Subscription sales fails and how to prevent them in your business

Is a shift from transaction to subscription billing on the agenda for your business in 2025? If you answered in the affirmative, you're in good company.   Around the world, leaders are alive to the benefits that charging customers for access or usage can provide.

Chief among them is the opportunity the model affords for businesses to earn reliable, recurring revenue. Having a slew of customers paying the same sum on the nail each month or year can eliminate the peaks and troughs that come standard with an outright sales model – and the cash flow challenges that can ensue during the troughs.

A subscription model also gives businesses the chance to form closer ties with their customers, something that's difficult to achieve or sustain if purchases are made infrequently and on an ad hoc basis.

Most importantly, businesses that get it right will achieve a higher customer lifetime value – the average revenue a customer will generate over the course of their relationship with a business.  Indeed, subscription businesses saw a  12 per cent lifetime value growth in 2023.

But maximising your revenue in this way isn't a straightforward exercise. There are obstacles aplenty to overcome, if you're to make the switch from transaction to subscription selling successfully. 

Changing the rules

Chief among them are cultural and team challenges. If you've a team of ambitious sales reps whose focus is on landing major deals and moving on to new prospects immediately those deals are finalised, getting them to focus on continuous engagement with customers can require a significant mindset shift. 

Changes to commission structures may be necessary, given revenue and profit will now be determined by customer longevity, rather than one-off transactions.

So might the creation of new roles – think customer success specialists who are responsible for circumventing issues and ensuring customers extract optimal value from their subscriptions.

A comprehensive change management program can help your business navigate these complexities and transform its processes and practices. Fail to invest in one and you may struggle to get the employee buy-in a subscription selling model needs to succeed.

Navigating revenue complexity

Switching to subscription sales can also necessitate a period of pricing experimentation. It's rare for businesses to arrive immediately at their 'Goldilocks' prices – not too high, not too low but just right for the bulk of customers in their target market – first time. 

Most experiment with and evolve their offering and costings over time to ensure they're aligned with customer expectations and demand. Commonly, what's arrived at is considerably more complex than the transaction-based pricing model being replaced.

And therein lies the danger, for businesses that don't have tools and technologies to enable them to adapt their revenue model quickly and bill customers clearly and correctly for the products and services they've used or consumed.

Inaccurate or opaque pricing and invoicing erodes trust and credibility. Subscription businesses that make a practice of it run the risk of losing the subscribers they've worked so hard to win, to competitors able to deliver a similar offering along with a hassle-free customer experience.

Tools to make the task easy

That's why a modern, cloud-based revenue management platform is essential. It can deliver full quote-to-cash support for whatever sales and pricing model you choose to adopt without the billing headaches and hiccups that come standard when businesses attempt to innovate using legacy billing technology. 

Implement one which has the capacity to generate reports that provide visibility into every aspect of the purchasing journey and you'll have an unparalleled source of up-to-the-minute customer insights which can be used to optimise your offering and improve your service.

You'll also avoid the costly customisation and support costs associated with using outdated systems that don't reflect the way your enterprise wants to do business today and tomorrow. 

Setting up for a stronger future

Maximising revenue is a must for all businesses, and never more so than in today's challenging times. Switching to subscription selling may enable yours to do so, provided you put programs and practices in place to help your team deliver value to customers.

A modern revenue management platform can provide comprehensive support for your new sales model and generate the real-time insights you need to refine your offering and maximise its appeal.

If you're serious about making a success of subscription selling in 2025, it's foundation technology that should sit at the centre of your ICT stack.