Faced with uncertain consumer spending and the rising cost of goods, Australian retailers are on the hunt for new ways to boost revenues. One that’s gaining increasing attention is the use of subscriptions.

As consumers become increasingly comfortable with the idea of subscribing to products and services rather than owning them outright, retailers are coming to the same realisation. Selling via subscription can be a major change for traditional businesses and a very savvy strategy to embrace.

Key benefits include greater customer lifetime value, improved cash flow predictability, and the opportunity to remain in ongoing contact with customers.

Selecting the right platform

It can, however, be a challenging shift to pull off, especially in the absence of the right tools. The main tool that will be required is a subscription management platform that allows a retailer to engage with customers efficiently at every stage of the purchasing and payment journey.

Selecting the right platform is important because when you’re in the subscription sales game, profitability depends on the longevity of customer relationships. Successful businesses are those whose buyers keep coming back for more, month after month and year after year.

They’re far more likely to do so when each and every one of their interactions with a retailer, both in person and online, are orchestrated efficiently and professionally.

At the same time, if glitches occur at any stage, customers tend to lose trust which makes churn much more likely to occur.

This is especially the case when it comes to billing. Being charged incorrectly for products or services consumed is a serious negative as far as customers are concerned.

On-premises v cloud-based platforms

When it comes to selecting a subscription platform, a retailer has a choice of two approaches. It can establish and operate its own subscription management platform and processes inhouse. Alternatively, it can adopt a cloud-based subscription management software platform that’s been designed specifically for the purpose.

Doing the former will require a significant investment in ICT infrastructure and the acquisition of a team of skilled technology professionals to deploy and manage it. Over time, there’ll also be a range of planned and unplanned expenses associated with keeping the solution up and running. These will include maintenance, upgrades and staff training.

In total, this can become a capital-intensive exercise and one that introduces additional complexity and ongoing overheads. It can occur at a time when those costs are least able to be absorbed by the organisation in question, given the initial drop in revenue that typically accompanies a switch to subscription billing.

The cloud alternative

If a retailer opts for a cloud-based subscription management platform, it becomes a very different story. There are no ICT infrastructure upgrades, no upfront licensing fees, and no difficult-to-recruit-and-retain ICT team.

Rather than needing to make a significant upfront investment, the retailer is able to have a modest usage-based monthly fee to achieve the same outcome.

If a decision is taken to select a best-of-breed solution from a vendor that’s committed to continuous improvement, there will be additional benefits. Quoting, subscription, renewal, recurring billing, collections and revenue recognition processes are likely to be automated, thus saving the retailer time and trouble.

New services and packages will also be able to be launched quickly and easily. Upselling and cross-selling campaigns will be able to be introduced at speed, thereby enabling a retailer to maximise revenue opportunities.

Meanwhile, the very real challenge of safeguarding customer data – a significant responsibility in today’s times – will be taken care of by the chosen solution provider. This, however, is reliant on choosing a market leader that has its own highly skilled cybersecurity team working round the clock to protect its platform and customer base.

Understanding the benefits

For retailers, smartly implemented, cloud-based subscription management software will quickly become a critical part of their overall digital infrastructure. It’s an enabling technology that provides comprehensive support for whatever subscription-based pricing model they decide to introduce.

If a platform is chosen that also connects seamlessly with an existing CRM software platform, the retailer will be able to monitor the popularity of its new pricing model and manage the customer base at a granular level.

If the chosen platform also incorporates a sophisticated data analytics function, it will be possible to generate actionable insights that can be used to modify offerings for maximum customer appeal.

Cloud-based subscription management software is a cost-effective option that delivers the flexibility and functionality fledgling subscription businesses need to get up and running. If making a success of this new sales model makes commercial sense, it’s a foundation technology that should sit at the core of a retailer’s ICT stack.

Carl Warwick is regional sales director for Asia Pacific and Japan at BillingPlatform.