If you are a growing SaaS subscription business looking to find a software that can help lubricate your operations and enhance your performance, then you are in the right space.
Keep reading to learn more about why SaaS subscriptions are so popular and what to look for when choosing a SaaS subscription solution.
It is extremely uncommon nowadays to come across any SaaS business that still relies on traditional one-time purchases. The trend has faded away for the better and is now replaced by subscription-based models. Previously, SaaS businesses were taking a one-time sum in exchange for the complete ownership of the software. While they were charging a big sum compared to the small subscription fee per subscription cycle, there were many downsides to it.
Why You Should Choose SaaS Subscription
When implemented correctly, SaaS subscriptions can give a plethora of benefits to a business. This makes them an incredibly attractive option as compared to one-time purchases for businesses of all scales. Here are a few major benefits of SaaS subscriptions.
- Maximize Customer Lifetime Value: This is actually a financial metric which refers to the amount of revenue generated from a customer throughout their lifecycle. The one-time purchase model allowed life-time usage of the software and could easily be shared with multiple users. This was a cause for potential revenue leakage as not only did this prevent more customers from joining but it also did not allow to maximize the Customer Lifetime Value (CLV) as subscriptions can.
Subscription payments are broken down over a long period and the small fees can attract customers. Moreover, if they find value in the service and choose to stick around then it is a sure way of maximizing CLV.
- Cost Effectiveness: In-house management of subscriptions is not only a tedious process but it can also be a major cost to a business. Apart from the huge investment in establishing a team for subscription management, businesses would also need to develop software. Moreover, businesses can fail despite establishing a subscription management team, which can make for a huge sunk cost.
On the other hand, SaaS businesses can outsource subscription management to third parties and only pay a small fee in exchange for smooth running of the subscriptions. This is a much safer and reliable option that also cuts the potential costs majorly.
- Predictability of Revenue: One major advantage of SaaS subscriptions is that businesses can visualize their financial standing in the near future by looking at their present subscriptions. They can see what the costs will look like for providing their services to the current number of subscribers and how much revenue will be flowing in. This kind of information can be very important in future planning and strategizing.
Features to Look For
Using subscription management software’s for SaaS subscriptions can be very helpful. When choosing any particular software, SaaS business owners should try to look out for key features that can greatly impact the position of the business in the long term. As a general rule of thumb, a good SaaS subscription solution should be enhancing the experience of the consumer and smoothing out operations for a business. There are no hard and fast rules but here are a few things that management needs to look out for.
- Scalability: All businesses aim to grow beyond their visible potential. This creates the need for a system that can accommodate that growth in the near future. There is no point in investing money in a software that cannot grow with your business. Thus, it is extremely important to ensure that the infrastructure can accommodate the load of your future users.
- Enhanced User Experience (UX): The first rule of starting any successful business is that it ensures to deliver a comfortable experience to the customer. This rule stands regardless of the nature of the business. Suppose, you, as a SaaS business, choose a very sophisticated SaaS subscription solution. It has all the features that can help both you and the customer but it is not user friendly.
Such a system can be of great disadvantage because users are unable to benefit from its features. Moreover, instead of bringing in new users it can even cause the current users to shift to other businesses that use a more user-friendly SaaS subscription software.
- Quick Customer Support: It is a very normal part of any business that customers will run into problems that need intervention. SaaS businesses need to choose a subscription software that not only gives prompt customer support but also offers multiple communication channels like email, phone and customer portals.
Customer satisfaction is very important for retaining customers and increasing revenues. If customers feel that their problems are not being addressed quick enough then they would have no motivation to stay with your business. So, choosing a software with prompt customer support is very important.
- Flexible Pricing Structure: You, as a SaaS business, will be dealing with a lot of different clients if you do both B2B and B2C transactions. The needs of customers can vary greatly depending on what features they access and what volume of the service they need to use. This will also reflect on the pricing structure so it is important for the software to be able to provide multiple pricing structures and also be able to handle the payments for them
- Customizable Integrations: In order to manage their day-to-day operations, subscription-based SaaS businesses take help of various other software’s. These can include external software’s like Customer Relationship Management (CRM) programs and internal software’s like Project Management programs.
Depending on the size and nature of the business there can be multiple software’s being used to run the functions. Thus, it is important that the chosen SaaS software can integrate with them in a cohesive manner.
- Regular Updates: SaaS businesses operate in a very dynamic landscape and major progress can take place in the span of even a day. Thus, it is important that the subscription software being used by a business reflects that.
A good subscription software will give regular updates to improve data security and performance of a business with minimum disruptions. Maintenance does require downtime which can disrupt functions; thus, it is important to choose a reliable vendor who gives minimum downtime.
Bottom Line
Choosing the right SaaS subscription solution is never an easy task because it requires extreme caution. It is very important for SaaS businesses to carefully review their options and make an educated decision when choosing a software. The right software can award increased agility and ensure a smooth experience for the business and the customers.
