What is subscription management?

So, you want to offer subscriptions to your customers. You know these offerings will likely help you increase average order value (AOV) and reduce churn, but you are unsure how to make everything come together. 

Here’s where subscription management enters the conversation: It’s the process of handling customers’ subscriptions, including how you allow them to handle their own subscriptions. With a mix of automated and manual actions, subscription management keeps your subscriptions running smoothly. 

Our new, interactive guide helps merchants choose the best subscription management solution for their needs. These solutions work on top of a payment processor to support recurring billing and other subscription functionalities—allowing merchants to launch or optimize subscriptions while helping customers along every point in their journey. 

This post will dive into what subscription management is, why it’s important, and the different elements that make up a subscription management solution. 

Defining subscription management: It’s not just recurring billing

Before we dive into subscription management, it’s crucial to have a baseline understanding of what it means. Subscription management encompasses all of the ways merchants handle customer subscriptions. Whether the merchant takes action or they enable their customers to handle their subscriptions by themselves, subscription management allows every kind of subscription business to provide a seamless experience. 

What is a subscription management solution?

A subscription management software solution allows you to optimize subscription processes with an assortment of features and tools. It ensures an easy and customizable customer experience, all while supporting recurring billing. Typically, subscription management is a mix of automated and manual actions, and can include:

• Issuing refunds and giving account credits
• Offering discounts to subscribers
• Making changes to an order, like swaps, skips, upgrades, and add-on products
• Consolidating essential business functions to save money and time

A subscription management solution is essential to earning customer satisfaction and high retention rates. 64% of people say they feel more connected to businesses with whom they have a direct subscription experience, according to WNIP. Cultivating subscriber relationships with a great customer journey starts with the right subscription management software. 

Why subscription management is important

One of the many values of subscriptions, aside from recurring revenue, is the ability to form long-term relationships with your customers. Without subscription management, merchants cannot create this smooth customer experience that leads to strong brand loyalty. Customer subscriptions must run seamlessly if you want to avoid churn within your subscription services. 

With the right subscription management solution, your online store will be able to reach its goals faster while meeting the needs of all your customers. 

Elements of subscription management software 

Offering subscriptions can help increase customer loyalty and even raise lifetime value (LTV), when done properly. Subscription revenue can also bring stability to your business while allowing you to cultivate stronger relationships with your customers. 

The best subscription management software will help you do this. By giving your customers the ability to manage subscriptions on their own, you give them much-needed flexibility to own and enjoy their subscription choices. 

The software typically includes these five important subscription management elements, which we’ll explore in-depth below: 

• Payment tools
• Shopper tools
• Merchant tools
• Analytics tools
• Subscription billing 

Subscription management solutions are made up of these five parts—working together to ensure success—which is why it’s so important to choose the right subscription management solution for your business. 

1. Payment tools

As you can imagine, payment tools are an essential part of subscription management software. The best subscription management solutions will have comprehensive payment tools that take into account payment processing, security, and logistics. Having top-notch payment tools is a vital component of subscription management software. 

With payment processing comes security risks—something your subscription management software will help with as well. Payment tools should offer security measures like payment vaulting to ensure your customers’ information is safe and secure. Additionally, payment tools can help you reduce involuntary churn when customer payments don’t go through properly by:

• Retrying failed payments behind the scenes
• Sending customers a warning when a payment fails
• Pre-authorizing transactions to ensure seamless recurring billing

As you can see, credit card payment processing is a crucial part of subscription services. Therefore, payment tools are an important consideration when choosing your subscription management platform. 

2. Shopper tools

As mentioned, subscription management software includes a mix of automated and manual actions—some of which give customers the power to manage their own subscriptions. Shopper tools fall into this category. By giving shoppers the chance to edit their orders, view their order history, and reschedule a delivery, you can greatly reduce churn that happens when customers become frustrated by an inability to make the changes they want. 

Many merchants offer these shopper tools within the customer portal—a central hub where customers can edit their subscriptions, view their order history, and more. Whether they need to skip a delivery or want to add products to their cart, the customer portal is there for them. Another popular shopper tool is transactional SMS. It enables customers to manage their orders in one of the most convenient ways—straight from their mobile devices. 

3. Merchant tools

Unlike shopper tools, merchant tools are only seen by the merchant. Admin portals—sometimes called merchant portals—serve as an online headquarters for merchants to oversee subscription management. These tools also typically allow merchants to create workflows for various user scenarios and include a suite of platform-independent APIs and documentation. 

4. Analytics tools

In order to get the most value out of recurring revenue, you’ll want to use analytics tools to determine what’s working well and what could be changed. Each subscription management platform will have different analytics tools, but they usually have a breakdown of key performance indicators (KPIs) to help you measure success. Other analytics tools include:

• Performance tracking of product SKUs
• Industry benchmarks to compare performance against competitors
• An overview of your customer base
• Customer retention insights
• Breakdowns by customer cohort
• Media attributions showing customer engagement across channels
• Customer actions tracking

With these powerful analytics tools, your subscription business can adjust to customer preferences and beat out competitors. The best subscription management software will ensure you have access to the right customer data needed to cultivate stronger customer relationships. 

5. Subscription billing

Subscription billing tools make up the last element of subscription management tools. Without automated payment processing, merchants would have no way to offer subscriptions in the first place. For this reason, billing tools are the core product of subscription management software—allowing you access to recurring revenue and more stability as a subscription business.  

Subscription billing tools include:

• Pricing customizations, like offering discounts
• A recurring billing engine to support automated payment processing
• Basel-level tax and shipping capabilities 

Selecting the best management solution for your subscription business

Subscription businesses looking to accelerate subscriber growth, increase customer lifetime value, and boost customer satisfaction can start with choosing the best subscription management software for their store. It’s crucial to consider the five elements of these solutions so that you have the best tools as a merchant, and can offer your customers the flexibility they crave with their subscription service. 

Recurring revenue from the subscription model has the power to transform your online store and offer unprecedented business growth—as long as your subscription management process is well supported by these software solutions.