Subscription Billing Mistakes SaaS Companies MUST Avoid

Despite the phenomenal growth of the subscription industry, SaaS companies face a variety of challenges, mostly in the areas of billing. It is one of the most critical requirements that lays the foundation of satisfactory customer experience and, therefore, it needs to be seamless, unobtrusive, and error-free. Yet, many companies struggle to get this key aspect of the subscription experience right.
Companies transitioning the business from manual, one-time payments to automated, subscription payments often find it hard to disassociate from the older approaches and end up with inaccurate and untimely billing, that results in revenue leakage, and dissatisfied customers. If you want to adopt the subscription model with confidence, and ensure your billing is precise, here are 8 subscription billing mistakes you must avoid:

  1. Manually billing your growing customer base:For any SaaS company, billing is one of the most important activities; yet for a scaling business with a large volume of transactions, manually billing your growing customer base will introduce a bevy of challenges. Siloed systems and data entry in spreadsheets can get very complicated as your business grows and will start costing you a lot of money. Not only does manual billing result in delays, but it also affects customer experience– preventing you from growing your business. An automated recurring billing solution can ensure accurate invoicing, timely payments, and precise revenue recognition. It allows you to choose a billing cycle that perfectly suits you and your customers, automatically track different payment schedules and manage bill runs accordingly.
  2. Issuing generic invoices and receipts:In a world where every customer expects a personalized billing experience, issues generic invoices and receipts can prove to be extremely devastating. Sending generic invoices as an attachment through bland emails can massively impact customer experience, and churn. Notifying your customers about any payment or issue needs to be done in a highly personalized manner. A recurring billing solution can make your invoices as transparent as possible and leverage them as branding opportunities. It can enable you to add polite reminders of upgrade opportunities and special offers while intimating them about successful payments. It can also help in sending personalized emails to customers for any information regarding a renewal, an upgrade or a special offer. You can make your customers feel valued by providing the details of their billings, and customize invoices for enhanced satisfaction.
  3. Lack of a robust communicationstrategy: Most SaaS companies today have the best product mix, but fail to communicate details about their products and subscriptions to customers effectively. Lack of a robust communication strategy in place, especially for a growing subscription-based business, can result in unhappy and unsatisfied customers. Intimating customers about auto-renewals, payment due date, price changes, credit card expiration as well as latest offers and discounts through advance notifications and timely reminders is important to show subscribers that you care about them. Informing customers about subscription upgrade/downgrade options as well as payment success/failure notifications in all your customer communications is important to boost customer loyalty and reduce churn. Choose a recurring billing solution that can automatically handle payment communication with your customers.
  4. Poor customer service:For any SaaS company, subscription billing is a complex undertaking. Managing millions of customers and keeping track of price per user, discounts, billing cycles, plans, and contracts can be tough. Poor customer service can cost your business massively. If customer issues are not resolved in real-time, it can lead to dissatisfied customers and high churn risk. SaaS companies need to invest just as heavily in their customer support operations as they invest in the development, distribution, and marketing of their product line. Customer support should be at the forefront of every subscription business, and hence providing 24×7 support through email, phone, or a support portal is extremely vital to address any questions your customers may have.
  5. A poorly developed billing solution: Given the high cost of operating a subscription business, many SaaS companies opt for a DIY approach to billing, and build their solution using their in-house team. While this might aid in minimizing costs in the short run, in the long run, the inefficiencies of a poorly developed billing solution will spill onto the customer experience. Dealing with the issues will then leave very little time for your team to focus on the core value proposition while requiring continued investment in your billing system as your business evolves. A modern automated billing platform developed by established service providers can make billing a competitive advantage. It can allow you to manage multiple services seamlessly, and accurately calculate and combine multiple charges, discounts, tax, and any usage fees.
  6. No self-serviceoptions: The highly informed and empowered customer of today expects billing issues to be resolved immediately. While some are willing to reach out to the customer service desk for any billing issues faced, many others who expect access to a self-service portal where they can resolve issues on their own – without having to go through the lengthy customer service process. A recurring billing solution with a modern self-service interface is one of the most favored support channels and can go a long way to improving the subscription experience for your customers. By allowing customers to access a knowledge base of information, you can ensure customers can resolve common billing issues on their own while turning to the help desk team for more serious issues.
  7. Ineffective credit card management: With credit cards being one of the most convenient ways for customers to pay for subscription services, ineffective credit card management can prove to be the root cause of many issues. Expired credit cards, insufficient limit, as well as loss or theft can stop a payment from going through. To ensure there are no problems with credit card payments, you need to have a billing solution in place that issues timely alerts. Such alerts can notify you about credit card expiration dates as well as prompt customers to update their details. A recurring billing solution with robust credit card management capabilities can also immediately inform the customer of payment failures and encourage them to complete their payment through another channel.
  8. Hard-coding the billing solution:In the rush to get to market quickly, many SaaS companies hardcode a series of transactional prompts directly into their product. Such hard-coding limits the flexibility to change pricing to meet market demand; in the long run, your product will suffer as you will need to move a lot of your critical resources from product development to tending to your billing system. If you want to efficiently handle credits, charge-backs, and refunds, while ensuring timely payments and exceptional customer experiences, you need to adopt a responsive billing system. Such a system will allow your best people to focus on what matters to your business while handing billing outages and issues immediately.

Strengthen customer relationships

The success of any SaaS company depends on the efficiency of the billing process that generates the majority of your revenue.
However, subscription billing mistakes such as manual billing, generic invoices, ineffective communication strategy, poor customer service, a poorly developed billing solution, no self-service options, ineffective credit card management, and hardcoding the billing solution can result in revenue leakage, high customer churn, and poor uptake of add-on services.
If you want to achieve success and sustain it as your business grows, you need to implement a modern subscription billing platform that encourages customers to pay on time, maintaining your business’ cash flow. When it comes to billing, don’t leave your customers; instead, streamline your billing process, make it easy for them to reach out to you, and strengthen your relationships over time.

Sharing is caring!