Subscription Management Elevates Experience Through Automation

Ventana Research defines subscription management as the processes and technology needed to manage the subscriber experience from the first digital touch to the continuous modifications of orders for services and billing. Effective subscription management requires a new generation of applications designed to manage the life cycle of subscriptions and provide subscribers with the experiences they expect. The subscription business model has grown in popularity across many industries, and for many organizations it is now part of how they conduct business. Organizations, whether through line extensions, completely new businesses or through mergers and acquisitions, now have a mixed business model combining subscription and usage with one-time sales, often as a bundle of related products and services. The model establishes a regular, predictable income stream and monetizes existing and new assets. In addition, usage-based pricing is preferred by many consumers, both B2B and B2C, because it is more closely aligned to actual consumption patterns. For product companies, selling by subscription enables them to maintain ongoing contact with customers to facilitate future sales. Subscription is also popular with customers as it allows a degree of control from the buyer’s point of view and can be cancelled or modified, typically online, in a frictionless manner.

However, the subscription model poses two significant challenges. First, in most organizations, subscription operations extend across departments and processes and so require cross-functional coordination and end-to-end process management. Organizations must connect front-office subscription processes in marketing, sales, commerce, support, and services to back-office operations including accounting, finance and people-related efforts. Second, today’s subscriptions are dynamic, usually involving frequent changes in levels of service, usage-based charges, and one-off items. End-to-end management simplifies the administration of these subscriptions and preserves a seamless customer experience, hiding any back-end integration complexity from the end user. And, as more companies see the subscription and usage business model not as something different or additional but rather as an integral part of their everyday operation, the need for a unified approach will become paramount as customers will require one touchpoint for orders and one touchpoint for billing and invoicing. We assert that by 2024, the division of the market for subscription management software between digitally native and mixed business models will converge into platforms that can provide for both.

Software that manages subscriptions and associated billing can resolve tensions that arise between sales and marketing departments on one side and finance and accounting departments on the other. The former wants to be able to offer promotions and contract structures that are responsive to customer and market requirements, but finance and accounting departments resist complexity because it creates unsustainable workloads in invoicing systems.

The goal of this Subscription Management Benchmark Research is to better understand the (software/technology) needs of organizations that manage subscribers and associate subscriptions as well as what processes and associated applications they use to assess related performance. In addition, it will examine the types of subscriptions in use — from the one-off sale and annual renewal to periodic additions and removals — as they can become complex quite rapidly when usage and duration vary. The research will span B2B and B2C industries, each with distinct buyers and supporting processes that require specific technology that can adapt to their unique subscriptions and interactions with subscribers. The research will also examine the efforts organizations have undertaken to assess and improve the subscriber experience, including voice of the subscriber (VoS) efforts that seek to track and understand subscribers’ journey, sentiment and satisfaction.

As well as streamlining the subscription management process, this year we will also be looking at how subscription management and billing solutions also handle partner ecosystems. Increasingly, organizations are looking to create bundles that offer added value to their customers. These bundles can be made of goods and services that include offerings from third parties that are in adjacent and non-competitive market segments. But searching and negotiating contracts and service level agreements with third parties on an individual basis is potentially onerous, as is computing revenue allocations.

It furthermore will evaluate how organizations use CRM and ERP as well as custom-built applications and tools such as spreadsheets, analytics and cloud platforms. The range of applications to be considered span accounting, billing and payment, commerce, planning and revenue recognition.

Our Subscription Management Benchmark Research is designed to elicit changing trends in how technology is being deployed to drive execution, predictability and transparency. We invite you to participate in this research and to learn more about our focus on subscription management.

Regards,

Stephen Hurrell