ChargeBee Blog

Entrepreneurs and sales experts have long known that selling to your existing customer base is good business. It’s 5 to 10 times cheaper to upsell a current customer than acquire a new one, and the average spend of a repeat customer is 67 times higher. The world’s most-successful SaaS providers take three approaches to increasing revenue: acquiring new customers, upselling, and reducing churn. For many subscription business owners, improving your revenue, and increase customer lifetime value requires designing and implementing a program for upselling.

Source: chaotic-flow.com

Upselling in Practice

One of the world’s most-successful subscription businesses, Salesforce, has built an empire that’s worth $2.27 billion annually through a strong focus on upselling. They don’t bombard their customer base with frequent phone calls, or offer freemium subscriptions, but simply let customers come to the realization on their own that they need more service than they’re currently paying for.

As Joel Yorke puts it, “if you’ve ever been a Salesforce customer, you know 90% of the upgrade process…[is] repeatedly bumping into the limits of your current subscription.”

Continue reading “How to use Upselling in SaaS” »

Even in an era of automation, there’s no excuse to NOT run your company on auto-pilot. The customers of subscription-based businesses may upgrade or downgrade, earn credit for referrals, and dispute charges, and they deserve accurate and timely invoices. Gary Vaynerchuk has always stated that “you can’t scale effort.” While there is truth to his statement, it’s a fact that effective recurring billing should strive to automate as much of the process as possible, while still providing accurate information on every invoice.

Gartner research estimates that by 2015, between 35% of global 2000 companies will generate 5-10% of their revenue through subscription-based models. Is your company’s billing system built to scale the increasing need for on-demand, recurring services?

Common Recurring Billing Issues

It goes without saying that in a subscription economy, there’s no room for one-size-fits all product or billing solutions. Consumers are more hesitant to commit than ever, which has lead to the incredible increase in subscription media and month-to-month mobile services. Recognize that your client base isn’t insulated from your competition, and streamline any systems that could lead to potential breakdown in your relationship.

Many subscription-based businesses are still handling their monthly invoices on spreadsheets. While this format is certainly malleable, the margin for human error makes it more of a liability than a system. Any company that depends on recurring revenue on a monthly, quarterly, or annual basis can expect the following changes on their invoices:

• Special Billing and Applied Credits
• Custom Pricing and Charges
• Offline Payment Collection

Continue reading “In recurring billing – Why there is some manual intervention required?” »

Content subscription businesses are low-cost inventory ventures that can be started with little capital. Founders can start and run the venture from their own homes and still make a name for themselves in their chosen niches. Today’s subscription business model focus is on portals.

Portals are basically content hubs that offer a mix of aggregated, editorial and syndicated content. Both unregistered and registered users can access the content available at a portal without paying. The hubs may provide niche related content or may take an all-in-one approach, covering various niches. Yahoo is a good example of an all-in-one portal that has content spanning politics to sports, heath to entertainment.

User Content Personalization

While portals do not require users to register to access content, their monetization avenues depend on the demographics of their users. Advertisers may want to purchase user data for market research or advertise their offers on the portals depending on the user demographics. This is why most portals encourage users to register.

While portals will not put their content behind a paywall, they offer different experience to registered and unregistered users. Unregistered users will usually see marketing messages highlighting the benefits of registering. At times, some functions may be reserved for registered users only. For example, users may have to be registered and logged in to comment on articles, download various content, and so on.

Portal Content Generation

Portals are driven by content. The businesses strive to write search engine friendly articles to generate mass targeted traffic. The content is usually a mixture of in-house editorial content, aggregated content, syndicated content, guest posts, republished content and so on.

The companies may have paid contributors and may even accept content from guests. In most cases, the guest contributors are not paid. Rather, they are allowed to advertise their businesses on their author bios and link back to their websites.

Continue reading “Subscription Business Model Series – Portals” »

Absolutely no one wants to feel like “unknown” or “valued customer” when they’ve purchased your product. They want to feel like an individual, who you know by name and appreciate. Failing to properly merge your clients’ names with your transactional emails isn’t just the sign of an inferior SaaS billing service or marketing automation software. It’s just plain bad business. There are no secrets online anymore, and a simple Google search can reveal everything consumers want to know about your competitors. Personalizing your transactional emails is key to retention. As Seth Godin has famously stated, “I don’t want email, I want me-mail.”

The Why and How of Personalized Emails

To be perfectly honest, personalization isn’t actually that difficult. If you billing service, mail platform or marketing automation software lack this functionality, you’re making things much harder on yourself than you need to. Known to industry insiders as MERGEVARS, it should be automatic for your automation to pull relevant information, like an individual’s name, from their profile and insert into an email.

It’s no secret that disengaged subscription business customers are the enemy of a healthy average customer lifetime value. If your clients simply aren’t using your service, why should they continue letting you charge them month after month? Post-sale emails let your client base know they’re appreciated, and open the door for a two-way dialogue between customers and your brands. Here are a few post-sale emails that can boost engagement, and let clients know they’re truly appreciated:

1. Thank You/Confirmation Email

Lindsay Kirchoff of HubSpot has written that after a customer makes a purchase, they’re essentially presented with a fork in the road. They can emotionally move on, or they can become an engaged, and a potential target for future upselling. Confirmation emails that are immediately triggered by a conversion can open the door for contact with your customer service team that’s critical to maintaining engagement. Managing expectations can also reduce the chances you’ll be hit with chargebacks. Continue reading “Why Personalization is important in transactional emails” »

Perhaps one of the easiest ways to start making money online is to start a blog. The variety of income earning opportunities that blogs present make them attractive as a business model. In today’s series of subscription business models, we are focusing on blog subscription businesses.

For most people looking to make money online, starting a blog is usually the easiest route to go. The low startup costs make blogs an ideal route for people who are not technical in nature. To make money with your blog, you simply need to find an offer and present it to people searching for it.

Blog Content Marketing

Successful blogs are driven by high quality content. However, if you are looking to make serious income with your blog, you have to treat it as a business. You need to identify your market, get an offer, drive traffic and generate leads to make sales.

Some of the ways through which you can earn money with blogs include advertisements, affiliate sales, consulting/coaching, providing services such as writing, social media marketing and so on. All these revenue generation methods can be implemented concurrently thus offering you multiple streams of revenue.

However, if you are looking for a sustainable blog business, you should focus on subscription business model.

Blog Subscription Businesses

A blog subscription business is easier to run  and can assure you of regular revenue. Just like every blog business, the subscription business will probably be centered on a particular type of content that your market will be willing to pay for. Depending on what you prefer, you can have a hybrid model of free and premium content or exclusive premium content only.

Let’s look at 2 case studies of subscription blogs that are getting it right:

a) Fizzle.co

The Fizzle blog targets people who want to start successful online and offline businesses. What makes the blog stand out is that most of its content comprises of videos and interviews of experts and other entrepreneurs for the benefit of its members.

Continue reading “Subscription Business Model Series – Blog” »

When it comes to subscription business models, a couple of SaaS companies come to mind. The subscription model works well for SaaS businesses because it enables founders to develop and scale quickly without incurring huge upfront costs. Today’s series on subscription business models focuses on SaaS businesses.

The traditional software industry has been overtaken by SaaS as the preferred method of delivering applications to users. SaaS has become the cornerstone of improving efficiency without increasing costs at most businesses. With SaaS, different users can access an application and use it based on their needs and tailored to their preferences without interfering with the user experience of other people using the same application.

Your company may be using SaaS in its daily operations without you knowing. Perhaps the simplest form of SaaS model is Gmail, where many users have different email accounts that they have tailored to their own preferences and that they can access from anywhere around the world. Now when it comes to a business model, this is where paid SaaS service providers come in.

Business owners are opting for SaaS business model for various reasons including:

• Low upfront costs are required for infrastructure.
• It is easy to scale operations.
• Low customer acquisition costs with high lifetime value.
• Easy to predict revenues during the billing cycle.

The SaaS model can apply to virtually any type of market. However, the fundamentals of running a successful online business apply even in the SaaS market. Founders have to identify a problem that people will be willing to pay for a solution for.

Case Studies of SaaS Subscription Business Models

Let’s look at two SaaS businesses;

a) Box.com

Box.com is a secure online file storage service that enables users to transfer, share and access large files between them. Users can access the company’s services from anywhere from around the world by logging into their accounts and modify their content as they wish.

Continue reading “Subscription Business Model Series – Applications (SaaS)” »

The myth about Online Fraud is that if you do business correctly, it will never happen to you. Actually, nothing could be further from the truth. We’ve all heard the depressing statistics about the relationship between chargebacks and online fraud; 86% of chargebacks are fraudulently placed, and only 14% of consumers bother to contact a merchant before initiating a chargeback. 58% of consumers never bother to contact the merchant at all, instead choosing to work directly with the bank throughout the entire process.

Source: ChargeBacks911

Heartland Payment systems estimates that around 0.01% of all transactions end in a chargeback. The process of disputing charges is largely designed to protect consumers against fraud, stolen credit cards or other erroneous charges. While it’s relatively easy for a consumer to file a dispute against charges on their card, it’s much harder for a subscription business to defend themselves.

A single phone call from a card-holder with ill intent can amount to hours of paperwork and phone calls for a startup CEO. Fraudulently-filed chargebacks are a headache, but are they worth your time to dispute? Perhaps more importantly, is there anything you can do to prevent the loss of revenue caused by disputes in the first place?

The Realities of Disputing a Chargeback

When your business is bootstrapped, the funds locked in dispute can significantly disrupt your budget for weeks. Given the fact that consumers have had the right to dispute credit card charges since 1975, there’s been a fair amount of time for a few dishonest souls to work out ways to circumvent the system. Despite the fact that relatively few charges are disputed, the total cost of all funds in dispute came to an estimated $765.9 million in 2012. Considering the fact that each disputed charge can cost the merchant up to $40, chargebacks are a big business.

Continue reading “The myth behind Online Fraud” »

We are very pleased to announce that we now support integration with the PAYMILL payment gateway.

PAYMILL is one the most interesting options to emerge in the European payment space. They recently announced their fund raising and that has generated a lot of interest amongst startups. We’ve received a good number of inquiries on our readiness with PAYMILL and we are pleased to make it available.

There is so much anticipation and a bit of frustration in the market with a lot of innovation happening in the payment space in North America and most companies taking the US first approach. It is nice to see a competitor emerging from within Europe and taking the Europe first approach. We could all use some more competition in the payment space to elevate the overall quality of options available.

You may ask “What’s so special about PAYMILL?”

Well, they:

- are cost effective and don’t have a setup or monthly fee
- offer quick account activation and setup (2-3 days)
- support 34 countries (and counting) in Europe
- have a friendly customer support team

Read on for some interesting views from early adopters:
https://news.ycombinator.com/item?id=5235183

So what does ChargeBee achieve by integrating with PAYMILL?

Continue reading “New Integration: Announcing PAYMILL for European Startups” »

Announcing the release of another top feature request in ChargeBee.

So for users who’ve been using spreadsheets to track their offline payments and for users who want to offer this as a payment option, the wait is over.

You can now track and reconcile all the offline payments you receive such as wire transfers, checks, cash etc., with ChargeBee.

The works

You can create or update subscriptions by turning the “Auto Collection” option On or Off.

When auto collection is “Off”, it means payments will be collected in offline mode.

Invoices will continue to be generated and the subscription will still continue to renew. The invoices will be marked “Payment Due” and when payment has been received, you need to record that in the invoice status as “Paid”.

An option to add comments to pending invoices is also available. This can be used in case you receive a partial payment and would like to keep the invoice open until the complete payment has been received.

Continue reading “New Feature: Offline Payment Tracking for Recurring Invoices in ChargeBee” »

In our continuing series of subscription business models, we have covered newsletters and magazine subscriptions. In today’s series, we look at periodicals, which strike the same content characteristics of both magazines and newsletters.

Periodicals are essentially content driven websites that may address general or specialized topics. The content is usually produced on a frequent basis, usually multiple times during the month, and is primarily meant to be read online. Unlike online magazines and newsletters that can be downloaded as PDF files, periodicals are usually stored in an archive format, categorized based on subject and tagged with the relevant keywords and authors.

Attributes of a Good Periodical

The major problem that periodical businesses face is getting users to pay for the service. Unlike businesses selling tangible products or those offering SaaS services, periodical readers are basically consuming content, which is difficult to quantify.

With a product, you can measure how many units a customer has bought. With a SaaS service, you can measure the extent of service a consumer has purchased. With a periodical, how do you quantify the quality of content that the reader consumes?

Bearing this in mind, periodical businesses have to look for alternative ways to make their offers stand out. These usually means coming up ways to differentiate their offers from their competitors. Some of the attributes of a good periodical include:

• The content should be written at an expert level that will make your business emerge a leader in your industry.

• The content should be produced on a regular schedule especially if users have paid a premium price for it.

• Offering a free trial is standard practice for content subscription websites. You can offer users a time- or content-limited trial.

• Offering more benefits apart from the periodical content is likely to attract more users and give them better value for their money. For example, check the benefits of subscribing to the Smithsonian Magazine.

Case Studies: Success Periodical Subscription Businesses

Perhaps two of the most well-known periodical subscription online businesses are the Wall Street Journal and The Economist.

Continue reading “Subscription Business Model Series – Periodicals” »