’t physically scale anymore. Because the more customers you acquire, the most revenue has to be recognised.   Companies that can’t keep up with thousands of customers, are not going to be able to keep up with tens of thousands or hundreds of thousands. That’s a heartbreaking place to be in.   Employee stress, burnout and turnover This is actually one of the most expensive impacts. Workers feel significant stress thanks to increased workload and communication breakdowns. Efforts can be duplicated. Things are wrong.   No one can work in these conditions without being unhappy with working conditions. Next step is stress and burnout. After that, they quit. Whether employees are signed off from stress, or you’re spending a fortune to replace them with someone who will come in and face the exact same problems. Customer Churn There are so many scenarios that happen to customers, leading them to leave you asap. One of the most common is when sales signs up a customer for a specific package, but the finance department isn't updated right away. This usually leads to an incorrect bill, which a new customer does not want to see.   It’s also a long-term churn creator too. When recognized revenue numbers are slow or wrong, marketing and development will never have good customer data about what they like, don’t like, what they’ll add on, and what they want as a one-time sale. Both teams won’t be able to offer customers what they want, so they leave for a company that can.  When you allow silos to persist in your revenue recognition process, you’re leaving money on the table. There’s no way of getting around that.   But all this can change with one decision. The Easy Solution to All Your Problems: Consolidation Tearing down your silos will send a positive ripple effect throughout your entire company starting with your recognized revenue.   But it also positions your SaaS business for greater scalability and profitability.  Implementing an automated subscription management system is the only practical solution.   The right system will streamline billing processes, automate revenue recognition, and provide real-time visibility into your financial data. Here's how: It creates real-time data flow between teams. Not only does it make the information accessible, but it automatically pushes the data between teams so it’s there before they realize they need it. No more errors, delays, revenue leakage or thousands of wasted hours of manual work.   It gives reliable numbers for better reporting and analysis. When revenue data is consolidated (and free from the errors related to manual entry), it’s easy to get comprehensive reports that give the insights and recommendations needed for good decision-making.   It ensures compliance with revenue recognition standards. You’ll feel more assured knowing that an automated system adheres to accounting standards, preps for audits, and remains tax compliant too. In other words, all the problems that are caused by silos in revenue recognition – the costs, the leakage, the churn, the penalties, the staff turnover – they're all gone.   With the flick of a proverbial switch.   Give your company and your teams the tools that it needs not only to succeed, but to get a massive edge over your competitors.   Stop leaving money on the table and start realizing the full revenue potential of your business.

The one-size-fits-all vs. personalized subscription plan in the retail sphere has been a long-term debate for subscription companies. The more generic plans offer retail businesses an ease of management, and customers get a transparent, easy-to-understand offering. On the other hand, personalised retail subscriptions lean into the popularity of the personalised experience. But new findings from the InternetRetailing report on customers and subscriptions brings up surprising results that can’t be ignored. Is there a way to make sense of these new findings?    Retail businesses offering subscriptions are faced with the tough choice whether to offer one-size-fits-all or personalised subscription plans.   It’s an understandable consideration because success can depend on choosing the plan that works best for customers.   But new findings in the InternetRetailing report SubscriptionX 2024 Report: Exploring Recurring Revenue, Growth and Customers, shed surprising light on which way current customers lean with their money. In fact, the findings go against conventional thought. But do these findings suggest that we have to change how we do things in the retail subscription world?  This article will cover the issues of retail subscriptions, talk through these surprising findings, and give some analysis on what you can do as a retail subscription business to satisfy as many customers as possible.   In this article: Why One-Size-Fits-All Plans Appeal What's in it for businesses What's in it for customers Why Personalised Subscription Plans Appeal What's in it for the business What's in it for the customers Report Findings - What's So Unexpected? How to Make Subscription Complexity Easy  Why One-Size-Fits-All Plans Appeal Sometimes people like things to be simple because life is complex enough.   A standardised retail subscription plan with standard pricing offers a straightforward approach for both the business and the customer.   What’s in it for businesses:   Accessibility: One-size-fits-all plans make it automatically much easier for businesses to market their offerings. They can tackle a wide audience. They don’t need to spend time and resources targeting specific segments in different ways.   Cost-Effectiveness: Because standardized plans take less time to plan and market they cut the cost of operations. And businesses have the option to spread the cost savings to their customers. The more competitive the pricing, the less likely customers are to leave.  Simplicity: Running a subscription company can be complex enough without keeping track of individualised plans. Sales, Customer Service, and Revenue teams spend less time tracking terms.   Scalability: For subscription businesses, scaling is life. So it has to be as easy as possible. One-size-fits-all makes scaling easy because there’s no need for extensive customization or restructuring.  Consistency: Businesses can get a good reputation for giving their customers a clear, consistent subscription experience. Everyone knows what to expect.   It’s not just businesses that love the one-size-fits-all approach.   Customers can gravitate to them because they appeal on multiple levels.   What’s in it for customers:   Hassle-free: Customers do not appreciate complexity. In fact, if even the website is complex, they’ll leave before they’ve even purchased a subscription. If they feel their time is wasted, or if they’re confused, they’ll leave.   No decision fatigue: Choice blindness is a real thing. The more options a customer has, the harder it is to commit to a decision. A one-size-fits-all option lets them sign up quickly without navigating multiple options.   More value: Customers get the value for (generally) less money. It’s affordable without sacrificing quality.   No confusion: Most customers have multiple subscriptions. They need things to be as easy to understand as possible. With a one-size-fits-all, they always know where they stand, which simplifies things (and builds trust).   There’s no doubt that one-size-fits-all subscription plans have their place in the general subscription model, and that we as customers love them. Netflix is a perfect example. Everyone knows what they get for their monthly cost. Yes, Netflix does personalise the experience, for example with their recommendations for each user. But they don’t do it with price and terms.   Imagine how confusing it would be if Netflix gave each customer a completely customised plan with differing prices, and usage quotas. It would be an extremely difficult to keep track of everything. And when you consider that each account can have multiple users, that makes it all even more complex.    But customers also love the personalised experience. And for some time, customers have demanded customization in their subscriptions.   What’s so appealing about tailored subscription offerings?   Why Personalised Subscription Plans Appeal  There’s no doubt that these days, customers don’t just prefer personalisation, they expect it because it meets their needs, preferences, and behaviors.    And both businesses and customers have a lot to gain with a personalised approach.   What’s in it for the business:   Revenue potential: The more personalised the experience and offering, the more potential to up and cross-sell products customers will find attractive through tailored recommendations. This in turn boosts CLV.  Differentiation: Setting yourself apart in a crowded market can make a huge difference. Personalization meets the diverse needs of customers, and shows them a commitment to solving their specific problems. Better insights and data: Personalized subscriptions give businesses clear data on what works and what doesn’t, so that they can constantly improve their product development and offerings. Better brand loyalty: Personalisation boosts loyalty because customers feel valued. And when customers love a brand, they’re far more like to tell others about it.  These are attractive, long-term benefits for a retail business.   Customers also find personalised plans irresistible. What’s in it for customers:    Emotional connection: Everyone wants to be heard and understood. When a customer receives an experience tailored to their specific needs and circumstances, it’s appealing. Uniqueness drives up the value because it shows them that they mean something to a business- they’re not just a necessity.    High-value and relevant offerings: Experimenting is for science class. Customers dislike having to pay to try out different things only to find each solution is not quite right or is completely wrong. Personalised subscriptions are built to align with their interests and needs.  Better control and flexibility: Customers like to feel a level of control and flexibility over their subscriptions (in anything from time periods, delivery frequencies, product preferences, service level adjustments, etc). It boosts their satisfaction and cuts the chances that they’ll go elsewhere.     With benefits like these, it’s no wonder that customers prefer personalisation.   Which is why the numbers from the new InternetRetailing report seem quite surprising.   Report Findings - What’s so Unexpected?  The findings are that despite the immense demand for personalised subscription experiences and offerings, retail subscription customers are still choosing the one-size-fits-all plan more often.   This might get some retailers scratching their heads. Why would results go against conventional knowledge, backed up by stats?  It’s because of the specific nature of retail subscriptions, versus other industry subscriptions like SaaS.   As the report explains, one of the biggest factors in this discrepancy is hidden in the differences in terms and conditions between one-size-fits-all and personalised subscriptions. Specifically, the time periods.   Let’s look at specifics of the breakdown:   83% of personalised plans have a minimum length of 2-30 days. But only 64% of standard plans with fixed pricing have the same restrictions.    Standard plans more often (23% of the time) have a minimum length of about six months to a year, compared to just 9% of personalised subscriptions. 13% of standard subscriptions also give a minimum length of between 1-3 months, a timeframe that wasn’t given by personalised plans of retailers surveyed.   These stats mean that the retailers who want to capture all the benefits of both types of subscriptions need to:  Offer a lot more flexibility in their subscription term times.    Add options like pausing a subscription to cut churn and accommodate the unpredictability of life.   Offer different or better things as alternatives if customers don’t like what they’ve gotten.    Seems like a simple solution. But there’s a big challenge. To subscription retailers, the logistics of these small changes might be impossible.   It’s hard to keep up with subscription terms as it is. But to add new terms, and allow for flexibility that keeps terms, resources, and usage in constant flux is too big an ask.   But that’s only true when a retailer doesn’t have the right tools. But when they’re equipped, they can offer all the terms in the world, and get the best of both worlds.   How to Make Subscription Complexity Easy   The right subscription management makes everything so much easier.   That’s exactly what a retailer needs- a comprehensive solution that will streamline the end-to-end processes, so that inefficiencies and customer dissatisfaction are the thing of the past.  Enter Bluefort's LISA    Bluefort's LISA is an end-to-end subscription ERP solution specifically designed to simplify the entire management of personalized and one-size-fits all retail subscription plans.   Not only does it automate your processes, but it uses AI-driven data to shape experience and offerings that will thrill your customers and your teams, and build your revenue and customer base.   Here’s how it will revolutionise your retail subscription management:   You’ll get agile and adjustable recommendations of the best pricing models AND products, no matter their complexity.   You’ll get accurate data-driven insights into customer segments, allowing you to personalise as much as possible, automatically.   Your customers will get the flexibility they need in their subscriptions, with no disruptions caused by your brand’s busy teams and manual errors.   Silos will be crushed for good because your sales, customer service, and revenue teams will get information on contracts, terms, usage, and everything else in real-time. This cuts down on mistakes and speeds up the selling and invoicing process. No more revenue leakage!    You’ll be able to eliminate loss-making orders because you’ll know how much your customers are likely to spend and use.    Selling opportunities are spotted, and customers will be given the best upselling and cross-selling recommendations at the best times.   You have the option of testing out different pricing strategies while you track customer behavior and automate operations.  You’ll have improved revenue visibility, knowing that your numbers are accurate in real time.   You’ll have automated and compliant revenue recognition.   You’ll have streamlined invoicing, billing, and payment collection.    Your customers will have a better customer experience that is as personalised as you want.   Most importantly, you’ll be able to effortlessly manage both “one-size-fits-all” and customized retail subscriptions, linking procurement to manufacturing processes, accurately predicting supplier needs, and calculating manufacturing lead times, ensuring consistent, on-time deliveries right to your customers’ doorsteps.  Bluefort’s LISA subscription management solution will allow you to tailor your offerings and plans to make them as personalised, easy, and flexible as possible.   That means you capture the advantages of both types of retail subscription models, with less time and resources needed.   Why Compromise on Plans?  As a retailer, you shouldn’t have to make a choice that penalises you or your customers.   With LISA, you’ll be able to easily navigate your retail subscription management, ensuring no customer, no matter what type of terms they might need, is left behind.  When you give your customers the plans that they want, you’re not just selling a product or service; you’re delivering value and satisfaction.  That’s something that isn’t a surprise at all.   86% of consumers will leave a brand they trusted after two bad customer experiences. - Emplifi So if you’re looking to give your subscribers the best possible experience (and reduce churn!), make sure personalization is at the top of your priority list—it could be the difference between success and failure. And if you give these SaaS customer personalization tips a try, you’ll be on track to providing them an unforgettable experience that keeps them coming back for more. Subscription automation is within reach, and Bluefort provides the knowledge and that platform to do it. Ready to learn more? JTNDc3R5bGUlMjB0eXBlJTNEJTIydGV4dCUyRmNzcyUyMiUzRSUwQSUwOS5vdXRsb29rLTM2NS1pZnJhbWUlMjAlN0IlMEElMDklMDloZWlnaHQlM0ElMjAyMDAwcHglM0IlMEElMDklN0QlMEElMEElMDklNDBtZWRpYSUyMHNjcmVlbiUyMGFuZCUyMCUyOG1pbi13aWR0aCUzQTE1OTFweCUyOSUyMCU3QiUwQSUwOSUwOS5vdXRsb29rLTM2NS1pZnJhbWUlMjAlN0IlMEElMDklMDklMDloZWlnaHQlM0ElMjAxNTAwcHglM0IlMEElMDklMDklN0QlMEElMDklN0QlMEElM0MlMkZzdHlsZSUzRQ==JTNDaWZyYW1lJTIwY2xhc3MlM0QlMjJvdXRsb29rLTM2NS1pZnJhbWUlMjIlMjBzcmMlM0QlMjJodHRwcyUzQSUyRiUyRm91dGxvb2sub2ZmaWNlMzY1LmNvbSUyRm93YSUyRmNhbGVuZGFyJTJGYmx1ZWZvcnQxJTQwYmx1ZWZvcnQuZXUlMkZib29raW5ncyUyRiUyMiUyMHdpZHRoJTNEJTIyMTAwJTI1JTIyJTIwc2Nyb2xsaW5nJTNEJTIyeWVzJTIyJTIwc3R5bGUlM0QlMjJib3JkZXIlM0EwJTIyJTNFJTNDJTJGaWZyYW1lJTNF

Curious about getting a new ERP system, but not sure where to begin? There’s a lot riding on the decision. The wrong ERP can disrupt a recurring service, bringing costly problems including billing errors and reporting delays. But the right ERP system can bring automated revenue recognition and billing and invoicing integration among other benefits. And the best ERP system consolidates everything into one system that keeps things ticking over for you.  Though running a recurring service can bring in plenty of rewards and stability, it still comes with challenges and complexities.   And this is especially important with your Enterprise Resource Planning (ERP) system. In fact, the ERP can make or break a recurring service, because it runs the operations of the company.   In this article we explore why an ERP is important for a recurring model, and what it needs to deliver optimal performance. 5 Examples of How a Bad ERP Disrupts a Recurring Business  There are multiple ways that a bad ERP system will mess up your business. Here are the 5 we see most often with our customers:   Billing Errors and Revenue Leakage Invoice mistakes are a nightmare. Not only are they expensive in themselves to rectify, but they have a knock-on effect. Inaccurate invoicing infuriates customers. It delays onboarding. When the system misses new terms or usage, it causes revenue leakage.   These issues are major, and they can make a dent in your finance and customer service departments. You get delayed payments. Halted cash flow. Disputes. Your creditors are ringing you. And churn.    Bad Subscription Management If you can’t manage the subscriptions, you’re going to miss out on a lot of growth and revenue opportunities. That’s because you’ll be so busy with all the manual processes, you won’t have the time to allow sales and marketing to draw in new customers and keep your existing customers excited by services and packages that keep them loyal and asking for more.   You also won’t be able to invest time in high-value activities like new product development and retention strategies.   Resource Allocation Challenges A recurring service business MUST keep on top of its resource allocation. Without it, you’re suffering from scheduling inefficiencies, shortages, lost hours, decreased productivity, and boosted operational costs. And it impacts your customer base too - no one wants late or delayed services, especially if they were already scheduled or included in contract terms.   Not only do these types of problems impact your workforce, and put them into stressful situations, but they impact project management, how you use your resources, and whether your employees leave. All these issues cost a fortune to put right.   Data Inconsistencies and Reporting Delays In the recurring services industry, data is key. And more specifically, getting the most out of the potential of financial and customer data should be the foundation of the big decisions you’ll make.   But inconsistent, untimed, or siloed data will cause delays and reporting errors. It will delay your decision-making and impact your growth. The internal communication gaps can be costly, too. All of it can damage your revenue and management departments.    You’ll never be 100% confident in your numbers, or that the future-focused decisions you need to make will be the best and most-informed possible.   Customer Service Failures and Massive Churn When you have inadequate customer service functionalities (especially when you’re scaling), you’re going to get poor customer experiences. That can make your churn rate skyrocket and damage your brand’s reputation.   Customers expect an excellent, customized CX that reflects who they are and what they want. If you can’t give it, they’ll go somewhere else. And the biggest consequence is that you lose a huge source of income because you have a 60% to 70% chance of up and cross-selling to an existing customer, while for a new prospect it's just 5% to 20%.    These have far-reaching consequences that can be difficult to come back from. It’s the last thing you need when you’re building your recurring model business.  So how do you know if the ERP you have is good enough for your recurring operations and growth?   Necessary Traits of a Great ERP for Recurring Service Business  To get what you want, what do you need?    Flexible Subscription Management   The best ERP systems recurring services must offer end-to-end subscription management capabilities. It needs to enable your seamless management of sales, revenue transactions, adopting evolving customer needs and behaviors at any point of the customer journey, and identifying the best variety of pricing models and subscription packages and terms.  Automated Revenue Recognition  You simply cannot scale without effective revenue recognition. A good ERP system will automate revenue recognition, ensure compliance with accounting standards across the countries you operate in, provide real-time payment term tracking, and provide reliable numbers for reporting and decision-making.   Integration with Billing and Invoicing  Billing, invoicing, and payment collection need to be synced up to your ERP to close the revenue leakage and immediately stop the loss of all the money wasted on manual hours, invoicing errors and late payments.   The best system will monitor billing information with customer records and usage in real time, so that invoicing and payments are correct and on time. Customers love that too! That boosts your revenue in the long term but also keeps a steadier cash flow and happy customers, reducing or eliminating churn.  Real-Time Analytics and Reporting  Real-time analytics are key to monitoring your performance and quickly identifying problematic areas and opportunities for more growth. With a strong ERP system, you’ll get advanced reporting capabilities that give you insights and actionable recommendations to help your strategies and decision-making.   Scalability and Customization  If you want to grow and have the freedom to change and customize your offerings to customers, you’ll need an ERP that can easily scale your business (without putting additional pressure on your workers). It should also give you clear and fast adaptability to changing market demands and ensure that you stay on top of resource allocation. It’s the only want to meet customer needs and continue to grow without overextending your resources.  How You Can Get One Solution for Your Recurring Business’ ERP Problem  It’s important not to fall into the common trap of Frankensteining your ERP with lots of integrated add-ons. Because that scenario still has the manual labor and information silos that cause all the problems in the first place. Apart from that, the cost for maintaining integrations can grow exponentially.  The best subscription management software solutions optimize everything for you, while freeing up your time for high-value work, eliminating integration maintenance costs altogether.   When you centralize your subscription management, billing, revenue recognition, and customer offerings and interactions, the problems tend to be avoided in the first place.  Automating the ERP responsibilities with one end-to-end solution not only saves you time and resources but also transforms the way your business operates. You get to enjoy:   Fewer administrative burdens, because everything from functions like billing, invoicing and payments, customer service management, real time information flow between your teams, and all the data analysis you need for reports, forecasting, audits, etc.  Selling opportunities with more attractive offerings, because the system crunches customer data to optimal identify the best personalized pricing, offering combinations, and even the time to offer them.   Fewer invoicing and payment errors and delays because the automating and billing processes are integrating payment gateways that customers love. Because there are no more silos between Revenue, Customer Service, and Sales, delays and errors are drastically cut. All while remaining compliant. This brings in more stable revenue and boosts customer satisfaction and avoids expensive penalties.  And finally, you get the chance to do the work you were hired for - delivering a great offering, exceptional CX, efficient operations, driving business growth, and building relationships that last with your customer base.   Why not give yourself the chance to succeed with the best solution for your ERP needs?  Say goodbye to manual ERP processes and boost your growth with Bluefort's cutting-edge automation solutions. Learn how our end-to-end system streamlines the end-to-end process. 

Recognized revenue is not for the faint-hearted.   In fact, it can be a critical concern for businesses because it doesn’t have a margin for error. But most SaaS businesses suffer from silos blocking the information that’s necessary for accurate and reliable revenue recognition.   That puts a huge amount of pressure on a financial team and their company. It’s pressure that no one needs.   What makes the silo situation even more dangerous is that they cause chaos for the entire revenue recognition process, with extra general damage on top.   Here’s what you could specifically be at risk for: Revenue Leakage- Leakage describes the unnoticed or mistaken loss of revenue that snowballs into a real problem over time. It’s shockingly common in a siloed environment because you need reliable information to spot leakage. Crucial data related to customer usage, pricing and terms, and billing can be isolated in different departments including sales, customer service, maintenance, finance, etc. When accurate data doesn’t freely flow, there will be errors in billing. Things will slide between the cracks. Upgrades might get unnoticed. Customers will be undercharged or not charged at all.   Incorrect Invoices - When teams operate independently, mistakes in billing are going to happen inconsistencies and errors in the billing information. This can lead to frequent invoicing errors, which doesn’t just hurt customer relationships and cause churn. Mistakes demand additional resources and higher operational costs.  With recognizing and reporting revenue, errors in calculations mean errors in allocation. This complicates the revenue recognition process further because there’s no accurate view of your company’s finances.  Unreliable Numbers and Bad Forecasting- Reliable numbers are the foundation of a company’s health because they’re essential for reports and forecasting. But the unreliable data that silos cause throws off recognised revenue.   And the knock-on effect of that is you don’t have the insights from recognised revenue to feed into reporting and forecasting. You don’t have an accurate picture of trends, product and service popularity, profitability, etc That makes it hard for stakeholders and decision-makers to develop effective strategies and make informed decisions. In the long run, this can hinder growth and profitability.  Regulatory Compliance Issues: All financial reporting (including revenue recognition) is under regulation (with standards varying depending on where you operate). Audits need accurate financial numbers. So do tax liabilities.   Running against non-compliance with standards puts you in the firing line for hefty fines, penalties, and even legal action. You’ll also set alarm bells ringing for stakeholders and investors. The financial health of the company is at risk.   Scalability Is No Longer Possible: Subscription companies can experience only experience so much before they hit that point where they can’t physically scale anymore. Because the more customers you acquire, the most revenue has to be recognised.   Companies that can’t keep up with thousands of customers, are not going to be able to keep up with tens of thousands or hundreds of thousands. That’s a heartbreaking place to be in.   Customer Churn: There are so many scenarios that happen to customers, leading them to leave you asap. One of the most common is when sales signs up a customer for a specific package, but the finance department isn't updated right away. This usually leads to an incorrect bill, which a new customer does not want to see.   It’s also a long-term churn creator too. When recognized revenue numbers are slow or wrong, marketing and development will never have good customer data about what they like, don’t like, what they’ll add on, and what they want as a one-time sale. Both teams won’t be able to offer customers what they want, so they leave for a company that can.   Employee stress, burnout and turnover: This is actually one of the most expensive impacts. Workers feel significant stress thanks to increased workload and communication breakdowns. Efforts can be duplicated. Things are wrong.   No one can work in these conditions without being unhappy with working conditions. Next step is stress and burnout. After that, they quit. Whether employees are signed off from stress, or you’re spending a fortune to replace them with someone who will come in and face the exact same problems.When you allow silos to persist in your revenue recognition process, you’re leaving money on the table. There’s no way of getting around that.   But all this can change with one decision. The Easy Solution to All Your Problems   Tearing down your silos will send a positive ripple effect throughout your entire company starting with your recognized revenue.   But it also positions your SaaS business for greater scalability and profitability.  Implementing an automated subscription management system is the only practical solution.   The right system will streamline billing processes, automate revenue recognition, and provide real-time visibility into your financial data. Here's how: It creates real-time data flow between teams. Not only does it make the information accessible, but it automatically pushes the data between teams so it’s there before they realize they need it. No more errors, delays, revenue leakage or thousands of wasted hours of manual work.   It gives reliable numbers for better reporting and analysis. When revenue data is consolidated (and free from the errors related to manual entry), it’s easy to get comprehensive reports that give the insights and recommendations needed for good decision-making.   It ensures compliance with revenue recognition standards. You’ll feel more assured knowing that an automated system adheres to accounting standards, preps for audits, and remains tax compliant too. In other words, all the problems that are caused by silos in revenue recognition – the costs, the leakage, the churn, the penalties, the staff turnover – they're all gone.   With the flick of a proverbial switch.   Give your company and your teams the tools that it needs not only to succeed, but to get a massive edge over your competitors.   Stop leaving money on the table and start realizing your business's full revenue potential.

There is a massive shortage of accountants in countries around the globe. That’s not the sentence we ever thought we’d have to type. An international accountants shortage doesn’t feel like it could have been a thing.   But right now, businesses are suffering because they can’t get the staff they need to keep revenue and accounts moving. That’s a lot of stress. It impacts everything in the accounting cycle - for example, huge delays in filing mandatory reports.  We saw how these problems work specifically with Tupperware when the company’s experiences with the accountant shortage went to court. They had not only experienced revenue operational headaches but were struggling with financial reporting accuracy and regulatory compliance.   Tupperware maintained it simply didn’t have enough accountants to get its annual report out on time. And the storage container manufacturer isn’t alone;  In this article, we’re going to talk through the accounting shortage, and how it impacts subscription companies like yours, especially in light of revenue recognition. We’ll also cover what can be done to ensure that your brand doesn’t go through the same problems.  Why There’s a Shortage   There are a couple of reasons for the accounting shortage:   A whopping 75% of certified accountants reached retirement age since 2020.  The profession has a bad reputation for long hours of repetitive work, with stressful annual cycles. Students are turned off by the extra year of expensive university courses needed for accounting qualifications when the base salary is only around $62k.   It’s only going to get worse. The US Bureau of Labor Statistics projects there will be 126,500 openings for accountants and auditors each year, on average, over the coming decade.  That means that companies are going to have to shell out enough money to make accounting irresistible or find a different solution.   Accountants and Subscription Management   Accountants are crucial in subscription management. They’re responsible for everything from revenue recognition to invoicing, payments, reconciliation, reports and forecasting, and compliance.   Generally speaking, it can be difficult for them to keep up with all these manual processes at the best of times.  Some of these accountancy problems are fairly regular:   Inaccurate revenue recognition that constantly throws off revenue numbers  Errors in invoicing from incorrect terms to inaccurate usage charges, and unawareness of customer account updates  Numbers that the C-Suite can’t rely on for good decision-making   That’s just the tip of the iceberg. We want to stress that it’s not their fault. Generally, accountants aren’t given the resources they need to keep up with subscription management, especially when the company is scaling.   They’re set up for failure because there are only so many hours in the day. Human errors crop up. Miscommunications between departments cause mistakes. But in this business, accuracy and timeliness are essential to keep things like financial data, reporting, and compliance ticking over.   That’s why problems get a lot worse when there are fewer accountants to keep up with everything.   We’re seeing the worst-case scenarios come to life with Tupperware. For instance, the accounting firm PriceWaterhouseCoopers, dropped the company as a client. Last year, investors were warned about potential bankruptcy thanks to greater operational losses.   And it’s the same with other companies. Lyft mistakenly reported last year in its fourth-quarter earnings release that it expects profit margins to increase by 500 (not the 50 basis points it actually was) — which led its stock to surge 60%. Electric vehicle maker Rivian made typos in their reporting. So did Planet Fitness.  So what can a subscription business realistically do to avoid this epidemic?   Sidestepping the Accountant Shortage   You can sidestep this resource crisis altogether. The easiest and safest solution comes down to one thing: harmonized processes automated through an end-to-end subscription platform.   The best subscription management software can completely change accounting workflows and guard your FinOps and compliance. All with the proverbial flick of a switch.   Here’s what automated accountancy can do for your financial processes:   It automates tedious and time-consuming tasks  Ensures accuracy, eliminating manual errors from the invoicing process  Ends silos by real-time sharing of terms and contracts with sales/customer service   Recognises revenue, taking into account any last-minute changes   Tracks compliance across regions and countries, including changes in legislation   Tracks resource allocation with customers and integrates it into the invoicing process  Creates reports and forecasts whenever they are needed, using real-time numbers  Collects payments in the customer’s preferred methods  Reconciles everything back to the ledger   Keeps communication accurate and transparent with customers   Mitigates risk  That means fewer problems for you. Fewer errors. Fewer delays in reporting. Fewer compliance issues.   Subscription management software streamlines your financial processes and improves your overall business performance. And the software enables you to scale easily.   And that means your company circumvents the entire problem.  It’s not often in business that there’s a simple solution to a massive, complicated problem. But we’re seeing what can happen to companies that don’t invest in the solution.   Automaton is not only compelling but necessary. Because the problem is only going to get worse.   But if your company leverages automation to streamline accountant workflows, you’ll not only benefit from cost savings, but better financial accuracy, easier scaling, far less compliance risk and an overall happier workforce.  You’ll also get more agility, reliability, and the strategic foresight you need to get the advantage over your competitors.   Sound good?  Say goodbye to manual sales processes and boost your growth with Bluefort's cutting-edge automation solutions. Learn how our end-to-end system streamlines the end-to-end process. 

This article lifts back the lid on what happens when the launch of an innovative product in the SaaS industry results in underwhelming sales. It can be confusing, but some factors influence the success of launches including target market knowledge, product need justification, the right marketing, equipped sales teams, correct pricing, and differentiation. Launch failures can impact the team including COOs, so it is important to know actionable steps that can be taken including segmentation, customer-centered approaches, optimal pricing and sales strategies, using data, and automation to bring sales performance that aligns with the excellence of the product.   It was a product failure that they really didn’t see coming.   Burger King, one of the biggest fast food chains in the world, created a product they were convinced would disrupt everything.   Satisfries.   Satisfries were fries with a special batter that absorbed less oil. They had 20% fewer calories than regular fries. And they were tasty.   Sounded like a no-brainer to them.   But, when they launched, their sales did not skyrocket. In fact, sales didn’t even take a little jump.   So what happened? Turns out it was a few things.   Many customers were cutting out potato products thanks to dietary trends at the time.                                                                                                       Others on diets went to food brands that have a healthier perception, like Chipotle.                                                                                                                         The nominal difference in calories – 20% isn’t enough of a difference to really make a change                                                                                                   The Price – a small Satisfries was $1.89, but regular fries were $1.59                                                                                                                                                                 Customers couldn’t see the value. After all they only had to eat 20% less of the regular fries, and they’d still save 30 cents.   It’s no surprise that franchises started to drop Satisfries right away. Out of 7500 branches in North America, 5000 dropped them right away, and the others phased them out.   Bottom line is that Burger King didn’t convince the public of the value of Satisfries. And they didn’t understand their target market.    As a SaaS COO, you might not be suffering with product failure. But maybe you had a launch for a product you found innovative and exciting. But it just didn’t connect with customers. Sales did not meet your expectations at all Where does it come from? The causes are fairly close what happened with Satisfries. There was nothing wrong with the product per se (just like chances your product is great and innovative). So what’s going on?   No understanding of target market: Without good segmentation and customer data, you’re missing out on information about your customer needs. And the less you know the needs, the harder it will be for your product development AND marketing.    Didn’t identify the need and justify the change: If your product doesn’t solve a significant customer problem, it’ll be hard for them to justify the time and money your product costs. Humans resist change, which is why the benefit of change has to be 3x greater than the problem before a customer acts.    Ineffective Marketing: You can have the best product in the world, but if marketing and any communication isn’t up to par, your audience won’t know what’s on offer and why it’s worth buying.   Unequipped sales teams: Sales teams need the time and data necessary to spot opportunities. And if the teams don’t know enough about the product, how the product fits into the current offering, it’s going to be a hard sale.    The wrong pricing: Without solid information about what customers are willing to pay for a product, chances are the pricing will be wrong.   No differentiation: SaaS is one of the most crowded markets in existence and customer loyalty is the lowest it has been. That’s a lethal combination! If products are differentiated from the competition, quite simply no one will buy them because they won’t see the value.   You and the product The sales backfiring impacts you as the COO.   You’re in charge of driving revenue growth and meeting or exceeding sales targets. If the product fails, or sales stall, not only are you accountable for a drop in revenue, but you might have to tackle the perception that you’re falling behind your competitors.   A failed product launch can also wreak havoc with your resources. You might be asked if your resources could have been allocated to a more cost-effective place. And then you face big decisions - does development now need less or more resource allocation to put things right?   Your responsible for how customers perceive your brands and products, too. When a product flops, customers wonder what happened and might lose trust in your products as a whole, as well as the brand.   And finally, it can point toward a lack of alignment between your development, marketing, and sales teams. This might take a lot of time and resources to figure out and resolve.   It’s all a lot of pressure – pressure that you don’t need.   What you as the COO need is time and space to do your job.   What you can do to secure better sales with your next product We’re a SaaS subscription business, so we understand how important it is to get sales to reflect all the hard work you put into your products. No one wants a Satisfries on their hands!   So when you’re ready to go a different way, here are actionable steps you can take to make sure you profit from your next innovative product:  Center existing customers – Every SaaS company’s searching for the elusive Customer Lifetime Value. It’s like gold. And the quickest way to boost it is to priortize existing customers. It can be challenging because customer loyalty is low in SaaS, but retention climbs with excellent products, customer support, communication, and preferred pricing and payments.  Know your target market and its segments: Segmented customer data hands you customer pain points, needs, behavior, and preferences on a silver platter. Everyone in your chain, from R&D to Marketing to Sales will understand what’s needed, making their job so much easier and impactful.   Create the best sales pricing and sales strategies: Both of these have to line up with your segments, and make your product the most attractive and competitive on the market. Pricing should be as flexible and customer-friendly as possible, and sales should be given the resources what they need to convert customers at the right time.   Use the data you’ve got: There are stacks of data in your system that are begging to be analyzed. That data can give you everything from trends, to what works and doesn’t, what your competition is doing, why our customers leave or come back, etc. It will help you make the best decisions.   Adopt the growth mindset: Even if you are already excellent, there’s always room for improvement. Monitoring KPIs and continually getting feedback from your customers will show you your strengths and weaknesses.    Automation: An end-to-end automation platform can do all these things for you. Imagine having these things automated and ticking over of their own accord:   Customers found, filed and funnelled: Automation can sift and sort to find and segment your customers, then put them through different funnels depending on their needs and wants. That means that when you have new products, the system will know who will want them, when, for how much money, and even who should sell it to them.   A streamlined sales process: Automation can take away the manual tasks and administrative burdens that sap the majority of your sales team’s time. When things like proposal creation, opportunities, quotes, pricing, and contract management are sorted, the team can give customers a speedy sales cycle and further nurture customer relationships.   Data-driven decisions: Automation give you the information you need to make the best decisions. This includes real-time analysis and insights into both the customer world and your sales and marketing performance. Reporting will let you know where you’re killing it, and where you need to improve.   That means you as the COO have the path to fast, ready-to-market, high-selling performance cleared for you.   And that means your customers are satisfied instead of Satisfried.  

Cultivating Success: A Comprehensive Guide to Subscription Management for SaaS CEOs and CFOs  In this guide: The Basics of Subscription Management Challenges in Subscription Management for SaaS Benefits of Efficient Subscription Management Subscription Management Best Practices Key Metrics for Subscription Management Integration of Subscription Management Tools Future Trends in Subscription Management What Bluefort Brings to the Table So you’re the CEO or the CFO of a SaaS company. You’ve been doing it a while, and your company has a brilliant product offering. Your customer base is growing. Things look pretty sweet, but there’s one thing that’s driving you crazy.   A splinter in your finger.   A fly in the ointment.   It’s there, it’s annoying, and it’s not going anywhere.   Subscription management.   You might have winced at the thought of it. But in SaaS, it seems to be an inevitability. Though it can be tricky to sort out, when done right, subscriptions are a great way to bring in constant revenue.   As a CEO or CFO, it's got too much potential to overlook.  At its core, subscription management is just managing the lifecycle of an ongoing relationship with a customer or supplier, including everything from choosing the best pricing models, setting up accurate and reliable billing cycles, and - gulp- minimizing customer churn.  But subscription management is nothing without an efficient framework because there’s no room for errors. The better you are at managing subscriptions, the more predictable your revenue, the more streamlined your operations, and the happier your customers.  So let's do a deep dive into the world of subscription management and how it not only impacts your business but your role and performance as a leader in a SaaS company.  I. The Basics of Subscription Management Before any problems can be solved, they must be understood. And like any kid who takes things apart knows, you have to break down those key components to see how it all works.   With subscription management, the key components are subscription models, billing cycles, and pricing strategies. These are the foundation because each of these elements plays a critical role in shaping your customers' experience and your company's financial health. A. Key Types of SaaS Subscription Models There are options when it comes to types of models, and some companies like to offer combinations. Whichever way you go, they are important because they lure customers in and keep them coming back for more.   There are three main SaaS subscription pricing models:   Flat-rate Pricing: This is a fairly straight-up model - what you sign up for is exactly what you get. You charge a fixed price for your service, whether that’s mostly or annually. Though flat-rate is super easy, it doesn’t cater to different customer needs or varying usage levels.   Usage-based Pricing: In this model, customers pay for your service according to how much or how little they use it. Though many customers prefer this because it’s both fair and flexible, it can lead to delays in billing and unpredictable revenue.  Tiered Pricing: This is a complex model - you offer different pricing tiers based on the customer’s preferred features, usage, or number of users. Though this model is attractive to a lot of customers, it’s harder to manage.   Some SaaS companies experiment or research to see which pricing works best for their customers. Some offer all of them or a combination. Either way, it can take a little time to figure out what fits comfortably.   Next, let's look at the components of subscription management. B. Subscription Management Components  From setting the billing cycles to determining the right pricing strategy and managing the customer lifecycle, each of these is crucial to get right so that you keep subscriptions running smoothly and keep those customers pleased and coming back for more.   Billing Cycles Billing cycles are key - they determine how often your subscription customers will be charged, whether weekly, monthly, quarterly, or annually.    Deciding which cycle is best really depends on your customers. Offering flexible billing cycles are mort likely to please more people and bring in more regular cash flow. Some customers prefer small and frequent payments, and some like whopping big chunks.   The drawback is that when you have to manage multiple billing cycles, it burdens your subscription management process. It also makes revenue forecasting more difficult because the timing and the amounts of revenue are always in flux.  Pricing Strategies It goes without saying that pricing strategies are extremely important to everyone involved. Pricing reflects the value your products provide but take into account things like competitor offering and pricing, market leverage, brand strength, and your development and operational costs.   When a pricing strategy is well thought out, it’s a powerful tool to tempt and keep customers. And you can segment your pricing strategies to cater to your customer groups.  Of course, it can be hard to figure out which prices will work best. And experimenting can be costly and waste of time. You need a deep understanding of your customers, competitors, and the market, and this understanding can only come from hard data.   A lot is at stake - underpricing leaves money on the table, overpricing can send potential customers into the proverbial arms of your competition, and changing too fast is confusing and damaging to your reputation.  Customer Lifecycle Management  In the SaaS sphere, it’s far preferable to keep your customers than to try to gain new ones. That means a customer’s experience with your SaaS business must be consistently good and meet their needs. Otherwise, why would they stay?   Retaining customers through customer lifecycle management demands you oversee everything from sign-up to renewal. This includes things like:   onboarding  providing ongoing customer support when it’s needed  handling upgrades or downgrades  disputes and billing    managing renewals  When customer lifecycle management is impactful, you can drive excellent customer satisfaction and retention. All that is required is a seamless onboarding experience, timely and effective support, and easy upgrades or downgrades (no pressure, right?).   But all this requires a lot of investment of time and resources. It also requires knowing your customers’ fluctuating needs, what they prefer, what they use, and their behaviours at every stage of the lifecycle.   These are the basics of what subscription management is.   Though subscriptions can be your company’s best friend, they also bring big challenges that must be negotiated.   II. Challenges in Subscription Management for SaaS No matter how brilliant a CEO or CFO you are, managing subscriptions is no walk in the park. And you're not just expected to navigate or eliminate these challenges, but to turn these problems into opportunities for growth.   Each of these challenges can seem overwhelming, but start combining them together, and you can have a bit of a mess that makes your job a lot harder (don’t worry, we’ve got some solutions later on!).   We work with a lot of subscription-based SaaS businesses, and these are the things that plagued them most:   Operations There are a lot of plates to keep spinning in the subscription management cycle - from sales pitches all the way through to payment reconciliation and reporting. It takes up a lot of time and causes a lot of stress to keep up with. At worst, it can force you to be in damage-control mode, putting out fires and fixing mistakes. This can have a knock-on effect with other departments too.   Revenue Recognition Complexities Consistently and completely recognizing revenue from subscriptions is a herculean task. You’ve got to know what you’re doing at all times with upfront payments, discounts, refunds, and cancellations, all while sticking to accounting best practices and standards.   Churn Churn will always be a major concern for SaaS businesses. There is so much competition doing everything they can to lure your customers away. That’s why it’s crucial to strategize to cut churn down as much as possible and keep existing customers over a lifetime. Knowing your customer is key to this, but it’s an intensive research process with little room for error.  Forecasting and Reporting Because so many subscriptions are recurring, and because churn can be so high, it can be very difficult to know where your revenue stands at any given time. This makes reports and forecasting needed for sound financial decisions nearly impossible.  Regulatory Compliance Concerns Being on the wrong side of compliance can be an expensive nightmare that damages your reputation. But SaaS businesses have so many regulations to deal with across their business including data privacy, security, financial reporting, etc. Not only that, but regulations change, and they vary from region to region.   Scalability All these problems are magnified the more you grow. Through time you’re handling a lot more complexity in managing multiple subscriptions, diverse pricing models, and varying billing cycles. And most likely you’re doing this on legacy systems.   It’s quite a list.   But these problems are not insurmountable. In fact, all of them are solvable. But for now, let’s have a look at everything you have to gain from an efficient subscription management system.   III. Benefits of Efficient Subscription Management  Though SaaS is complex and always in flux, there is one constant- the need for efficient subscription management. And when you get it right, it is worth it.   And when it’s effective, it’s more than just keeping track of who is subscribed to what and for how long. It’s about leveraging these subscriptions to drive growth and improve customer experience.  One of the best benefits of efficient subscription management is improved revenue visibility. Because, in a subscription model, revenue trickles in over time, making it hard to both track and predict.   When you’ve got an efficient subscription management system in place, you’ll get the clarity you need in recurring revenue, which is part of monitoring your financial health and making good future decisions.  Efficient subscription management isn’t just about numbers; it’s about people too. It can make your Customer Experience so much better because you can give both flexibility and convenience. They get accurate billing on time, clear communication, and choice. What customer would leave when they’re enjoying all this?   Efficient subscription management can also streamline financial operations. Billing is a four-letter word in the SaaS world with its pricing models, discounts, offers, new products, usage, and billing cycles on top. But the right efficient systems that specifically target the end-to-end, frees up financial resources and tightens up operations. That’s how you get optimized performance.   Lastly, efficient subscription management can offer regulatory compliance advantages. Though compliance can be a challenge, taking steps to tackle compliance benefits you. Providing robust security features, maintaining detailed records, and facilitating accurate reporting only strengthens your brand.   Of course, to reap these benefits demands a well-designed system that takes into account both your business needs and market conditions.   And that's where the best practices come in.   IV. Subscription Management Best Practices What are the best practices that can take you toward efficient subscription management?   Automated billing system   It’s a fact- manual billing processes are time-wasting, error-prone, and not scalable. But automation streamlines everything including your billing process. It cuts down on mistakes. It feels up valuable time for strategic tasks.   Subscription software that has been specifically built for this will handle all your tasks, from managing different pricing models and billing cycles to issuing invoices, tracking and processing payments, and reconciliation.   At its best, it can offer you complete revenue recognition and provide you with accurate revenue numbers at any hour of the day.   It can also automate renewals, preventing service interruptions and maintaining steady revenue flow. Moreover, subscription billing software can provide valuable insights into your billing data, helping you identify trends, spot issues, and make informed decisions.  Flexible Pricing Strategies   Adopting flexible pricing strategies is another great best practice. With all the competition out there, adopting flexible pricing strategies will give you a huge advantage. You’ll be able to meet diverse customer needs and preferences.   Your flexible pricing strategies can include any of the pricing models, and add to that usage-based billing, which caters to your customer segments wherever they are and whatever they need.  One caveat- your pricing strategies (especially if they offer usage billing) will need resources to make sure billing stays accurate and on time.   Customer Retention Strategies   It’s important to do what you can to cut down on churn- it’s a crucial aspect of subscription management.   These strategies can include:   personalized customer engagement  offerings that meet their needs   add-ons and cross-selling with their preferences in mind   understanding your customers' needs and preferences   tailoring your communication  servicing accordingly  It can also include proactive churn prevention, which involves identifying at-risk customers and taking steps to address their issues before they decide to leave.  But even at those optimum levels, these best practices are not a one-size-fits-all solution. You’ll have to tailor them to your business, market conditions, and customer needs.  V. Key Metrics for Subscription Management Key Performance Indicators (KPIs) are a wonder. They give you a snapshot of where your financial health and growth stand, which gives you the knowledge you need to adjust to make things better.    So what are the metrics that will be most useful for you to know to guide your business strategies?   1. Monthly Recurring Revenue (MRR) This is one of the most important. MRR is the predictable revenue that your company expects to receive every month, to measure the stability of the company's revenue stream.  It's calculated by multiplying the total number of paying customers by the average revenue per user (ARPU). When you know your MRR, you can track sales and churn over time, and make informed future-focused decisions.   2. Customer Lifetime Value (CLV) CLV is the total revenue your business can expect from a customer throughout your relationship. CLV is calculated by multiplying the average purchase value, the average purchase frequency rate, and the average customer lifespan. Improving CLV helps you plan your marketing and customer service efforts more efficiently so they can target high CLV segments to maximize your profitability.  3. Churn Rate This is the rate at which customers leave your subscription service within a year-long period. It helps you gauge customer loyalty.  When you know your churn rate, you’ll be able to better spot problems with factors like your product quality, customer service, or pricing. It equips you to take proactive steps to stop churn, and serves as a progress monitor for customer retention and satisfaction.  4. Customer Acquisition Cost (CAC) CAC provides insight into the cost associated with convincing a potential customer to buy a product or service. It includes costs spent on marketing and sales efforts divided by the number of customers acquired in the period the money was spent.  A high CAC can be a concern as it could mean lower profitability, especially if the CLV is not significantly higher. Companies should aim for a lower CAC, while simultaneously working on strategies to increase CLV, leading to increased profitability.  Understanding these key metrics is just the first step. You also need the right subscription management software to do the problem-solving for you.    But where to begin?   VI. Integration of Subscription Management Tools It’s the integration of good subscription management tools that will make the biggest difference. These tools not only streamline your operations- but they also give you valuable insights that can push the growth of your business forward.  Selecting the Right Subscription Management Software  You might feel a little lost in picking the right software for you. Don’t worry, that’s common- after all, there’s a lot of choice out there!   There will be essential features that you need to look out for:    automated invoicing and billing  flexible pricing options  free-flowing information between sales and financial teams  revenue tracking  a variety of payment gateway support  customer management capabilities  financial reporting and forecasting   data and analytics  awareness of compliance requirements   robust data privacy   And it’s important to look out for software that is intuitive, easy to understand and operate by your team (and customers when applicable). And the software should provide great onboarding and customer service Considerations for SaaS Businesses   For SaaS businesses have a special consideration to add on top: scalability. There’s no point in bringing in the bells and whistles if you still can’t keep up when you scale.    Good software can handle a growing base and more, complex transactions. t should also integrate seamlessly with your existing systems and customer support tools, providing a unified platform for managing all aspects of your subscription business.  Integration with Existing Systems  With some software platforms, it is possible to integrate into your existing systems like CRM and accounting, and customer service tools. But one thing is important here: when you’re after the best result, you need to give subscription management software the best foundation.   Choosing the best software for your system provides a more cohesive view of customer data. It also streamlines financial reporting and delivers the best customer service.   Integrating with Customer Relationship Management (CRM) software will let you consolidate your legacy data. This gives you a 360 degree view of the history of your customers, their behavior, preferences, segmentation, needs, and and interactions. This enables you to offer the personalised experience that customers love.     When the subscription management tool is compatible with your accounting software, you’ll get effortless financial reporting and tax management. You’ll get accurate insights into your company's financial health and help in strategic decision-making.  Integrating your tools is an extremely impactful subscription management.     There’s one last thing to consider when thinking about choosing subscription management software: what’s coming up in the near future.   VII. Future Trends in Subscription Management  You’re in SaaS, so you have a crystal-clear understanding of how important it is to stay ahead of the curve with a forward-thinking approach to everything.   That means having a good idea of what lay ahead.   Let's delve deeper into two big trends and how they will transform the future of subscription management.  A. Artificial Intelligence in Subscription Analytics  AI is poised to change everything in subscription management. Its ability to harvest, process and analyze vast amounts of data quickly and accurately opens up a whole world of possibility.   The more we know about customer behavior, the better we can predict trends, and tailor product development to target their needs. That makes investment ROI go through the roof.   But it’s not just helpful on the product side. One key area where AI stands out is in predicting customer churn. AI can look at behavior and usage, and flag up early warnings about customers who are likely to cancel their subscriptions.   This lets you proactively engage with them, bringing them back into the fold before they leave. That’s a lot easier than trying to tempt them back after they’ve signed up for your competition.    Furthermore, AI can also optimise your pricing strategies by analyzing factors like market trends, customer demand, and competitor pricing.  Finally, AI gives you segmentation on steroids. It can use a lot more data points to really narrow down those segments which means you can give people the most customised offerings and experience possible. Boom- that’s more engagement and conversion for you.   B. Personalized Subscription Experiences Building on AI, personalisation deserves its own focus too.   Customers are extremely fickle. We know this because we’re customers too. We all understand how tempting it is to jump ship as soon as someone gives us a tempting offer- especially if we have no loyalty to the business we’re currently with.   And that fickleness has forced SaaS companies to personalise the customer experience as a way to emotionally engage with them and increase the likelihood of them staying. And this has resulted in the highest rate of customer expectation ever.   Personalization is rapidly becoming a non-negotiable element of any type of subscription. Customers want services that cater to their individual needs and preferences. And businesses can struggle to keep up without the right tools to offer things like:   customized content and marketing   tailored products  pricing plans based on each subscriber's usage patterns  soliciting and using feedback  personal data for recommendations   Businesses that offer a radically personalized experience will boost customer satisfaction and loyalty, improve retention rates, and increase their overall Customer Lifetime Value (CLV).  VIII. What Bluefort Brings to the Table   Bluefort has a globally proven end-to-end subscription management solution made specifically for your needs.  Streamlining processes and leveraging automation is at the heart of what we do.   It determines the best pricing models and spots the most effective upselling and cross-selling opportunities based on individual customer preferences and buying patterns.  From onboarding new subscribers to managing renewals and handling tier upgrades, we’ve automated and simplified these tasks for optimal efficiency and precision.  Billing is a pivotal aspect of the subscriber’s lifecycle, and we’ve got it covered.   Our automated subscription billing ensures timely and accurate invoicing, while our integration with various payment gateways, including Stripe and GoCardless, offers both flexibility and security for all transactions.  It crunches and analyses data to give you reports and forecasts, empowering you to make the best decisions.   And - this will be music to your ears - it completes recognized revenue.   You will be fully equipped to do the job you were hired to do. No more getting left out on the ledge, hanging on for dear life.   How you fit into it   We understand the tremendous pressure you’re under because our CEO and CFO have been there.   You’re in charge of all your staff, the day-to-day of everything, the revenue, and the future health of the company.   And you’re the one who must stand in front of a board or stakeholders and explain why things are the way they are.   Even if it’s not your fault, the buck always starts with you.   And the most frustrating thing about all this responsibility is that without the right tools to keep things running, you are stuck in a damage-control limbo. You can’t do any of the high-value strategies and tasks that you were hired to do.   All the amazing and innovative ideas you were hired for? They’re stuck in an indefinite holding pattern.   The whole situation is terrible for your blood pressure. It’s terrible for morale. And it’s terrible for your reputation.   No one needs it. This is why the best subscription management software is the best option.   Not only does it bring the benefit of reliable revenue streams and a broader customer base, but it gets your name out there. It shows the world (and your competitors) exactly what you have to offer.   Software that integrates into your business, monitors those KPIs, and keeps your entire end-to-end subscription management ticking over for you will give you a huge advantage.   You’re a SaaS business. You understand how essential cutting-edge technology is for success. Why not give yourself the same upper hand your products give your customers?   You have nothing to lose except wasted time, resources, and customer churn.   You can position your subscription business for driving the returns that your investors expect along with sustained success in the years to come.  Say goodbye to manual sales processes and boost your growth with Bluefort's cutting-edge automation solutions. Learn how our end-to-end system streamlines the end-to-end process.