Enhanced Quote-to-Cash Efficiency: Leveraging Subscription Ramps for Multi-Year Deals
5 MIN READ
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Updated on June 5, 2024
Multi-year contracts are a no-brainer when it comes to mid-market and enterprise businesses. The most fundamental reason is that it helps acquire customers with a contract value that is higher than average and also increases the predictable revenue. While this is a clear win for subscription businesses, the end customers have to factor in a lot of things before they sign a multi-year contract – like software scalability, vendor reliability, migration and implementation costs, time taken by the vendor to deliver the agreed custom solution, support responsiveness, and so on.
Merchants include predefined terms in the contract that benefit both parties and make the partnership meaningful. These could include offering upfront discounts, custom pricing, packaging changes that define the number of plan/add-on licenses, etc. Essentially, these are multiple scheduled changes and price/quantity/discount ramps defined at the time of purchase and apply throughout the tenure of the contract. Even in the case of self-serve purchases, customers may want to schedule multiple changes (upgrades/downgrades in terms of plans, add-ons, or quantity) in advance that apply at different times during the subscription tenure.
Irrespective of whether a human touch point exists in the sales cycle, the real challenge arises when you have to take those terms/scheduled changes into account and bill accurately. Let’s break this down.
Table of Contents
Quote-to-Cash: Tools and Processes
Your CRM is the starting point of a sale. Sales reps need all the details about your offerings within the CRM to generate a quote and send it to the buyer. Once the buyer accepts the quote, the CRM needs to be updated with the subscription details mentioned in the contract. Once the deal is closed, the CRM should pass on the subscription to the billing system to automate recurring invoicing and payments.
As simple as that may sound, here’s when most processes break:
- Your CRM does not have the flexibility to attach multiple line items or scheduled changes to a contract.
- Your sales reps don’t have the flexibility to offer upfront discounts, which gradually ramp down as and when the services are delivered.
- Your sales reps cannot modify unit price or quantity or attach custom bundles to the quote.
- Your billing team has to set up reminders and manually renew contracts by making amendments to the subscriptions.
- Your customers don’t have the flexibility to schedule multiple changes from their self-service portal.
In most mid-market SaaS organizations, it takes 3-4 business days to manually effect the mutually agreed-upon price change on a contract. The delay stems primarily from the lack of tools and processes that help find these contracts instantly (mostly lost in inboxes) and facilitate communication between account executives, account managers, and the billing operations team.
The Ideal State
The ideal state is when your sales and finance teams can work in tandem, and the changes made in one tool are reflected in the other promptly. It is when your sales teams have all the essential tools to close deals with multiple scheduled changes in terms of price, plans, add-ons, and ramp discounts, and all the changes are automatically billed and provisioned accurately with minimal human intervention.
That’s precisely what Chargebee’s Subscription Ramps does for you. With tight integrations with CRMs like Salesforce, Chargebee handles the heavy lifting of billing accurately and provisioning the plan and add-on changes as defined in the contract. Similarly, any changes made in the billing system update the CRM record so your sales and success teams have the customer context they need at all times.
Here’s how Subscription Ramps can improve the efficiency of your Q2C process:
Close deals with scheduled ramps and subscription changes on Salesforce
No matter how complex your contract terms are in terms of discount/price ramps or plan and packaging changes, your sales reps can create subscriptions with all these predefined ramps and scheduled changes right from Salesforce. Sync your Chargebee Product Catalog with SFDC through the CB<>SFDC integration to reflect the up-to-date catalog prices. Empower your sales reps to create new subscriptions with ramps for plans, prices, add-ons, or discounts that gradually ramp up or down over a specific period.
Bill accurately by taking mid-cycle amendments into account
Say goodbye to reminders and manual renewals. Based on customer requests or previously agreed-upon terms, your CSMs or Finance teams can modify existing multi-year subscriptions at any time during the contract’s tenure and have them billed accurately at the time of renewals. You can add new ramps to make pricing, plan, or add-on changes that take effect from a specific date or delete already existing ramps.
Automate feature provisioning based on scheduled contract changes
Ensure all the billing changes are provisioned to customers on time per the agreed-upon contract terms. With Chargebee, you can:
- Automate new plans/add-ons/products/specific features to take effect at a later time
- Onboard new or additional users to your products
- Manage user access based on their roles and profiles
- Override entitlements to reflect the changes made to contracts and report them accurately
Monetize upsell opportunities with seasonal discounting
Every QBR or meeting with your customers unearths many insights on customer pains, the new solutions they need, and so on. Prioritizing customer happiness is critical to improving retention and increasing CLTV. With seasonal discounting, you can proactively schedule offers to drive customer retention, upsells, cross-sells, repeat purchases, or even increase adoption.
Make revenue recognition easy for your finance teams
Avoid errors in revenue recognition for multi-year contracts by taking Chargebee as the single source of truth for billing information and services delivered. While Chargebee gives you visibility into the total contract value at the time of subscription creation, it helps you recognize revenue by passing on accurate billing information to Chargebee RevRec and your accounting tools, which automates data reconciliation and compliance with revenue recognition standards like ASC 606 and IFRS-15.
We’re launching subscription ramps in Salesforce and Chargebee Quotes very soon to improve the onboarding experience. If you want to test or implement ramps to improve your sales efficiency, fill out the form below, and our product experts will contact you!
Request Access to Subscription Ramps
Stay tuned for more updates on unlocking seamless quote-to-cash processes!
