We've witnessed a rapid rise in the popularity of subscription-based services. Data from Barclaycard Payments discovered that the average household now spends £552 on subscriptions each year.
Whether you're streaming movies, enjoying meals and recipes that have been delivered to your door or making sure you never run out of toothpaste with a monthly Amazon order, subscriptions are something many consumers have in place to make life a little easier. In fact, Barclaycard's research also discovered that households in the UK have an average of seven subscription contracts in place.
However, it's not just consumers who have been taking advantage of this business model. In fact, Forbes notes, May 2020 saw a jump of 115% in trial subscriptions for businesses and a rise of 79% in companies taking on software subscriptions, as we made the move to work from home.
B2B subscriptions have enjoyed a surge in demand in a corporate setting, with companies now offering more subscription-based services than ever before to make managing processes and expenses easier. If you're considering offering subscription-based services to your clients, then this guide takes a closer look at how to simplify matters.
What is a B2B subscription?
A B2B subscription works similarly to those subscriptions you perhaps already have in place as a consumer. A company will sign up for a regular service that they then pay a set price for on a monthly or even annual basis. It’s a business model that can cover anything and everything including:
- Sales – Customers can pay for a subscription to a sales service you offer. This could be an integrated POS platform or a payment function implemented on their website. The likes of Square, for example, offer set monthly prices for their sales services that businesses can pay for monthly and enjoy.
- Marketing – Businesses can sign up for marketing services that allow them to pay a fee and enjoy complete automation when sending out everything from social media posts to scheduling blogs to go live. These services also allow the client to track where leads are coming from and where opportunities may lie.
- Product delivery – Your clients may wish to sign up for a regular delivery service for your products. Using a subscription service, they can enjoy regular deliveries of stock or products without having to worry about placing orders or sending payment.
- Software – Perhaps one of the most popular subscription services, also known as SaaS (software as a service), many businesses choose to pay a regular fee to enjoy a particular piece of software. A graphic design company, for example, may sign up for a subscription to Adobe's suite of software to ensure their employees have access to the tools they need to get their job done.
- Publishing – With advertising revenue on the decline, more B2B publishers are looking to subscription models to capture recurring revenue from their readers. One way to do this is through corporate subscriptions, whereby companies buy bulk subscriptions to give their entire team access to relevant industry-specific publications, such as financial news.
What are the benefits of B2B subscriptions
Many companies are discovering that this model is the future of doing business, whatever service they offer. Anything a customer uses and replaces over a predictable period can work in a subscription replenishment model. So, what benefits could B2B subscriptions offer your business?
Increased customer loyalty
In these fast-moving times, keeping customers can be tricky. There are so many options and suppliers out there that clients can easily take their business elsewhere. And if they can move to another supplier with little or no notice then this could have a significant impact on your revenue.
However, if a client buys into your subscription model, they have to commit to your services for an agreed length of time and this allows you to accurately predict your revenue for this period.
Customers who sign up for subscription services enjoy constant access to what they need with minimal effort. This suggests that they'll stick around for longer (hopefully past the trial period!) because all the setup and research is complete.
Steady and predictable revenue
Subscription models are a predictable cost, whether taken annually or monthly. There are no hidden surprises along the way to cause concern, and providers also benefit from a steady source of income.
Subscriptions also usually work out cheaper due to discounts on bulk packages – another benefit that can encourage customers to stay signed up for longer.
For you, a subscription-based service means guaranteed revenue each month. For customers, it means they can easily manage their expenses with a regular and predictable cost.
Your business will reduce the workload for customers
Who doesn't want more hours in the day to focus on the things that matter? And that's what your customers will enjoy when they sign up for a subscription-based service.
Plus, there's no need to shop around or waste time signing up. Once a subscription is in place, the customer can simply enjoy the service knowing that payment is covered. Overall, this means happy customers and an improved retention rate for your business.
You'll enjoy an increased insight into your customers and their needs
Companies that offer subscription services can quickly learn more about their customers and their needs based on what services they sign up for. Your sales team can then anticipate any changes and spot upsell opportunities as time goes on.
You can see how much of a particular element of your service the client has used, whether they've adapted their order or added to it and if they have multiple users. This gives your sales team the ammunition they need to pull together enticing deals and to encourage clients to add more to their subscription service.
It can be highly lucrative
The market for B2B software and service solutions is estimated to reach a value of $344.3 billion by 2024 – and these service types can be managed easily via subscription. This suggests that this lucrative market can be easily adopted as part of your offering, leading to an increase in sales and clients in the future.
Being able to implement and manage an effective, powerful subscription model with a large client is also impressive. Get it right and keep them happy and you could find it leads to deals further down the line within other parts of their business offering.
Corporate subscription management challenges and how to make everything simpler
Subscription models are having a positive impact on the world of B2B services and can lead to great long-term benefits for all concerned. Currently, demand is on the rise and shows no signs of stopping.
B2B subscriptions are considered the future of commerce but there are some pitfalls to be aware of. Here, we've considered some of the issues that can arise when offering subscription-based services and how to keep your corporate subscription management as simple as possible.
More complex than B2C subscriptions
B2B subscriptions are significantly more complex to manage than those we use day-to-day as consumers. Setting up and integrating business software across different systems can be a real headache.
Here are just a few ways of ensuring your subscription model is as simple as possible to keep both your team and your clients happy:
- Implement scalable federated access: a single sign-in can securely manage any website mix within a parent company.
- Whitelist IP addresses: give specific users unlimited on-site access to avoid any issues.
- Offer bulk subscription discounts and deals: these are appealing incentives to customers, both new and old.
- Create simple corporate onboarding and support packages: make the experience intuitive and simple for new users and ensure you have customer service support in place should any issues arise during setup.
- Set up soft limits: if corporate accounts run over an allotted number of logins, trigger an opportunity for upselling to your sales team. This reduces the need to manually monitor logins and also keeps clients in check when it comes to account sharing. More on this below.
- Ensure pricing makes sense: clients don't want changes to their pricing every five minutes to take time to check that what you're charging is profitable and affordable.
- Only create a few subscription packages: the more options you have in place, the more complicated things can get. Two business packages are likely enough – free and premium – where you can offer those enticing extras with the paid version to encourage clients to sign up.
Prevent account sharing
Whether it's B2B or consumer subscription services, you'll always have the issue of 'piggybacking'. This is when users allow friends and family access to the service they're signed up to, which in turn costs businesses money. Some corporate subscription services may see this happen too, with companies sharing out passwords rather than paying for a subscription for multiple users.
The two main strategies for limiting account misuse are:
- Active prevention: this makes it harder for accounts to be shared.
- Passive prevention: you can passively track the users who share their accounts. Then you can use that data to sell more accounts and wider access to the customer.
When it comes to active prevention, authentication techniques ensure only the real account holder can log in. Or, you can limit the number of devices a customer can use to access your service. Do this by either setting a maximum number of concurrent sessions that can take place or by restricting the user to named devices.
If you choose to passively track users, there are several metrics you can monitor to get an indicator of account sharing. You can check each user’s concurrent sessions, and each unique IP address they use. When it comes to renewing contracts, it can be very useful to prove more customer’s employees are using your service than are permitted. This can be used as leverage when renegotiating.
To identify the scale of the problem, discover potential strategies to tackle the issue and better understand how to use account sharing to your advantage, take a look at our whitepaper.
Managing billing and invoicing
If you have lots of customers signed up for your service, you'll need to find a way to manage automated payments and track where customers are in the subscription lifecycle.
You'll also need to ensure customer payment information is secure. When setting up a subscription service you need a payment management system that offers total security and follows best practices to keep customer details safe.
Failed transactions are another common issue that comes with the subscription model territory. Sometimes, a customer's banking details may not work as expected and so you need to find a way of tracking any failed transactions.
Anything involving payments can get messy. So, when you're managing a subscription-based service, you need simple, secure and effective processes in place. When deciding on a payment service to use alongside your subscription offering, here are the things to look out for:
- Choose the right type of payment system – There is a range of options here such as payment gateways that manage electronic payments for you and can have subscription management options that work on top.
- Carefully check their security credentials – Most importantly, ensure your payment gateway provider is PCI compliant.
- Look into software that offers dunning management – To reduce the risk of failed transactions and missed payments, dunning management can help. This automated process monitors customers' payment details and ensures everything is up to date by sending out reminders when payments are due and asking clients to check if there are any issues.
Customers will inevitably need a hand at some point while managing their subscription and if there isn't a process in place to offer support you could run into trouble.
If businesses are going to subscribe to you for a set period of time, it’s important to keep them happy. You need to ensure you make their subscription model consistently simple, effective and reliable. Get to know your customers inside and out so you can offer unique, personalised solutions.
Create a prioritisation system via SLAs (service level agreements). Like prenuptial agreements, they create a clear mutual understanding between you and your clients before you sign a sales contract. This ensures customers know what they're signing up for and what to expect from you.
You could also consider self-service support options, such as support pages and video tutorials, to lighten the load on your customer service team.
Cover these bases and a client is much more likely to continue with you, rather than your sales team waiting until the end of their contract to try and make them stay.
B2B subscriptions are worth the effort, particularly when companies are able to capture long-term, high-paying customers.
But these greater rewards come with increased complexity and higher stakes. Controlling access, managing payments and ensuring adequate customer support are all crucial to a seamless B2B subscription experience, and getting them wrong can lead to incredibly costly churn. Luckily, many of the complexities and struggles of setting up and managing corporate accounts can be taken care of by incorporating a corporate subscription management service into your current TechStack. Those that are willing to research the best practices and invest in a comprehensive digital ecosystem will find themselves with higher revenue, AOV and retention.
Want to learn more about setting up B2B subscriptions for your organisation? Check out The Publisher’s Digital Subscription Toolbox!