Customer lifetime value can increase by 200-300% with effective subscription management.
For Value Added Resellers (VARs) looking to add recurring revenue to their existing business or Managed Service Providers (MSPs) aiming to grow their current operations, this can lead to significant growth and sustainability.
In this blog, you’ll learn how to effectively manage your subscription-based services, discover strategies for optimizing each stage of the subscription lifecycle, and explore the tools and platforms designed to improve operational efficiency and customer satisfaction.
What is Subscription Management?
A subscription is a consumption model in which a company pays a recurring fee at fixed intervals to receive access to a product, service, or solution.
Subscription management involves overseeing and administrating these subscription-based services and products that MSPs offer to their clients - from the moment they subscribe to your service to the point where they renew or cancel.
Subscription management is not just about billing; it's about managing the customer journey from start to finish.
Subscription Lifecycle
The subscription lifecycle is a crucial framework for managed service providers to efficiently manage their subscription-based services.
Before diving into the specifics of the subscription lifecycle, it's essential to understand that the setup for subscription management is an integral part of your sales workflow.
Successfully managing subscriptions hinges on collecting and connecting all relevant data during the sales process.
From here, the lifecycle can be broken down into three main stages: Create, Manage, and Renew. Each stage plays a vital role in ensuring seamless service delivery, customer satisfaction, and sustainable revenue generation.
Create
This initial stage involves programming and activating a new subscription including revenue, costs, and payouts. Key activities in this stage include:
- Program and Activation: Defining the service packages, pricing tiers, and billing cycles.
- Cost Allocation: Identifying costs associated with delivering the subscription services. This includes direct costs like software licenses and indirect costs such as support and maintenance.
- Payouts and Commissions: Setting up the structure for payouts and commissions if there are partners or resellers involved. This ensures that everyone involved in the sales process is appropriately compensated.
Manage
The management stage is about tracking, maintaining and optimizing the subscription throughout its lifecycle. This includes:
- Tracking: Monitoring subscription usage and performance by generating usage reports and analyzing data to understand client behavior and service utilization.
- Upgrades and Downgrades: Facilitating changes in subscription plans as per the client's evolving needs. Clients may need to upgrade to a higher-tier plan with more features or downgrade to a more basic plan based on their requirements and budget.
- Customer Support: Providing ongoing support to address any issues related to the subscription.
Renew
The renewal stage focuses on extending the subscription at the end of its term or handling cancellations. This includes:
- Renewal Process: Automatically or manually initiating the renewal process before the subscription term ends, sending reminders to clients, offering renewal incentives, and ensuring there are no interruptions in service delivery.
- Customer Retention: Implementing strategies to retain customers. Retaining existing customers is often more cost-effective than acquiring new ones.
- Cancellations: Managing the cancellation process efficiently if a client decides not to renew. This involves deprovisioning services, ensuring that all contractual obligations are met, and possibly gathering feedback to understand the reasons for cancellation.
Subscription Management Best Practices 
As a former MSP with a successful Network as a Service practice that achieved an 80% conversion rate, we know what works. Here are some best practices to ensure your subscription management strategy is top-notch:
Automation
Ensure billing is automated every month. No human should be sending invoices manually. Use a subscription management system that handles this automation.
Customer Lifecycle Management
Maintain strong customer relationships through regular check-ins, personalized updates, and proactive support. Use analytics to tailor interactions and offer flexible, scalable solutions that grow with your clients' needs. Gather feedback to continuously enhance your services and address client pain points.
Smooth Renewals
Subscription models can lead to a 20-30% increase in revenue predictability.
Ensure a smooth renewal process with automated reminders, flexible terms, and easy upgrade options.
Monitor analytics to improve renewal rates and minimize revenue leakage.
Seamless Onboarding
A user-friendly interface and simple sign-up process can make a great first impression.
Automation plays a crucial role here in guiding new subscribers through essential steps effortlessly, reducing the chances of drop-offs.
Flexible Payment Options
Offer a variety of payment methods and plans to cater to different customer preferences and financial situations. This flexibility can improve customer satisfaction and reduce the risk of payment-related churn, ensuring more consistent revenue streams.
What to look for in Subscription Management Software
Automation
For a subscription billing tool to be truly helpful, it needs to be end-to-end automated.
This should include automated invoicing for recurring services like network monitoring, cybersecurity packages, and cloud storage, ensuring timely and accurate billing without manual intervention.
Invoice Management
Invoice management ensures the seamless processing of recurring payments, the backbone of the subscription business model.
Your subscription management tool should automate invoicing to handle various pricing models, such as flat rates, tiered plans and usage-based billing with minimal manual intervention.
Automatic invoicing is essential to manage real-time transactions efficiently, cater to different billing periods, and prevent delays.
Upgrade/Downgrade Service
As with any subscription cycle, flexibility is key. Customers should be able to upgrade/downgrade/pause and resume with the click of a button.
Client Portal
Subscription management can be cumbersome without a customer portal. Imagine customers needing to contact support for every plan change or billing question. A client portal allows customers to:
- Manage subscriptions independently
- Raise support tickets
- Purchase additional services
- Access billing information
Comprehensive Reporting and Analytics
Look for software that provides detailed insights into your subscription metrics. This includes tracking service utilization, revenue trends, customer churn rates, and contract renewals.
Integrations
The software should integrate seamlessly with your existing IT and MSP tools and third-party applications, such as CRM systems, RMM (Remote Monitoring and Management) tools, PSA (Professional Services Automation) software, CPQ (Configure, Price, Quote) software, and payment gateways. This is critical for ensuring that the data from your quoting/CPQ software is accurately reflected in your subscription management processes.
Partner Management
Scaling your MSP subscription business hinges on building a strong partner ecosystem. Partner channels extend your reach and boost revenue, but efficient partner management is key.
Learn about the 5 Must Have Partners to Build your Network as a Service Practice.
Subscription Management Platforms
- TechGrid: TechGrid combines all the features offered by leading subscription management tools into a single, cohesive platform. From recurring billing to advanced customer analytics, TechGrid aims to meet all your subscription management needs efficiently.
- Chargebee: This platform focuses on automating recurring billing cycles and offers a variety of payment methods and invoicing formats.
- Recurly: Recurly simplifies onboarding new subscribers and employs retention strategies to minimize churn. It also provides effective analytics and reporting capabilities.
- Stripe: Stripe offers advanced tools for analytics, allowing you to gain deep insights into your subscription metrics and customer behavior.
- BlueLogix: This tool offers comprehensive features for both billing automation and customer lifecycle management. BlueLogix is noted for its ability to handle various payment failures and streamline payment recovery processes.
Why You Need an MSP Platform That Includes Subscription Management 
A dedicated subscription management platform helps in ensuring smooth billing cycles, effective customer engagement, and streamlined operations. This results in predictable revenue streams and enhanced customer satisfaction.
Purpose Built for VARs and MSPs
TechGrid is specifically designed for Value Added Resellers (VARs) and Managed Service Providers (MSPs). We address the unique needs of these businesses, offering tailored features to manage subscriptions and client relations effectively.
Tied into Your Existing Tech Stack/Ecosystem
The ability to integrate with current CRM, ERP and accounting systems is crucial. This ensures that your subscription management tool works seamlessly with your existing tech stack.
Technology Finance
Implementing a subscription management platform can provide significant financial advantages by automating recurring billing processes, reducing manual errors, and ensuring timely payments. This opens up new avenues for revenue predictability and financial planning.
