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2020 - 2023
Trend #1: The role of Finance will continue to evolve
Trend #2: Experimentation with different growth strategies
Trend #3: Businesses will opt for a mix of recurring and usage-based pricing models
Trend #4: The rise of fourth generation subscription management
The evolution of subscription management generations
Looking ahead
As we ring in the new year, we asked Niclas Lilja, Founder and CEO of Younium, about the key trends for 2024.
Even amidst ongoing economic turbulence, stiff competition, and security risks, he believes that forward-looking businesses will continue to adapt and thrive.
“2024 will be all about trying new technologies and fine-tuning operating methods (and making data-driven decisions). Such incremental strategies reflect shifting priorities and emerging needs. And it speaks to the doggedness of the B2B SaaS industry to improve efficiency, consumerization, flexibility, and cost-effectiveness, ” he added.
2020 - 2023
Looking at the industry’s recent past, Niclas shared that 2020 and 2021 were all about the excesses (read: greater spends on technology, new hires, etc). Then the ‘big SaaS bust’ happened in 2022, leading to two years of layoffs, inflation, budget cuts, and measures to improve efficiency (read: work harder, sell more).
Cut to 2024. He finally foresees this rough patch tapering off with investments expected to grow again.
To support this cautious recovery, Niclas predicts that SaaS companies will adopt multiple growth strategies and pricing models, while the strategic nature of the role played by finance teams will grow.
Read on as Niclas elaborates on the top 4 trends to watch out for in 2024.
Trend #1: The role of Finance will continue to evolve: The modern finance function is increasingly taking on a more strategic role, moving beyond traditional number-crunching. It is now an essential cog in the business design and decision-making framework, using data-driven insights to drive business efficiency and growth.
Niclas believes that this trend is likely to accelerate, with more investments being made into tools and talent to support this role.
Trend #2: Experimentation with different growth strategies: Harnessing the contributions of all teams within your B2B SaaS company to deliver consumer-grade user experiences can be challenging but rewarding. While transitioning to a product-led growth strategy isn’t immediately feasible for solutions with complex sales cycles, key aspects of this approach can be incorporated.
“Especially for companies not originally designed with PLG in mind, the key is to understand customer behavior and product usage, and accordingly align sales and marketing strategies to it,” he stated.
Trend #3: Businesses will opt for a mix of recurring and usage-based pricing models: At a time when 72% of businesses consider customer experience to be their top priority, the shift towards the pay-as-you-go or usage-based pricing models reflects this customer-centric approach.
Niclas opines that the adoption of more customized and granular pricing strategies are a response to inflation, higher interest rates, and general customer feedback. And it will allow for greater scalability and flexibility, which in turn, can enhance long-term customer retention.
He did, however, caution B2B companies against completely dropping all predictable recurring revenue, stating that a majority of companies would benefit from a mixed strategy, e.g. offerings with an annual subscription component coupled with a pay-as-you-go component.
“Increasingly, Chief Financial Officers (CFOs) are relying on subscription management solutions to identify new opportunities and accelerate revenue growth. Such platforms are in high demand because they can manage different pricing models with ease,” he added.
On that note, we move to the final trend for 2024 – the growing popularity of fourth-generation subscription management.
Trend #4: The rise of fourth generation subscription management
A separate section for trend #4 exists for a very important reason: fourth-generation subscription management has the power to drive the other three trends.
Whether you wish to secure up-to-date financial, customer behavior, and product usage insights; or better manage the workflows of a usage-based pricing model, it would help to have a complete solution – one with an integrated and customer-centric approach to subscription management.
As the SaaS landscape has evolved over time, the need for an agile subscription management solution has grown: one that can handle the intricacies of a modern B2B SaaS company.
The evolution of subscription management generations
- Generation 1 was focused on basic recurring billing, predominantly consumer-oriented. This level provided fundamental billing automation but limited customization or integration capabilities.
- Generation 2 offered more standardized subscription management solutions with an e-commerce orientation, typically focused on B2C as well as simpler B2B scenarios. These solutions started to integrate more features but still lacked deeper business process integration.
- Generation 3 introduced advanced features, often with a niche focus, and leaned more towards B2B clients. These solutions offered greater flexibility and were able to handle more complex subscription models.
- Generation 4 emphasizes an integrated platform approach. Here, the goal would be to eliminate costly silos and align all functions towards serving the customer more effectively.
While today’s subscription management space is primarily occupied by first and second generation solutions, the new model is quickly gaining traction – and for good reason: these fourth-generation systems are designed specifically for the B2B SaaS companies of the modern world. They’re built on one data structure, unlike the older generations with siloed structures that can’t be merged. This agility not only allows for the handling of complex usage-based pricing models, but it ensures adaptability for the future. Customers can rest assured that their needs are covered by this cohesive system that connects their separate business functions – Sales, Customer Success, Finance, and Business Intelligence alike.
Niclas shared that this new model goes beyond mere billing and basic subscription handling to focus on delivering a comprehensive and seamless experience for prospective clients and existing customers.
“As a CEO deeply immersed in the world of B2B SaaS, I have been witness to how the emergence of Revenue Operations (RevOps) mirrors the growing need for integrated systems. RevOps focuses on aligning sales, marketing, and customer success to drive revenue growth through operational efficiency – a key tenet of the fourth-generation approach,” Niclas concluded on the matter.
Looking ahead
Emerging from two years of tight budgets and reduced spending, it is tempting to declare that things will soon return to normal. But with a recession potentially looming, it remains important to be conservative in our outlook for the immediate future.
To navigate a path towards efficient growth, and tap into new opportunities on the market, Niclas recommends:
- Streamlining operations to boost efficiency and resilience with technologies such as subscription management platforms.
- Understanding and catering to customer needs for product alignment and loyalty.
- Using data analytics for strategic decision-making.
- Adapting to diverse customer needs by offering flexible pricing and subscriptions.
Still curious about the new generation of subscription management? Find out how you can transform everyday and strategic B2B SaaS operations with Younium’s subscription hub. Contact us today to get started.
