Although the idea of subscriptions is not new, it has reached new heights due to changes in consumer behavior and technological improvements. The subscription economy has emerged as a result of consumers' preference for access and experiences above ownership in the modern world. Under this model, users pay on a regular basis (usually once a month or once a year) to gain access to a product or service, such as software updates, curated goods, or special content.
Businesses need to reconsider their income strategy in light of this shift in consumer preferences. Gaining new clients helps achieve goals in one-time sales. Recurring revenue businesses, such as those that rely on subscriptions, focus on keeping their current clientele, who pay on schedule and renew, in order to generate income. Maintaining client engagement to attain top-line subscription growth is the aim of subscription management.
One tool that has become essential for managing subscription-based businesses is Salesforce. It helps track customer information, manage subscriptions and billing, and automate workflows. Customizable dashboards and reports assist in revenue opportunity monitoring. There’s more to what Salesforce has to offer, and we are here to spill the beans.
The need for effective subscription management
The OnlineDasher research indicates that retaining an existing customer can save five to twenty-five times the cost of acquiring a new one. According to a survey by OrderGroove, 41% of revenue is generated by returning customers, who account for just 8% of overall sales. Because retaining customers is now so crucial, companies have developed new models centered on ongoing connections.
But building a base of subscribed recurring customers is not enough - you need to find a way to take full advantage of it. There are four reasons you need subscription management:
- Customer retention: businesses rely heavily on repeat purchases, and if a customer experiences any issues related to billing, cancellations, or even just navigating the subscription website, they are likely to cancel their subscription altogether.
- Branding: inaccurate billing or subscription renewal can lead to negative customer reviews, ultimately damaging the business's reputation and discouraging potential customers from signing up.
- Financial stability: with many subscriptions running on an auto-renewal basis, it is essential to keep track of payments and ensure that billing errors or fraud are detected and addressed promptly.
- Personalization: an in-depth understanding of the customer base is vital to marketing, data-driven decisions, customer retention, and engagement.
Overview of Salesforce Subscription Management system
Salesforce Subscription Management is a technology-driven automated solution that maximizes subscription delivery by utilizing shared data. It enables subscription-based automation of the sales, billing, and collection processes for unified products. In a similar vein, it facilitates the production of catalogs, the administration of costs and quotations, and the omnichannel tracking of purchases, bills, and past-due payments. Along with Salesforce Billing and CPQ (Configure, Price, Quote), it is a component of Revenue Cloud.
The system unifies disparate channels and technologies on a single platform, consolidates subscriber data into a single source of information, and drives automation and AI-powered analytics simultaneously. All of this is done to give the consumer the greatest possible experience, from the moment they make a purchase until they renew or adjust their membership.
Salesforce Subscription Management API helps integrate with other platforms, including payment gateways, marketing automation tools, and customer relationship management (CRM) solutions. For instance, businesses can incorporate Salesforce subscription management with payment gateways such as PayPal, Stripe, or Braintree to automate billing processes and ensure timely payments. Integrating Salesforce with marketing automation tools such as HubSpot or Marketo can help businesses manage customer data and automate email campaigns to upsell or cross-sell additional products or services to their subscribers.
Key features of Salesforce for subscription management
To help you understand how subscription management works in Salesforce, look at its most essential features.
Customer 360 view: holistic customer insights for personalized services
With a comprehensive and real-time view of customers, businesses can track their interactions and preferences, analyze their behavior, and tailor their offerings to enhance customer experience and satisfaction.
Automated billing and invoicing
This feature streamlines financial transactions by setting up default payment schedule policies that automatically generate payment schedules and items, simplifying invoice processing. Salesforce subscription management automates the conversion of negative invoice lines to credit memos, ensuring accurate accounting and streamlined credit processes. With automated refunds and balance settlement, businesses can simplify order changes or cancellations by automatically issuing refunds and applying credit memos to settle any remaining invoice balances, improving efficiency and customer satisfaction.
Renewal forecasting: predict and plan for subscription renewals
This feature uses record data, such as previous subscription patterns, customer behavior, and usage data, to provide accurate and reliable renewal predictions. This way, businesses can make data-driven decisions and optimize revenue streams.
Churn analysis: identify patterns and reasons for subscription cancellations
By analyzing customer feedback, usage data, and behavioral patterns, Salesforce can help businesses diagnose and address the causes of churn, such as pricing, service quality, and features. Churn analysis delivers valuable insights that can help improve customer satisfaction, increase retention rates, and ultimately grow revenues.
Integrated CPQ for pricing flexibility
With an integrated CPQ, businesses can create quotes based on subscription parameters such as the number of licenses, user types, duration, discounts, and more. This ensures accurate pricing, reduces the chances of errors, and streamlines the sales process.
Estimated tax inclusion in quotes
This feature helps enhance quote accuracy by incorporating estimated taxes for subscription products, providing customers with more transparent pricing information, and reducing the chances of disputes.
Advantages of using Salesforce for subscription management
Salesforce has become an indispensable tool for subscription management. Let’s uncover what advantages made it so popular.
Seamless customer onboarding and lifecycle management
The platform centralizes customer data, ensuring the sign-up and renewal processes are smooth, efficient, and hassle-free. This benefit alone can boost a company's customer retention rate, making it excessively convenient for new and existing customers to sign up for their services.
Increased customer retention through personalized engagement
The platform's advanced AI and predictive analytics technologies analyze customer behavior patterns, preferences, and other data points to develop individualized marketing strategies that improve customer retention. Personalized recommendations, tailored marketing messages, and targeted content help foster a deeper connection and trust between businesses and their valued customers, thus enhancing their loyalty and satisfaction.
Time-saving and error reduction through automation
Automation of key processes helps save time and reduce errors significantly. Businesses can free up valuable time and resources to focus on core business operations by automating tasks such as invoicing, reporting, and customer support. This results in increased productivity and cost savings, which can help drive the organization's long-term growth.
Enhanced data-driven decision-making with robust analytics
With Salesforce, companies can access powerful business intelligence features to gather insights into customers' preferences, cross-selling opportunities, and other trends affecting their businesses. Innovative forecasting, reporting, and analytical tools help stay competitive and relevant in their respective industries.
Scalability for growing subscription businesses
As subscription-based businesses scale and evolve, they require a more sophisticated and dynamic management system to handle their subscribers' needs. Salesforce is a flexible, scalable platform that manages subscriptions at any level, with tools that can adapt and evolve as the business grows. It offers ample space and infrastructure to help companies scale their operations and handle the increasing demands of their subscription models.
Improved subscription business model
Salesforce has also redefined the subscription business model, enabling subscription services in entirely new ways. For instance, businesses can use Salesforce to create customized subscription models that suit their unique needs while making it easy for customers to opt in or out of subscriptions as needed. This makes it easier for businesses to maximize profits and revenue growth through optimized pricing strategies.
Unified self-service customer experiences
Businesses can create a unified, self-service customer experience, enabling subscribers to manage their accounts, update their payment information, upgrade or downgrade their subscriptions, and more. This reduces the time and effort required to manage subscriptions on behalf of customers while also improving the customer experience, leading to higher retention rates.
Total control of the billing process
Salesforce offers robust billing capabilities, allowing you to process payments, manage invoices, and eliminate billing errors. Thus, businesses have complete control over the subscription billing process, including setting up custom payment plans, handling billing inquiries, and creating detailed reports.
Real-life case studies: successful subscription management with Salesforce
Below are some companies that have joined the subscription revolution and reaped the benefits of using Salesforce's platform.
- Airbnb. The online marketplace for lodging and rental homes has a flexible pricing model that requires constant fluctuation. Salesforce helps Airbnb manage its pricing models and direct bookings. Salesforce's solution also allows Airbnb to integrate with advertising and marketing campaigns to boost customer engagement and conversion rates. By utilizing the platform for subscription management, Airbnb saw a 25% increase in its conversion rates.
- The New York Times. The New York Times is an acclaimed US-based newspaper offering its service in a subscription model. Salesforce helped the Times team identify that subscribers who read more stories are more likely to renew their subscriptions. This insight helped create targeted content for each group of subscribers, ultimately allowing them to predict at-risk ones and win them back. As a result, The New York Times has witnessed a substantial increase in revenue, drawing in more than $400 million in subscription revenue annually.
- Financial Times. Another news publisher that leveraged Salesforce for subscription management is Financial Times, which relied on a legacy CRM system to manage its subscription database. The company shifted to Salesforce to offer a more comprehensive view of the customer, resulting in a 75% reduction in the time it takes to manage subscriptions.
- Unilever. A global consumer package goods company has implemented Salesforce to manage and monitor suppliers, transactions, and inventory. By digitizing subscription management systems, Unilever improved logistic management and supply chain efficiency, bringing down the cost of inventory management and allowing for faster order fulfillment. The result was a higher customer satisfaction rating.
- Zoom Video Communications. With the sudden outbreak of the COVID-19 pandemic, the need for video conferencing became more significant than ever. Zoom has been at the forefront of video communication, raising its yearly revenue from $60 million in 2019 to $77.2 billion in 2020. This growth has been primarily fueled by Salesforce, which enables Zoom to manage its subscription and billing efficiently.
Considerations before implementing Salesforce Subscription Management
Before implementing Salesforce Subscription Management, consider several essential factors to ensure a successful and efficient integration:
- Understand your business's specific needs: identify and prioritize the areas where your organization could benefit from a subscription management system, such as enhancing customer engagement or optimizing revenue streams.
- Focus on smooth integration with existing systems: effective integration with ERP, financial software, and other relevant applications allows for a seamless flow of data and information across all departments, streamlining processes and minimizing errors.
- Ensure staff training and onboarding: all users should be adequately proficient in using the system's features and functions, maximizing efficiency and productivity.
- Schedule ongoing maintenance and updates: ensure that the system meets the business's evolving needs and remains up-to-date with the latest technological advancements.
Future trends and predictions in subscription management
As the industry evolves, several trends and predictions have the potential to shape the future of subscription management. First, businesses will be able to offer more customized subscription plans due to advancements in Big Data and ML that help analyze customer behavior and provide tailor-made plans.
Secondly, the subscription-based economy is expected to become more competitive as new players enter the market and existing providers improve their offerings. To remain relevant, businesses must offer better value propositions, such as unique content, exclusive access, and personalized experiences. Metrics such as customer lifetime value, churn rate, and acquisition cost help measure success.
Finally, new subscription-based business models are set to emerge in the future. For example, subscription boxes, which have gained popularity in recent years, will continue to evolve, and new formats will appear. In addition, the concept of “subscription as a service” is gaining traction, where companies offer complete solutions, such as software, hardware, and support, through a monthly or yearly subscription.
IoT and connected devices in automated subscription services
With subscription-based services integrating IoT technologies, organizations may create customized solutions based on consumer needs by combining voice recognition, automation, analytics, sensors, and AI. The possibilities are almost limitless.
Connected devices, such as smart home assistants, wearable devices, and IoT-enabled appliances, are critical components of the automated subscription service ecosystem. These devices collect data and interact with other devices, allowing seamless communication and automated processes. With their help, subscription services can now operate with a greater level of accuracy and provide more personalized experiences to their customers. IoT-enabled devices can also help track usage patterns, which allows subscription services to adjust their offerings and pricing according to customer demand.
AI in Salesforce subscription management
One of the key benefits of incorporating AI and ML into subscription management in Salesforce is that it enables businesses to predict the likelihood of customer churn. Companies can identify customer behaviors and trends that indicate a higher churn probability and take proactive measures to prevent it. AI algorithms can also be used to gain insights into the most effective communication channels or messaging that resonates with customers to personalize outreach and increase engagement.
Another way in which AI and ML influence subscription management in Salesforce is by automating repetitive tasks and streamlining workflows. AI algorithms can automate subscription renewals and upgrades, freeing employees' time to focus on more strategic business operations. And since everything in the digital services world seems to revolve around personalization, AI is the perfect solution for tailored subscription offers. The technology can analyze customer behavior and preferences, drawing personalized product recommendations or bundled subscription packages that better match customers' needs.
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