billing

The modern billing system has evolved beyond the original back office processes connected to archaic databases and applications.

By Krish Subramanian

Today, savvy businesses treat billing as a central source of intelligence to understand customer profiles and buying behaviors, and in turn reduce churn and increase long-term  revenue. Modern billing systems have become a lab for customer growth experiments, enabling online businesses to tweak pricing, trial offers, discounts and many other expansion levers. But to really take advantage of this laboratory, companies need the freedom to quickly roll out experiments without writing code or worrying about changes that are difficult to roll back.

In an ecosystem where growth is key to survival, there’s a constant demand to improve customer acquisition and retention. Subscription-based SMBs need to pay special attention to customer satisfaction and loyalty, which are important pillars for long-term growth and churn reduction. However, subscription businesses have a strategic and often underutilized avenue to experiment with growth strategies that are unique to their business model. The modern billing and subscription management system, which serves as the financial system of record for subscription-based SMBs, fuels these strategies. With the right foundation in place, this system can be used as a powerful growth lever.

Experimenting with Freemium and Free Trial Offers

Enticing users to try your service is the first step towards converting customers, and there are several  pricing models that are powerful in driving adoption. For example, subscription businesses can use a “freemium” model with a free base-level offering and chargeable “premium” features and capabilities, or leverage a free trial model that limits the period of use or functionality for the service.

These models may seem simple enough in theory, but they can pose complications when it comes to successful execution. For instance, imagine if you find out that one of your premium offerings is enormously popular, but your pricing model isn’t generating enough revenue. In this case, changing the price without taking other considerations into account can quickly lead to bigger challenges. Will existing customers continue to be billed at the original price? Will they need to re-subscribe to the new pricing? Will they get a limited-period discount? Implementing these scenarios without a billing system that automates them can demand significant development resources and delay execution.

Designing Marketing Campaigns That Provide Meaningful Insights

Marketing campaigns offering coupons, ongoing discounts, rebate payments or other promotions can work as powerful levers to spur growth. Subscription SMBs that want to leverage these tools need to modify their billing system and payment gateway to process promotional discounts and apply them to customer invoices, which is especially complicated if the discount extends across multiple billing cycles. Hand-coding the back end of marketing campaigns can slow down progress, leaving your business with little room to experiment. By automating these functions on a billing platform, you can quickly and easily test different promotional campaigns to realize optimal results.

Importantly, in today’s data-driven economy, you need fast and meaningful insights on how campaigns affect customer growth and retention. To achieve this level of clarity, your billing system should have the ability to link discount and coupon use to specific customer accounts and provide analytics on their performance.

Expanding Globally with Multiple Payment Methods

Adding new payment methods can be a powerful customer acquisition and retention strategy, especially as your businesses scales globally. While credit card payments are still the norm in the U.S., many customers will be attracted by the opportunity to use other forms of payments, such as Apple Pay, Google Wallet and PayPal. At the same time, not all countries use credit card payments as the standard for online purchasing. In Europe, for example, buyers expect to be able to make direct debit payments via Bacs or SEPA, while in many Asian countries, consumers rely on mobile payment apps like Alipay and WeChat.

In today’s marketplace, every online business is a global business. Accepting multiple payment methods that are most commonly used in the buyer’s geographic area — and that provide the lowest fees — has become an integral part of growth. Rapidly adding new payment methods through a billing system that supports global payments empowers companies to find out what works without wasting resources on building payment integrations from scratch. For SMBs with a subscription model, accepting multiple payment methods can also be useful to fall back on and recover revenue if the first customer payment fails. 

While subscription business models demand that SMBs pay close attention to customer satisfaction and engagement, they also provide a unique opportunity to try new acquisition strategies and grow revenue. The key to unlocking this opportunity is to use your billing and subscription management system as an advantage to drive fast and frequent experimentation.

By Krish Subramanian is the CEO and co-founder of Chargebee. Twitter handles: @cbkrish@chargebee.

Billing stock photo by isak55/Shutterstock