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Billing Automation6 min read

The secret to a successful subscription billing strategy

Subscription billing beyond transactions

Transform your financial success

Subscription billing is so much more than a simple transaction, and understanding how it's linked to the entire user experience is one of the most pivotal elements in driving financial success. 

While subscription billing is typically thought about purely in terms of scheduled invoice generation, in reality it's a powerful tool that can be leveraged to maximize customer relationships, support financial planning through reduced risk and leakage, and enable sales teams to work smarter for better outcomes.

In this article, we look at how a strategic approach to subscription billing will change your outlook and your prospects.

How billing is structured and executed can be instrumental
in terms of capturing, keeping and upselling to customers,
helping to maximize CLV as well as prevent revenue leakage.


Maximizing Customer Lifetime Value (CLV)

Grow revenue through tailored billing experiences

Billing is an emotive experience for most customers—if it's seamless and goes well then they feel safe, supported and may hardly think about it over time. However, if it goes wrong, and they're billed incorrectly, they may lose trust and question their commitment to the product.

Getting that process right for each individual requires a combination of uniformity and the capacity for customization. To achieve that seamlessly you need a system that can respond to individual use cases quickly, easily and accurately, which is exactly what keylight's designed to do thanks to its rule-based, API-first approach.

With that type of system as your foundation, the world is your oyster when it comes to serving individual customers effectively. Then you can start implementing strategies to maximize the customer experience and business health through billing. For example, you might consider maximizing the CLV by managing the following:

checkyFlexible terms & billing periods
Different initial terms and billing periods with easy cancellation can help boost sign-ups, so that you then have a real chance of showing customers the value you deliver. For example, you might offer the first three months of the subscription with free cancellation, and when it comes to renewal the system can automatically switch the customer to a plan with a longer term. You might also adjust billing periods to suit individual customers—maybe a one-year term billed monthly and with the option to cancel monthly but with a cancellation fee.

checkyTweaking invoice parameters
Staying aware of individual customers and offering benefits at key junctures is also a way of improving CLV. For example, you might split invoices above a certain volume automatically, or inform your sales reps to reach out and offer a custom deal at certain expenditure points. It’s also helpful to automatically invoice certain customers on a date that fits within their business's financial workflow in order to support them and improve billing efficiency. 

Customers who are labeled with late payment behavior can be billed differently to reduce the dunning effort, or you may insist that they commit to longer terms or restricted payment methods. On the other hand, for customer convenience, some segments may be billed before annual accounting closes and long-term customers can be moved to subscription plans with a longer term but rewarded with a discount for their commitment.  

All these different options help you to improve cash flow, profitability and real customer value to your business rather than projected value.

Reduce billing risk

Safeguard financial health

We have already touched on one of the billing risks that comes with any business—customers who are predisposed to late or failed payment methods. The risk of financial loss is present in any organization, but, much like tweaks to the invoicing parameters, there are things that you can build into your billing strategy which will help minimize risk.

checkyCredit checks
A fairly standard practice now for businesses is to perform credit checks at the start of a customer relationship, in order to ensure they’re in a position to provide timely payments.

checkyFulfillment statuses
By only billing the customer when they have received or activated their product, or only provisioning the service once the payment has arrived, you can help avoid the risk of disputes, returns, and accounting correction workflows down the line, all of which can disrupt financial forecasting. 

checkyDunning management and smart retry features
Implement automated payment retry and dunning workflows within your billing strategy—these are both included with keylight. Smart retry features work in tandem with dunning management—if a payment fails, it attempts the payment again based on the rules you define. If the payment collection is ultimately unsuccessful, dunning processes can be triggered to recover the revenue.

Enhance the contract lifecycle

Strategies to increase subscription contract value

The most important feature of a subscription business is the ongoing nature of customer relationships, which should lead to repeat billing. This ties billing inextricably to the customer experience, and makes invoicing a tool through which you can enhance contracts over the course of the customer lifecycle. For example, you can enhance the customer contract in a number of ways:

Automated price re-evaluation checky
If a customer has been onboarded via a special offer, it’s important to have a system and a strategy that automatically checks if they are still eligible for that price (usually a discount), or whether a different price should apply when they purchase a new product, change their subscription, or at renewal. This will help to capture more revenue as well as increase customer lifetime value.

checkyCapturing upselling opportunities
With the right subscription system, you will have the data to understand your customer and their behavior well by the time they come to renew their subscription, making it the perfect time to implement automated upselling options or a higher price point. As part of your financial strategy, you can introduce billable usage metrics, required upgrades, or add-ons for specific customer segments based on product consumption.

Helping your sales team to work smarter

Integrate customer experience with financial returns

Taking a more holistic approach to billing strategy, inextricably linking the customer experience to financial returns, requires a system that supports that mindset. It needs to be user-centric and flexible through a rule- and configuration-based approach, so that administrators can implement new billing strategies quickly and without the need to wait for the engineering team to create customizations. While there are myriad benefits to this approach—a faster rollout of strategies, better customer experience, staying ahead of the market, and more—one additional benefit is that it provides the sales team with more leverage in the sales process, also helping to drive greater revenue.

Better billing for better outcomes

Improve your billing strategies

The game changer for subscription businesses is when billing strategies are interconnected with the entire subscription platform and experience—informed by the user experience as well as financials as part of an agile, flexible set of capabilities. 

Implementing successful billing strategies requires easy adaptation so you can cater to individuals and customer segments at the click of a button, and with keylight that’s exactly what you get. You can focus on strategy because the system is there to deliver what you need. Its powerful subscription billing capabilities inspire billing admins to be creative and automate subscription billing for advanced strategies. It communicates effectively with customers at touch points including the checkout page, invoices, emails, and provides comprehensive tools for businesses to streamline customer data for better outcomes.

Do you have interesting billing scenarios to share? Share it with our team.

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