Rental Management Software Guide—Top 9 Features to Look For.
This guide about features to look for in a subscription management software is for subscription businesses that rent out physical products like bikes, cars, furniture, baby strollers, consumer electrics, consumer appliances, equipment (construction, medical, home), and so on.
Let’s begin.
Scaling subscription operation requires automation
One of the most frequently asked questions is how to scale a subscription business? The simple and shortest answer is, through subscription automation.
You may have started your subscription business on spreadsheets but now that it has crossed 20 or perhaps 50 subscribers, managing the day to day operations is probably becoming increasing time consuming and complicated.
What you need is a subscription management software that sits on top of recurring payment solutions like Stripe, PayPal etc. and covers the entire subscriber customer journey for subscription products and not just the process of collecting recurring payments.
When Subscription management sits on top of payment solutions, recurring payments can be stopped, cancelled, or altered. Doing so is important to deal with customer-related issues and to increase customer retention.
But stopping, cancelling and altering recurring payments is not the only thing that a subscription management software should be capable of doing. There’s more to subscription management and that’s what we’ll cover in this article. But first let’s briefly discuss the different types of subscription business models.
Types of Subscription Business Models
You can differentiate the different types of subscription businesses based on the type of product being offered as a service.
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Intangible products as a service
There are intangible products as a service, such as movies by Netflix, Amazon, music by Spotify, Apple Music, SaaS software by Hubspot, circuly (that’s us BTW) and so on.
What intangible subscription businesses do not have to deal with?
Netflix or Spotify do not need to bother about getting their movies or music back from their customers.
Hubspot does not needs to repair a few things in the software and adjust that in the cost calculation when a subscription is cancelled.
Subscription box companies do not need to track their product by serial number and be informed about the whereabouts of their box service at all times.
Tangible products as a service
And then there tangible product subscription which are further divided into consumables or short-lived products like subscription boxes, apparel, toilet paper, razor, drinks etc., and durable consumer products such as cars, bikes, furniture, stroller etc.
The problem is an absence of a dedicated solution
While there are plenty of solutions out there for digital subscriptions and consumable subscriptions, the absence of adequate examples, information and know-how on product subscription business models makes it harder to scale product subscription businesses.
Subscription for physical products like cars, furniture, consumer electronics etc requires dedicated processes for operations like product return, repair and refurbishment, asset tracking, product swap and so on.
Here’s a list of features to look for in a subscription management software.
Top 9 Features to Look For in a Subscription Management Software
If your question is whether or not you need a subscription management software for your rental or subscription business; the answer is YES! YOU NEED ONE TO SCALE! But the needs of your business are slightly special! Your business needs a software that can deal with long-lived tangible products and can manage its operations.
Let’s start
Summary:
- KPI Dashboard
- Subscription data collection
- Product return handling
- Digital product repair and refurbishment
- Automated recurring payments
- Automated recurring invoicing
- Product and asset history
- Product tracking
- Asset management
- Connection with existing tools
- Fraud prevention and
1. KPI Dashboard
Priority: Medium
Measuring performance is crucial for any kind of business activity. Especially for eCommerce, translating efforts-put-in to the outcome achieved, is basically the norm to go forward.
The same is true for subscription eCommerce.
How do we measure success in subscription eCommerce? - By looking at some Key Performance Indicators (KPI). But the difference between eCommerce and subscription eCommerce is what is defined as a performance indicator in the first place.
Typical eCommerce-specific KPIs such as monthly sales, orders, and conversion rate are insufficient. To measure success and performance, subscription businesses look at subscription-specific KPIs like Monthly Recurring Revenue (MRR), Churn, Avg. Revenue per Customer, Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV) and so on.
Best practice
When you’re just starting out with your subscription business it is important to look at data but not get lost in it. You can do all sorts of fancy stuff with data and you should, once you have enough data to analyse.
But at the beginning you need a few standard metrics you can look at and improve upon. As you grow the metrics you want to track will majorly depend on your goals for you subscription business and then it even makes sense to be more data driven.
What to look for
Check if the subscription management software comes with a KPI dashboard and what metrics are being analysed automatically by the software system.
2. Data collection
Priority: High for subscription companies that have enough demand and generate enough orders and data to analyse.
When you’re already in the game for a while and have a good overview about the data you need to scale your business, you might want to move beyond the standard subscription KPI and develop your own metrics. In order to do that you will need data points you can look at and anaylse. it’s crucial to understand how the subscription management software is collecting and storing data.
Additionally look for certain data points that you need to form metrics such as number of payment retries, failed monthly payments, new customers, new revenue etc.
Best practice
Before getting started take a step back a and list down your goals and the metrics that will help you measure that goal. Once you have the metrics, think about the dat appoints you will need to make those metrics.
What to look for
Check if the subscription management software collects the data points that you need or has the possibility to collect them based on their product roadmap.
3. Product Return Handling
Priority: High
Physical subscription products like cars, bikes, furniture etc., have the tendency of coming back either at the end of the subscription period and sometimes even during (in case of replacement, swaps and cancellations). As a result reverse logistics form a very integral part of a product subscription businesses.
Young subscription companies use spreadsheets to track the tentative product return date and set calendar reminders to remind them of the return dates.
But return handling goes a bit beyond keeping track of the subscription end date. When products are returned, the customer should ideally get an email about return instructions, the subscription needs to be stopped, which also means stopping the recurring payments and when the product is returned, someone needs to check it and push it back into stock so that it’s available for further renting.
However in the absence of a subscription management solution, all these operations are performed in different tools. For example, recurring payments are stopped in the Payment Service Provider, products are repaired and the repair result is not tracked, product is added back to stock in the Shopsystem.
What to look for
A subscription management software makes it possible to perform all these actions and operations in the same place. Look for a solution that eliminates the need for looking into and operating in 10 different tools.
A subscription management solution automates the return handling process and the workflows associated with it.
4. Digital Product Repairs and refurbishment tracking
Priority: High
One of the most common reasons why a lot of manufacturers start operating a subscription business model is to learn more about their product and to improve the design based on the learnings and finding.
In order to do that it’s crucial to track all repair and refurbishment related data. Common refurbishment related topics that can be tracked include:
- Repair costs
- Repair part
- Parts that broke and needed repair and so on.
Subscription management softwares don’t take care of the refurbishment of the product but they can track it.
Best Practice
Set up an initial repair process and modify it as your products go through one rental cycle.
What to look for
Look for a subscription management solution that can digitally take care of repair and refurbishment.
5. Automated recurring payment
Priority: High
Recurring payments is a golden goose for a subscription business. Another reason why a lot of companies adopt a subscription model is because recurring revenue is more valuable than one times sales.
In order to collect recurring payments you need a payment gateway to authorise and process the payment and a merchant account to accept the payment and act as mediator between the bank and you.
Luckily there are enough payment solutions out there that act as payment processes and provide the benefit of different payment methods without the need to deal with the requirements.
But payment service providers can often only collect recurring payments at an agreed frequency on an ongoing basis.
There’s a lot more to a subscription business than simply collecting recurring payments. When subscription management sits on top of recurring payment solutions, payments can be edited, changed, stopped, paused and cancelled and more.
What to look for
Look for a solution that can automate the revenue collection process and can make the Payment Service Provider deal with subscription payments.
6. Automated recurring invoicing
Priority: High
If there are payments involved, there are invoicing not too far away. In every business an invoice needs to be generated and sent to the customer whenever a payment is made.
In a subscription business invoices are needed based on the frequency of the payment. If its a monthly subscription, then payment is collected monthly and an invoice is also generated and sent to the customer on a monthly basis.
The sheer volume of invoices to be made and sent to the customer can probable keep 10 people permanently occupied.
However a subscription management software uses the capabilities of a Payment Service Provider to not only collect recurring payment but also generate invoices and send them automatically to the customer when needed.
Additionally when it come sto invoices, bear in mind all the regulatory requirements that need to go on the invoice depending on the country you are operating in.
What to look for
Look for a subscription management software that can automate the invoice generation and sending process.
Automated invoices let you focus on generating more business and not on generating manual invoices. The invoice emails should be 100% customisable and fit your branding so that the customer feels connected to your brand and can maintain trust in it when there is a payment being charged.
7. Product History
Priority: High
In a subscription business you need to have a complete product overview including the rental cycles. Tracking the rental cycles is important in order to estimate and keep track of the lifecycle of the product.
Let’s assume that you offer a bike-as-a-service for 70€ (part of the cost-plus some profit) on a monthly basis. The original price is 2000€. You calculate how long it will take to cover the cost and how many cycles of renting it would take to make a considerable amount of profit out of it. Let’s say that the first subscription cycle of the bike runs for a year and when it comes back into your inventory, it needs some repairs worth 200€. Obviously, these repairs increase the cost of the original product which needs to be accounted for.
What to look for
A good subscription management software will have the capacity to attribute these costs, showcase the product history and help you in key decision making like changing product supplier in case the same part of the product breaks over and over again or knowing when to discard a product or perhaps even depreciate a product over time.
8. Product Tracking
Priroity: high
What is the one thing every customer does after they make a purchase? They track their products and mentally ask their phones the question, "is it there yet".
While this is also true for customers of a subscription product, tracking in a subscription-based business is a two-way street. The customers track the delivery status, and the subscription provider tracks the lifetime status of the product.
This essentially means that a subscription service provider needs to know at all times where the product is and which product is associated with which customer. For that, every product needs to have its own serial number beside the Stock Keeping Unit (SKU), and that serial number needs to be stored in a place that can track it.
Let's take the case of StrollMe.
StrollMe offers baby strollers as a subscription service. They have multiple strollers under one stroller category. They need to track each strollers separately for each customer.
In case one of the strollers is broken when returned, they are able to track which customer was responsible for it by simply logging in into the circuly backend and checking the customer information associated with the serial number of the stroller in question.
Subscription products like baby strollers, furniture, consumer electronics etc. do not have a tracking device attached to it. But that doesnt mean that you cant track the whereabout of the product.
Important in case of such products is to see how the product progressed in the rental cycle and between the different customers.
So supposing you get a stained couch in your warehouse with the help of product tracking you should be easily able to figure out who the last owner of the product was and charge them for and damages if needed.
What to look for
Look for a software solution that track and maintain data on the whetreabouts of a product.
9. Asset Management
Priority: High
For the customer, renting and buying are two sides of the same coin in the sense that it is about getting a product online, using it and returning it at the end of the subscription. To the customer, it’s like e-commerce.
Things like “out-of-stock”, “delayed delivery”, “fill a form to get a quote” are deal-breakers for the customer. If your product is not available at the moment when they need it, they will simply move away to buying it instead or worse to a competitor who is probably doing a better job at managing their inventory.
What to look for
A subscription management software with asset tracking enables you to keep an overview of what's happening with your inventory and have a real-time estimate of when it moves from repairs back to stock in your webshop. When it comes to asset tracking and management the goal of any tangible product based subscription business should be to make sure that there are always products available to be rented out in the webshop.
Summary
These are just a few important features to look for in subscription management software in case you feel lost and don't know where to start. In case you skipped over the entire article, I'll be a nice writer and sum it up for you. So when it comes to picking a subscription management software, ask for the following:
- How are returns handled digitally?
- How are repairs handled?
- Why is repair handling important?
- How can I track the product history?
- How can I track my inventory and automate the process?
- How are invoices and bills dealt with?
- Do you take care of payment automation?
- Do you customize the checkout according to our branding?
- Do you provide email templates?
- Can I have the entire overview of the product(s) in the software?
All right then! See you in the next article.
FREE RESOURCE: E-book on Core Growth Strategies for Subscription Business! An action plan to grow and scale.
About circuly
We enable companies to rent out their products instead of just selling them. In this way, we create further sales potential for our customers and at the same time bring sustainability to e-commerce. With our Subscription Management Software for physical products, we support young companies in optimizing and scaling existing rental models and help established companies to build new, circular business models as a second mainstay.
Our software is a white label solution that creates a customer-centric rental experience along the entire value chain of the rental model. Starting with the conclusion of a rental contract, the setup of recurring payments, self-administration by the end consumer, and ending with the management and tracking of all products by the provider. We also enable the integration of third-party providers such as logistics service providers and financing partners in the back-end. We make Circular Business Models simple and effective!
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