How Should You Go About Choosing the Best Subscription Systems for Your Business?
Abstract:
This podcast episode dives into the world of subscription systems, highlighting the crucial role they play in the customer lifecycle, from lead generation to revenue collection. It emphasizes the importance of choosing the right systems for your business through proper integration and alignment across four key areas: Business, Operations, Systems, and Technology (BOST framework).
Key Points:
Subscription systems and the lead-to-cash process: Explained through three buckets: Lead Management (Marketing Automation and CRM), Order Management (CPQ, ERP, CLM), and Billing & Revenue Management (Billing & Invoicing, Revenue Recognition).
Choosing the right system: Goes beyond features and focuses on aligning your architecture with business needs. The BOST framework helps evaluate requirements and capabilities across business, operations, systems, and technology.
Additional considerations: Budget, ease of use, customer support, short- and long-term goals.
Benefits of investing: Improved customer experience, reduced costs, increased efficiency, maximized recurring revenue.
Call to action: Seek expert guidance for navigating your subscription journey and choosing the right systems.
Target Audience:
Businesses considering or currently utilizing subscription models.
Host 1: Hello, everyone! Welcome back to another exciting episode of Subscription Matters.
Host 2: Today, we’re going to be talking about how to choose the best subscription systems for your business.
Host 1: Let’s jump right in and cover some housekeeping items first. In the context of subscription businesses, we’ll use the phrase lead-to-cash quite often, and this refers to the entire customer lifecycle – all the way from when a potential customer gets onto your radar as a lead, to when you fully converted them and then they remit payment to your business for your product or service. And, given the nature of subscription businesses, it’s absolutely critical that you have the correct processes and systems in place to be able to take your customers through this end-to-end cycle smoothly and efficiently.
Host 2: Absolutely. And, for the sake of simplicity, we’ll categorize these systems and their activities into 3 main buckets: we’ll have the first bucket, which is Lead Management; then there is the second bucket, which is Order Management; and finally, the third bucket, which is Billing and Revenue Management.
Host 1: The Lead Management bucket covers the initial phase of the lead-to-cash process where leads or potential customers are generated and managed. Lead management involves capturing leads through various channels, such as marketing campaigns or website sign-up or referrals. And, the subscription systems in this bucket help companies organize and track their leads, nurture them through the marketing activities, and then ultimately convert them into paying customers.
Host 2: As marketing is heavily involved in this stage, the systems here will largely be around Marketing Automation Tools. They’re used to automate repetitive marketing tasks, nurture leads, and run targeted campaigns. These systems help move leads through the sales funnel efficiently. Examples include Marketo, Pardot, and Mailchimp—just to name a few. We also have our CRM systems fall into the bucket. CRM stands for Customer Relationship Management. This type of system is largely used by sales folks. They are designed to track and manage customer interactions and relationships. They help to capture leads, maintain customer data, track communication history, and manage campaigns. Examples of CRM systems include Salesforce, HubSpot CRM, and ZOHO CRM.
Host 1: And, as we move through the customer lifecycle in the lead-to-cash process, we then get to Order Management. Once a lead expresses interest and decides to become a paying customer, the Order Management bucket comes into play. Here, the subscriptions systems handle the processing of orders, managing product or service configurations, and handling pricing and billing details. It’s essential to have a robust Order Management system to ensure the accurate and timely provisioning of the subscribed services and delivery of the products. It’s also critical to mention here that a lot of these systems may overlap a tiny bit in their functionality, but they need to be heavily and correctly integrated to ensure the flow of data is accurate and timely. Often times, businesses will get these new systems in place without the proper integration to their other systems, and this causes huge challenges both internally for employees and for the customers as well. Improper integrations means that a lot of errors will be present, there will be excessive manual effort, and overall it will be a very bad experience for everyone involved. Please do ensure that your subscription systems are properly connected!
Host 2: The Order Management systems heavily revolve around CPQ, ERP, and CLM systems. CPQ stand for Configure Price Quote. It is a specialized type of software that’s designed to streamline and automate the process of configuring complex products or services, determining accurate pricing, and generating quotes for potential customers. Some examples include Salesforce Revenue Cloud, Oracle CPQ, and Zuora. This system then also needs to be connected to an ERP system. ERP stands for Enterprise Resource Planning. It integrates various business processes, including order processing, inventory management, and finance. And it helps manage the entire order fulfillment process seamlessly. Examples of ERP systems are Oracle NetSuite, Microsoft Dynamics 365, and SAP ERP. We then have CLM tools. This stands for Contract Lifecycle Management. These systems help by automating the creation, management, and tracking of contracts. This includes functionality such as document generation, e-signatures, contract analytics, and compliance tracking. These tools streamline the process of creating and executing contracts, which is a crucial part of the order management process. A key player in this space is Conga.
Host 1: And, again, just to highlight here – hopefully you can see why it is so critical that your systems are thoroughly connected. If you have your CPQ system which helps you to configure your products and services and the quotes, that information must flow into your ERP system so you can eventually fulfill and bill, and then this information has to go back-and-forth between all these systems to ensure that everything that the customer wants is what they’re paying for and that it is what’s getting delivered to them. CLM systems will also help you to properly manage and track those contracts that your customers are signing so everything remains streamlined and up-to-date.
Host 1: Moving on to the third and final bucket – we have Billing and Revenue Management. This is perhaps the most complex and important of all your subscription systems because that is how you get paid. This bucket focuses on managing the ongoing relationship with a customer after the initial sale. It includes the recurring billing aspect of subscription services, handling invoices, payment processing, and managing customer subscriptions, upgrades, downgrades, cancellations – everything – and that’s why it is so complex. The Billing and Revenue Management system ensures that your customers are billed correctly based on their subscription plans and usage, and it also plays a crucial role in Revenue Recognition.
Host 2: As Host 1 mentioned, there is a huge number of tasks in this bucket, and an equally huge number of billing systems out there. Your billing and invoicing systems will take care of generating invoices, managing billing cycles, and handling various billing scenarios, such as proration and one-time charges. Examples are Stripe Billing, Oracle BRM, Zuora Billing, Aria, and ChargeBee – the list goes on. We also have that Revenue Recognition aspect – and this is software that companies use to adhere to complex Revenue Recognition rules such as ASC-606 or IFRS-15. Revenue Recognition software automates the process of accounting for revenue. Some examples include RevPro by Apptitude Software, Softrax and Zuora Revenue.
Host 1: Wonderful! Now that we’ve talked through the lead-to-cash process and the various systems that are a part of it, we can move on to how to choose the best subscription system for your business. But – what we are absolutely not going to do is list off the various products and tell you whether or not you should choose them.
Host 2: That’s right – because there is so much that goes in to choosing the right system for your business, that it is not something that can be done over a podcast. Successful subscription system implementation and overall enterprise architecture really comes down to strong business and IT alignment, and we’re going to discuss something called the BOST framework to better illustrate what this means.
Host 1: We should start out by saying that BOST is an enterprise architecture framework that has deep roots in architectural modeling and planning, but the concepts are very relevant to our topic that we were discussing today at a high-level. So, first thing’s first – let’s talk about BOST. BOST is an acronym, and it’s a framework that organizes 4 architecture views of the enterprise: Business, Operations, Systems, and Technology. The success of your subscription business will be largely determined by how well you can align your capabilities with the ever-changing requirements with regards to all 4 of those views.
-For your business, you have to ask yourself: What business is being enabled?
-For operations, ask yourself: What capabilities are required to support that business?
-For systems, ask yourself: What applications and tools are needed?
-And for technology, ask yourself: What technology is used to enable the applications and tools?
Host 2: Often times, when businesses are evaluating what system to choose, there’s a lot of focus on features, and which tool has what feature, what we need now vs what we need in the future, etc. But, the BOST framework highlights what needs to be considered when evaluating what your architecture will look like.
Host 1: And there are another 2 major components of the BOST framework, and those are the Requirements and the Capabilities. You can envision the requirements going from the top down, and the capabilities going from the bottom up. What this means is – when your are evaluating your business, operations, systems and technology, you must determine all of the key requirements that go into each, and then from those requirements, you can work your way back up with what all capabilities your technology, systems, operations, and business needs to have.
Host 2: In conjunction with this framework, of course you need to take into consideration things like budget, ease of use, customer support, and your business’s short and long-term goals. All of these factors matter when you’re looking to make technology investments.
Host 1: And of course, the underlying reasons why you should be doing all of these investments are to improve your customer experience, reduce costs, increase efficiency, and ultimately maximize your recurring revenue.
Host 2: As we’re coming to a close for today’s episode, we want to encourage you to reach out to our subscription experts for any type of help along your subscription journey. Whether you’re in the process of evaluating your next – or your first – subscription system, our experts are here to set you up to truly thrive in the subscription world.