As customers’ inherent needs change dynamically, In response, subscription platforms must be equipped to tackle churn more efficiently than ever. Embarking on a data-driven, customer-centric journey to tackle churn intelligently is the right approach as long as you can identify the most sensitive drain leading to customer churn and, eventually, revenue leakage. One such snag causing customer and revenue loss could be a weak billing system with no revenue recognition and management strategy in place.
An efficient billing system enables smoother cash flow tables, enhances the user experience, and even helps stabilize your cost-to-net income ratio. A survey by Profitwell, a leading payments platform, revealed that 20 to 40 percent of churn is involuntary, as it happens due to credit card failures and cart abandonments. Unannounced customer churn events such as this described scenario allow little or no opportunity for subscription businesses to spot, cross-check, follow up, and revive those interactions.
A Critical Navigation Tool
Maximizing cash flow will be a critical lever to navigate the dynamic subscription landscape. A recent PYMNYS State of Subscription Business report reveals that 48% of the total churn passively occurs through payment failures that result in service cancellations. Since payment inefficiency is a clear reason for involuntary churn, enabling payment flexibility not only ‘ups your user experience strategy’ but keeps that cash flow positive.
An efficient revenue management system with billing automation and centralized control saves you from the cascading effect of customer churn. At the same time, such a system helps build a fully-functional, high-performance platform simultaneously. A robust revenue ecosystem is a must-have for your growth and expansion trajectory for plenty of reasons.
Consider just a few of them here:
- Payment flexibility with a centralized billing system allows you to experiment (primarily conduct an A/B test) with new pricing plans and implement them faster. An enhanced pricing plan can dynamically transform your static billing periods and pricing models overnight.
- You can achieve accelerated retention by streamlining your revenue ecosystem, which allows you to easily grandfather your existing customers. This strategy helps keep the existing customers by offering subscription tiers at the older signed-up prices while acquiring new customers at different rates.
- Efficient revenue management makes your platform compliance-ready for global tax regulations, location-wise.
Tiered Subscriptions
Revenue management isn’t confined to clean accounting and hyperautomation. Maximize your customer care by offering enticing pricing options and tiered subscription plans so your customers get tailored attention - always. Tiered subscription models expose OTT businesses to newer revenue streams with income yields by aligning completely with customer choices. Tiering your subscription plan widens the scope to enable new pricing for your customers while constantly engaging them with innovative incentives and plan upgrade offers.
Dunning Management
Dunning management is an automated payment recovery mechanism run by your revenue management platform that gets triggered when a payment fails. This capability equips subscription platforms to communicate payment failure with customers via email, text, or in-app notification. Dunning saves collection costs and automates your accounts receivable workflow. What’s more, it helps with customer retention.
Revenue Recognition
Low-touch onboarding is a game-changer for the subscription industry. Customers crave the ability to upgrade, downgrade, pause, or cancel their subscriptions. Some more frequently than others. This feature also gives you valuable customer data to study buying behavior, identify payment trends, and even recognize revenue in mid-cycle subscription plans. Subscription platforms can know exactly when and how much of their revenue is recurring to compute an average Monthly Recurring Revenue (MRR).
A centralized billing system simplifies platform functionality with a holistic view of the underlying revenue lifecycle and strengthens customer communication by backing your offer strategy with valid data points.
The revenue management module of the Evergent Monetization Platform strengthens your revenue ecosystem with payment flexibility, multi-currency support, and global payment integration to drive retention, propel growth, and elevate profitability.
We’re just scratching the surface here. To gain a more in-depth understanding of what goes into enhancing the platform experience by streamlining your revenue ecosystem, book a call with our monetization experts today.
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