Freemium conversions: Sales versus Finance - whose job is it?

An automated billing solution smooths out the flow of revenue and cash from freemium renewals by ending the debate over whose job it is to remind your customers to renew. 

Let’s just say that you’re commercializing an open source product on the freemium model.  You have a million or two “free” users and a nicely growing group of paid subscribers getting the enhanced version of the product.  While you might not consider your customers “subscribers”, the term “subscription” in this context is a bit of payments and billing jargon that describes an enduring business relationship that has to be invoiced occasionally to keep it alive.   

Depending on your business model, but most likely once a year, your existing paid premium subscribers need to renew their subscriptions.  The question is, which part or your org chart should be responsible for making sure renewals happen?  In most companies, Finance takes the position that coaxing customers to renew isn’t their job, and that they wouldn’t be very good at it even if it was.  Meanwhile, to keep the growth rolling, your sales force is tightly focused on generating new revenue from new customers.  They’re loath to stop pursing new business and turn their attention to what looks like a low-value maintenance job.   

But, regardless of whether anyone wants to do it, somebody has to reach out and remind your customers that it’s time to renew.  Your customers are more focused on using the product than paying for it. Chances are good that if you don’t remind them to renew, they just won’t get around to it.  If the “premium” part of their service stops when they don’t renew, they will probably get around to renewing in a few months, but then again, maybe they won’t.   

What’s our experience in this model?  Well, in the last few months, two freemium business-model companies have begun using Monexa Billing to automate their renewals.  It’s a simple solution to a vexing problem.  The subscription billing application remembers the customers’ details and it automatically reminds them when their subscriptions are about to run out.  This keeps the sales force selling to new customers, and allows the finance staff to respond only to exceptions where payments don’t arrive properly.    

You get a smooth revenue flow, peace between finance and sales, and best of all you have happy, up-to-date paying customers. 

Comments

[Captive Insurance]

Fremium...what a silly name. I mean, don't get me wrong here, it amuses me to no end. But its kinda silly sounding. Anyway, as a business model, it doesn't always seem to work...depends on the area/niche.

[ClubPenguinCheats]

In most companies, Finance takes the position that coaxing customers to renew isn’t their job, and that they wouldn’t be very good at it even if it was.