According to a recent Forrester report, SaaS revenues are growing “two to three times faster than the overall software market,” and those revenues typically come in the form of a monthly or annual subscription.
In fact, a report from 2012 states that “in 2008, 82% of license budgets were spent on traditional licenses” while a newer report indicates that spending on perpetual licenses and subscription licenses will split evenly by 2014 (Fig 1).
Subscription Ecommerce capabilities checklist
Imagine you have a SaaS/subscription product. Your product has gained some traction but you’re looking to get to the next level. Your in-house ecommerce solution is no longer fulfilling your needs so you are considering an outsourced solution to fortify your ecommerce channel.
What should you be looking for in a subscription ecommerce partner? Here’s a good list to start with. You should ask any ecommerce provider you meet whether they can support some (or all) of these features:
- Payment processing / PCI Compliance
- Merchant account
- Payment gateway
- Effective API functionality
- Subscription analytics/Business intelligence
- A/B testing
- Global support
- Payment methods
- Marketing capabilities
- Cross selling
- Shopping cart hosting/design
- Fraud prevention
- Affiliate and reseller support
- Account management
- Conversion optimization
- Customer Support
Subscription commerce platforms
Today’s most popular subscription commerce/billing platforms (e.g. Zuora, Recurly, Stripe, Braintree, Aria etc.) are viewed as the default solutions for SaaS companies. The problem is that most of these solutions only support a fraction of the capabilities that your business might require. To have access to all these features, it seems you would have to mix and match several vendors to achieve complete coverage.
In my opinion, up and coming SaaS companies gravitate towards subscription commerce platforms because they’re biologically programmed to. These SaaS ventures were “born” out of the same time period: Salesforce and the booming subscription economy. Ipso facto, SaaS companies and subscription commerce platforms have to understand each other’s needs and the best ways to grow online revenue, right?
In some cases, yes, but more often than not, software companies implementing a subscription billing model should consider the older brother of the subscription commerce platform: full service.
Full service ecommerce platforms
Full service ecommerce platforms (e.g. Avangate, Digital River, cleverbridge, etc.) represent a more tenured breed of ecommerce solutions. Some of these companies have been navigating the online landscape for over two decades. All full service ecommerce partners are not created equal but most of these companies provide significant support around all the features mentioned above. In addition, some of these full service providers offer significant consulting services out of the box (i.e. conversion optimization, international go to market strategies, front end design, etc).
Emerging SaaS/subscription companies may only need payment processing/PCI compliance today but what about a year from now? How about two or five years out? The challenges of today are not the challenges of tomorrow. The need to eventually solve more complex ecommerce problems may require a more robust platform. The important thing is not to be surprised by sudden requirements that your payment provider cannot fulfill and not to underestimate the complexity in moving from one platform to another.
Generating the most online subscription revenue possible for your SaaS product goes well beyond plug–and-play API’s and processing credit card payments. Evaluate all your needs. There are a lot of tools out there to help your product succeed.
Do you prefer a mix and match approach? Or, alternatively, a full service approach to allow you to completely focus on your product?
Josh Wolfson is the SaaS Key Account Manager at cleverbridge