Monetize it in the Cloud for 2012
As many experts predict, cloud computing’s popularity will continue to explode in 2012. As the New Year has now arrived, it’s time to get your organization up to speed on the possibilities of the cloud, including advanced billing of your offerings. Managing subscriptions, metered transactions, payments and accounts, a once daunting task for many organizations, is now made easier and more effective in the cloud. The benefits of cloud monetization and billing tools, from achieving desirable economies of scale to reducing sales cycles, are abundant. However, before your organization makes the shift, it’s important to understand the basics.
Below are eight key takeaways you need to know about cloud billing:
1) “Cloud billing” isn’t what it sounds like.
Software as a Service (SaaS) companies are redefining what is required in the cloud — they need to position and enable their offerings to make money. SaaS companies need advanced solutions that manage enrollment, payment capture, and customer support and can shorten the go-to-market strategy for their business models. And for most, a SaaS buy of a rich billing solution trumps building. It’s simply too complex to build for anything other than basic subscriptions.
2) Cloud billing must support the needs of the business.
SaaS deals touch multiple services and departments. This requires a system that supports essential back-end functions, including account creation, entitlements, product changes, usage and subscriptions, payment capture, and customer relationship management (CRM).
3) Cloud billing can improve the customer experience.
The cloud can indeed be the best venue for reducing customer frustrations, as long as companies also deliver easy on-boarding and customer success tools. SaaS companies can empower users to click to buy on their own, in order to keep customer acquisition costs (CAC) down. Doing that boosts the lifetime value of a customer (LTV).
4) Cloud billing should be self-service and simple.
In addition to lowering infrastructure costs, the cloud can lower overhead costs by shrinking the need for human intervention in day-to-day transactions. However, you can only take advantage of this when you architect your business workflow to handle it. Customers and prospects should be able to navigate your website easily – enroll, create an account, change their product or service level, review their account status, update payment information and access support resources. If you have a high volume site, you must automate the processes.
- Tip: If it’s a lower volume site, save your human interaction for only the most high value tasks.
5) Cloud billing helps you guide customers to products you want them to buy.
This is where product catalogs and product placement become really important. Gas station owners, grocery market chains and others in consumer markets have focused on product placement for years as a primary means to guide purchasing decisions. Online product catalogs can build on similar strategies to point customers toward higher value offerings. Make these choices visually prominent.
- Tip: Leverage purchase mechanics to tell the buyer next steps toward completing the selection. Offer additional products or selections based on a buyer’s profile or behaviors. Every effort needs to be made to make conversion and on-boarding a foolproof experience. A good rule of thumb is to make sure your purchase and sign-up processes demand the customer take no more than three steps: select a product, review the purchase and pay. That’s it.
6) Cloud billing lets you be attentive to the data, and adjust as needed.
Add up all the sales and marketing expenses, and you’ll get your CAC. Then as customers enroll, you’ll need to understand their lifetime value and worth to your business. To reduce churn (the deadly sign of a poor SaaS business) and achieve the economies of scale that make the cloud valuable, you must keep an eye on these numbers and adjust your business processes in meaningful ways.
- Tip: If customers are abandoning their purchases, use tools like Google, Whoopra, Totango or SiteCatalyst to assess where the friction points lie.
7) Billing in the cloud requires a powerful billing platform.
This can be your best tool for keeping customers happy in the cloud. The customer drives the financial relationship with you. When you can automatically respond to changes, manage accounts, address service packaging, close bills and provide customers with self-care views in their accounts without adding additional bodies to your staff, you can grow without constraints.
- Tip: Set up e-mail validation for purchases and keep customers in the loop about new service offerings and packages that might interest them. Make it easy for them to seamlessly accept free trials or upgrade packages.
8) Cloud billing pays off when you act fast, but think first.
In the cloud, the growth possibilities are endless, but that doesn’t mean you should propel your company into the cloud without a clear vision of how you’ll monetize once you get there. The benefits of cloud-based business models – customer driven relationships, flexible product creation, automated payment capture and lower overhead – are within your reach, but only if you plan how to grasp them.
Make early cloud billing choices that will help you manage advanced, dynamic and metered transactions. Doing so up front will eliminate having to rebuild your cloud model later on.
Contribution By Curt Raffi,
Marketing Director at MetraTech’s Metanga