What is subscription management?

Subscription management is a term used to refer to the process of managing subscription-specific operations that go beyond recurring billing and recurring invoicing.

Recurring payments are only a part of subscription payments. In recurring payments, a customer authorises the vendor to deduct payment at an agreed upon frequency on an ongoing basis.

Subscription payments on the other hand are when subscription management sits on top of subscription payment solutions (like Stripe, Adyen, Braintree, PayPal etc.) and support automated recurring payments when a customer signs up for a product and selects a frequency for the recurring payments.

When Subscription management sits on top of payment solutions, recurring payments can be stopped, cancelled, or altered. Doing so is important to deal with customer-related issues and to increase customer retention.

Why does subscription management matter while collecting recurring payments?

Subscription management covers the entire customer or subscriber lifecycle, while recurring payments only cover the part when a prospect becomes a customer and payment needs to be collected from that customer. Subscription management allows you to take actions that often cannot be automated and allows you to have more flexibility over customer-related actions.

Here are a few areas in the customer lifecycle where subscription management plays a role:

• Signing up - by adding subscription management to recurring payments, vendors can provide discounts and vouchers to customers who often make decisions based on price. Additionally, a subscription management solution makes it easier to offer free trials, which according to studies, is a great way to pull customers to try out a product. Technically this means delaying recurring payments and not charging a payment when an order is processed through the checkout page (a subscription management solution passes this information to a PSP and prevents the PSP from charging payments until instructed to do so). Free trials can be further extended by delaying the payment even further

• During the “subscription active” stage: subscription management covers important processes like subscription upgrades, downgrades and plan changes. All these processes have price implications meaning that as the customer changes aspects of an ongoing subscription, the price of their subscription also changes. Subscription management makes it possible for PSP to understand this information and change the recurring payment amounts accordingly.

• Post-purchase customisations - subscription management makes customer retention easy by allowing the vendor to offer price customisations to the customer. For example, products that are tied to seasonal usage, such as grills, are often at risk of being returned when the customer does not need them. But giving the customer the possibility to stop the subscription helps the vendor retain the customer and also avoids operational costs arising from the logistics of getting the product back.

What else can subscription management take care of?

Subscription management not only goes beyond recurring payments but sits on top of it. Additionally subscription management includes:

• Asset tracking and asset management
• Return handling and reverse logistics
• KPI and analytics tracking
• Customer communication
• Upgrades and downgrades

Read more: A guide to subscription management softwares: Top 11 features to look for.