Blueprint for Subscription Success

Choosing the Right

Subscription Billing Platform

A Smarter Approach to Subscription Commerce

What's Inside
The Staying Power of Subscriptions

Preparing for Success

Recurring Billing is Complex

Five Keys for Subscription Growth

Efficiency in Key Processes is Critical

Churn, Decline Management, and Recovered Revenue

Focus on Flexibility

The Three S's: Stability, Security, Scalability

Ready, Set, Go!

Integrations and Expertise Help Build a Better Mousetrap

Lightweight and Easily Embedded

Actionable Insights

A Platform for Today's High-Velocity Businesses

2
The Staying Power of Subscriptions
It’s said that the only constant in the world is change. New
business models supplant established practices, creating
new opportunities to monetize existing solutions and new
ways to meet customers’ needs.
The subscription model illustrates this concept, and its
popularity and effectiveness have made it one of the fastest-
growing e-commerce categories. Businesses that choose
to add a subscription component benefit from a consistent
recurring revenue stream as well as customer loyalty and
ongoing insights that the subscription model can produce.
The advantages of the subscription model are not lost
on today’s enterprises. Gartner, a leading information
technology research and advisory company, estimates that
35% of Fortune 2000 companies generate revenue via
subscriptions. Recurly’s recently published research on
the holiday shopping season also demonstrates the growth
and staying power of the subscription model, with shoppers
spending more on subscription services (as measured by
same-store sales) than on e-commerce in general. These
purchase decisions showcase the convenience, efficiency,
and sometimes sheer delight that subscriptions deliver.
3
Preparing for Success
Subscription businesses need to provide an excellent
product or service, delivering a consistently positive
customer experience to realize high rates of customer
lifetime value. Operational excellence is an equally
important requirement for sustained growth, especially in
the form of an effective billing process to ensure continuity
for customer relationships.
“Success depends upon previous preparation,
and without such preparation there is sure to
be failure.” CONFUCIUS
A critical first step to achieving operational excellence
in billing is to build upon a strong foundation, one that is
specifically designed for today’s high-velocity recurring-
revenue businesses. The ability to scale, especially under
peak loads and high volumes, the ability to capture revenue
and also recover revenue from failed transactions, a highly
secure environment and a robust infrastructure—these are
crucial components that support growth. Businesses that
choose a platform with these characteristics reduce the risk
inherent in accepting payments and processing recurring
transactions.
4
Recurring Billing is Complex
But recurring billing is complex and requires expertise in a
number of areas. The customer experience is especially key,
and excellence here is based on a variety of factors. This
means providing a frictionless checkout experience via a
straightforward sign-up process and a checkout page with a
well-designed interface. Customer service teams also need
accurate, easily accessible customer information so they can
respond quickly to inquiries and issues. And the business
needs to understand trends in the subscription lifecycle so
they can anticipate what may best serve the customer and
seize upsell opportunities.
Expertise in billing involves knowledge of regulations and
taxation to ensure compliance, and high levels of security
are crucial to successfully processing payments. Experience
working with different payment gateways, payment types,
and currencies is also required. Extensive billing expertise
plays a critical role in minimizing churn, especially involuntary
churn, where knowledge of how to rectify failed payments
can make a significant contribution to the bottom line
and help retain customers. Finally, in all the above areas,
knowledge of accounting and finance requirements is critical
to supporting efficient operations.
Recurring-revenue businesses are built around customer
retention, but customer acquisition is vital to growth, too.
Subscription businesses need expertise in determining
the optimal offers and pricing. They also need flexibility
in creating new plans and testing different offers, in order
to understand which plans yield the customers with the
highest lifetime value.
Subscription billing done well provides a genuine
competitive advantage. Customers are less likely to
churn when their payments are consistently successful.
A frictionless experience also means higher customer
satisfaction. And knowing that sign-ups and payments are
being handled seamlessly and effectively allows a business
to dedicate its time and resources to the strategic and
tactical aspects of growing their business rather than to the
billing process.
5
Five Keys for Subscription Growth
When it comes to business success, the formula is simple:
address a customer need better than your competitors
currently address it. But while the formula may be simple,
the execution of that essential goal is anything but.
Automation of key tasks and the flexibility to adapt to
changing demands, along with security and scalability can
make the critical difference. Fast time-to-market lets you
seize opportunities and gain a competitive advantage.

How you will set up and operate your subscription

business to deliver your product or service better—more
efficiently—than your competitors is one key to your success.

“The first rule of any technology used in a business

is that automation applied to an efficient operation
will magnify the efficiency. The second is that
automation applied to an inefficient operation will
magnify the inefficiency.” BILL GATES
Efficiency in Key Processes is Critical

Modern enterprises need to be highly efficient. Efficiency in

subscription commerce demands automated functions for key
processes such as billing for recurring charges, calculating taxes,
and processing payments. Automation reduces the time and
resources needed to complete these and other tasks and increases
the accuracy of your data by eliminating the possibility of human
errors. All this adds up to savings in both time and money.

Finance departments require solutions that provide efficient and

accurate revenue reporting. A subscription platform that integrates
with leading ERP and accounting solutions such as NetSuite and
QuickBooks Online is crucial, especially in terms of meeting
revenue recognition requirements. Recognizing revenue in
subscription businesses is complicated, and a subscription platform
with automated tools to calculate these results can eliminate some
of this complexity.

7
Churn, Decline Management, and Recovered Revenue

In e-commerce, transactions can fail for any number of reasons, and

every time a transaction is declined, the business loses revenue.
With subscription businesses, the problem is compounded by the
fact that subscription revenue is recurring revenue. This makes
effective management of billing and payments especially critical:
any time a transaction fails, a customer can churn.

Subscription businesses need a platform that can solve many

of the most common reasons for transaction declines. Every
transaction that can be salvaged—by updating the card information
for example, or other automated method—means more revenue
gained or “recovered.” Handling declines programmatically
eliminates the need to contact customers manually when
payments fail, which is not only inefficient but also inconveniences
the customer.

When considering a subscription management platform, look for a

platform that provides robust, automated, highly effective decline
management and revenue recovery tools that will increase your
transaction success rate and minimize churn, ensuring you’re
getting the revenue you’ve earned and keeping the customers
you’ve won.

8
Focus on Flexibility

Where will your business be in six months? How about
two years? Changes in technology or regulations, shifts
in consumer preferences and behaviors, innovation from
competitors, even political and cultural shifts—all these
things can influence the market and your business’ unique
position and value proposition.
Given that change is constant, the framework upon which
your subscription business is built needs to be nimble and
flexible. This will allow the organization to adapt to changing
market forces, innovate, and make necessary adjustments
quickly and easily.
Effective customer acquisition also requires creativity
and flexibility. Perhaps you’d like to use coupons to offer
discounts that will entice prospects or upsell to current
customers. Perhaps you’ve decided that a different billing
model will better align the value of your product or service
with your customers’ expectations. Be sure that you have a
subscription management platform that lets you readily make
the changes you need to support growth.

You also need to be able to easily create new subscription

plans or update the pricing of existing plans to better meet
customers’ needs or to react to changes in the market.
Customer service teams also need to effectively manage
upgrades and downgrades and accurately handle the
associated pro-rating of charges.

“The best way to stay consistent is to change

with the circumstances.” WINSTON CHURCHILL

9
The Three S’s: Stability, Security, Scalability

The foundation which underpins your business, its systems and its environment, are
like the foundation of a house: flaws, weaknesses, and poor construction can send
the whole thing tumbling down. You need to build your business on a platform that
is stable and secure, one that you can rely on to support your business every single
day, especially those days when traffic peaks—for example, as a result of a special
promotion or during an event streamed live around the world. A business needs
to know that regardless of how much traffic or demand it generates, customers will
always be able to sign up and access the service.

Subscription businesses also need a foundation that will meet not just today’s
needs, but future needs and volume as well. The best technology platform in
the world is of little use if, when the business needs to scale, the platform cannot
support this growth. And not just support growth, but do so with ease, without it
having to be completely reconfigured from the bottom up.

And of course, a solid foundation is one that’s secure, with tools, systems and a
framework that aren’t easily compromised or corrupted. Recurly’s environment is
PCI Level 1 and SSAE16 SOC 1 Type 2 compliant as a merchant service provider,
and we maintain a highly available, N+1 redundancy throughout our entire
infrastructure stack.

10
Ready, Set, Go!

Successful businesses are able to seize opportunities and run with them.
Whether moving off a platform that you’ve outgrown, transitioning an
existing business to a subscription model, or launching a new subscription
business, the solution you choose needs to provide fast time-to-market.

In the realm of subscription billing and management software, there are a

breadth of options. Some are easy to get up and running but are not very
flexible or feature-rich. Others have many advanced features and functions
but are inflexible, bloated and “code-heavy,” with complicated data models.
Many businesses have discovered too late that these systems often require
many months and significant professional services fees to implement and
are difficult to maintain and update.

Fast time-to-market is crucial to success in today's demanding business

climate. Subscription business can’t spend months and months (or up to a
year!) deploying their subscription software and integrating it with their other
business systems in order to finally launch their business or transition their
existing business to a new platform. A solution that’s easy to deploy is one
that is created with developers in mind. It has an API that’s comprehensive,
easy to understand, and that comes with well-organized documentation.

11
Integrations and Expertise
Help Build a Better Mousetrap
Lightweight and Easily Embedded
The ecosystem for business systems has changed over the
years. The cloud, along with providers such as Amazon Web
Services, have revolutionized how technology is brought to
market. And rather than one all-encompassing solution, new,
more lightweight and specialized point-to-point solutions
are being built by best-of-breed vendors to solve specific
problems. But, to create a system that’s effective and
cohesive, all these solutions need to be integrated.
“The purpose of software engineering is to control
complexity not create it.” PAMELA ZAVE
As mentioned, some billing systems are bloated, inflexible,
and not easily implemented. They’re also difficult to
integrate with the many available specialized solutions out
there. And their complexity takes engineering resources
away from working on other more strategic initiatives that
would help the company grow. Instead, businesses need
a system that’s lightweight and easily embedded into their
existing architecture, providing multiple advantages such
as streamlined interactions with other solutions, like CRM
or accounting systems.
12
Actionable Insights
Running a business well, making smart strategic decisions,
and knowing that the changes you make are resulting in
greater profitability—all this is dependant in large part by
having accurate and easily accessible data and the ability to
test, learn, and iterate.
You need to know which plans are succeeding, which are
faltering—and why? Which prospects convert better—and
why? Which customers tend to churn—and again, why?
The answers to these questions provide the key to finding
the optimal customer acquisition cost, improved customer
lifetime values, and ultimately creating and maintaining a
profitable, growing business.
“Measurement is fabulous. Unless you're busy
measuring what's easy to measure as opposed to
what’s important.” SETH GODIN
This intersection of customer events, billing events, and
marketing events provides critical strategic insights, but the
data that provides these insights is often siloed in multiple
separate systems. This makes getting the comprehensive,
detailed data difficult, often requiring heavy lifting by a data
analyst. But without such data, today’s businesses cannot
compete effectively.
To make informed strategic decisions that propel growth,
businesses need a subscription platform that provides this
analytic insight. And not just data, but data with enough
detail for marketers, product managers, financial analysts,
and others to monitor trends, see results of promotions, and
make necessary decisions that will continue to improve sales
and revenue.
13
A Platform for Today’s
High-Velocity Businesses
The key to success in subscription commerce is to eliminate Strong decline management and revenue recovery
the complexities of recurring billing while of course processes are key requirements, as these help to ensure
delivering high levels of customer satisfaction. Meeting the customer and revenue continuity along with customer
demands of rapidly changing markets requires a subscription satisfaction. Also critical are robust analytics that bring clarity
management platform that's easily implemented so a new to key metrics and provide insights on how customer, billing,
or transitioning business can get to market fast and seize and marketing events are driving the business forward.
opportunities. The platform should be nimble and flexible,
And of course, any subscription management platform
so businesses can respond to market changes with ease.
should be highly secure and stable, and be able to handle
It should also support efficient, automated processes, be
high traffic volumes. It should not just meet but exceed PCI
highly scalable, and designed for streamlined integrations
compliance requirements.
with other solutions.

A platform that meets these fundamental requirements will

“Success is neither magical nor mysterious. Success unlock the power of subscription commerce, unleashing a
is the natural consequence of consistently applying thriving, growing business.
basic fundamentals.” JIM ROHN

14
To learn more about how Recurly can provide the
blueprint for your subscription business’ success,
visit Recurly.com or call us at 1.844.732.8759.

REQUEST A DEMO

Recurly helps you gain a competitive advantage with our industry-leading Recurly.com
subscription management platform and deep expertise. +1.844.732.8759 sales@recurly.com

© 2019 Recurly, Inc. All rights reserved.