Successful selling in the cloud relies on billing
The cloud offers a multitude of benefits for businesses looking to expand their sales channels. In the cloud, these companies can create new, predictable revenue streams; develop economies of scale; gain faster time to market; and shorten sales cycles. However, those benefits come with some challenges. Many organizations imagine the path to the cloud is a technology-dominated road. The truth is that companies moving to the cloud need to put 80 percent of their focus on developing a new business model. The remaining 20 percent of a cloud company’s attention should go to technology. In choosing that technology, an organization should remember that its investments must support the business needs created by the cloud. The right billing solution can solve many of those issues.
Cloud billing equals cloud monetization
“Cloud billing” is a misnomer in some ways. The billing solution for a traditional software business might deliver basic invoicing and be an add-on to another system. In the cloud, billing might be more aptly dubbed, “monetization,” since it facilitates productization, enrollment, payment capture and customer support all of which facilitates the go-to-market strategies for companies adapting to a new business model. A monetization solution may even help a company “consumerize” its offering. Meaning that it can reduce customer friction making product easy to buy and adopt. That simplification has been adopted in the “consumer” software world and is becoming an essential building block for enterprise success in the cloud.
The cloud is also about dynamic agreements that touch multiple services and departments. Monetizing those agreements requires a system that supports essential backend functions, including:
- Account creation: This should be an easy, customer-driven portal activity that reflects the consumer’s desire for product choice and agreement flexibility.
- Entitlements: Make sure you can easily manage different offering levels and turn service entitlements on and off as agreements change.
- Product changes: Give consumers the ability to upgrade or downgrade themselves, and drive revenue through bundled offers.
- Usage and subscriptions: Clearly capture metered product usage and monetize usage level through flexible pricing.
- Payment capture: The cloud needs to accommodate more complex payment options than straight credit card billing, taking into account charges that might be applied by numbers of seats, usage hours or some other metric.
- Customer relationship management (CRM): The billing system is the center of knowledge for financial relationships and for providing that information to other systems, including CRM is key.
Re-architecting for a cloud-based economy
Today’s software is shopping for painkillers, not technology. The cloud can be the best venue for reducing customers’ pain, as long as companies deliver easy on-boarding and customer success tools. The right monetization system can support those efforts, in addition to offering key benefits that help build business.
First, the cloud enables businesses to offer an easy purchase path. As long as a company has a compelling product with brand awareness, the need for human support in the cloud should be minimal. Prospects can click to buy on their own without completing multiple conversations and processes with a customer service representative. When customers can locate the product or service they want, try it out and purchase it off a Web portal without assistance, organizations generate revenue without incurring new costs. This is especially helpful for less complex offerings (and less lucrative ones), enabling businesses to dedicate service teams more fully to enterprise or high-end customers. In the end, it’s all about CAC, a SaaS term for Customer Acquisition Cost. The cloud requires that CAC be as low and efficient as is possible for the associated LTV Lifetime Value.
Second, cloud monetization sets the foundation for scaling a business to far greater size than would be possible with a traditional sales force. In order for cloud-based companies to grow from 100 customers to 1,000 to 100,000 or beyond, they need to give customers the option to self-select products and packages. This also presents a requirement for dynamic relationship management and billing.
Finally, cloud billing enables companies to deliver and monetize whatever creative promotions and packages marketing can design. That is positive for the business, of course, since it can act on ideas and turn them into revenue. It also benefits users, who gain more choice in the ways they purchase from the company.
A sales channel that comes down to service
As with all things related to the cloud, the promise of cloud billing is to serve the customer better. The right monetization choices must, of course, open new revenue streams and deliver a way to manage far more complicated sales than offline business models. However, the true measure of a billing tool can be taken in the level of customer satisfaction it engenders. When customers are able to select the right products for them, adjust their usage levels at will and obtain support as needed, cloud companies win, too.
Contribution By Mark Dudman, Executive Vice President and General Manager of MetraTech’s Metanga.