Tips for Monetizing Your Billing Cycle

The moment someone becomes a customer for your recurring revenue product or service, one thing is guaranteed: You will send an invoice or billing statement for each billing period detailing usage and payment due. The way you handle this process, mundane and routine as it may seem, is crucial to strengthening customer relationships and, ultimately, augmenting the success of your recurring revenue model.

However, your monetization opportunities do not end with a paid invoice. You can take seemingly regular customer touch points – upgrades, plan changes, discounts – and turn them into revenue moments that both increase your bottom line and build a stronger relationship with your customer.

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Does your billing platform allow you to maximize revenue and customer lifetime value (CLV) at various events during the billing cycle? A monetization platform permits you to configure specific settings for each individual event.

The typical billing cycle breaks down into three periods: day one, mid-billing period, and billing anniversary; and contracts can overlay several billing cycles. Each billing period has standard events that can increase CLV if handled appropriately. To identify a revenue moment, start asking questions.

  • What/how much do we charge?
  • Is this a usage-based subscription?
  • How do we handle discounts and coupons?
  • What information do we include on the invoice?

Each of these moments presents an opportunity for increased revenue, increased customer satisfaction, and increased CLV. An enterprise-grade monetization platform not only allows you to specify the outcome of these moments, but also includes an API (application programming interface) that allows you to optimize them within your own registration and user self-service applications.

Below I’ll highlight a few key moments in each period of the billing cycle.

Day One Billing

How do you know when an account is billable? Perhaps a new customer has registered for a product or service or an existing customer has decided to convert from a free product or service to a paid product or service. What is your desired day-one behavior? An agile billing platform will allow you to invoice immediately or later, with or without proration.

Do you wish to offer specialized products for particular regions, or apply discounts or coupons for those products? An agile billing platform can accommodate a diverse mix of options to optimize revenue and CLV.

Mid-Billing Period

What happens if a customer makes a plan change in the middle of a billing period? Plan upgrades/downgrades, add-ons, refunds/credits, etc. all require a change in billing. Can your billing system manage these changes in real-time and allow you the flexibility to decide between immediate invoice and proration, anniversary changes, or to configure behavior for a hierarchical account structure?

Most customers are very aware of their billing cycle, especially when it comes to a change in charges. We’ve all called customer service at one point to get more details on an upcoming statement on the heels of a plan change. A complete monetization platform allows CSRs to preview statements so they can keep the customer informed. In addition, custom applications that leverage monetization platform APIs allow customers to log in and monitor account activity at any time.

Billing Anniversary

We’re all familiar with the billing anniversary – that day you expect to receive a bill each month, year, or other agreed upon recurrence period. Your monetization platform should have the capability to automatically create and send statements on a billing anniversary, saving you time so you can focus on other business activities.

However, a robust monetization platform should also support seamless delayed billing (pending project completion, etc.), or recurring charges in arrears.

Contracts

On an optimal monetization platform, contracts overlay one or more billing cycles with custom pricing, and specify a penalty for early termination. In addition, automated contract end actions such as renewal, continuation of service without contracts, or account deactivation help retain customers on their most desirable terms.

Billing is an important part of the relationship between company and customer. And because 80% of revenue comes from 20% of existing customers, it’s important to employ a monetization platform that helps you the identify customer touch points where you can monetize the moment to create more revenue and optimize CLV.

About the Author

Rod West
Rod West, Aria Systems knowledge services training specialist, is responsible for developing product training content for online multimedia delivery. Rod brings subject matter expertise in reporting and statement development having joined Aria in 2011 with 15 years of experience across cloud computing, knowledge management, and web-based training.

The Forrester Wave: Subscription Billing Platforms, Q4 2015

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