Manage ARR like a boss!

You’re a SaaS company, you work hard to get every dollar of subscription revenue in the door. Even if you are the best in your cohort it probably cost you a dollar in sales and marketing costs just to get a dollar in ARR. But if your company is like most of your peers, you are managing all that important information in a spreadsheet that sits between your CRM system and your accounting system.

You do have other options of course. There are tools out there, like Zuora or Chargebee, that do the work to track billing and deferred revenue. But those systems cost big bucks and essentially create a third system of record.

We wanted to solve this by building Subscription Management right within TekStack. SaaS companies can manage all recurring revenue from one tool, as a by-product of the built-in Opportunity CPQ process, also managing renewals and co-terming subscriptions as well.

Create Subscriptions right from the Opportunity

The concept we’ve built around Subscriptions allows you to associate all of the products that are on a single Opportunity, to one Subscription Group.  You can also co-term to an existing subscription renewal that is already in place with the customer.  We can define things like The Subscription Start (Does the subscription begin on the Order being signed, or when a Project Milestone like go-live is completed?) The Invoice Schedule  (Is the subscription term invoiced in advance, or monthly?) Renewal Type (Does the renewal happen automatically, or do you need an acknowledgment from the customer, like a signed agreement?), and Payment Terms. 

Tracking Subscriptions at the Customer Level

We also relate all subscriptions against a customer record. This lets you see the history of what they’ve purchased, and also when renewals are coming up. This is insanely powerful because as a by-product you can actually see what software the customer owns, when the renewal is coming up, also if they’ve delisted anything in the past.  Important information that drives your customer success team crazy trying to get from finance.

Reporting ARR/MRR and Churn

So we’ve automated the transactions, how do you get access to the information visually?  We’ve built a couple of charts. One is native in the CRM system, the other is accessed through PowerBI. There are advantages of each so we’ve built both.  (Keep in mind this is a limited sample dataset).

This is a screen capture of the native charting in TekStack.  It’s a friendly visual, but not as powerful as the reporting we can get out of PowerBI which will provide some additional insights, below.

In addition to the ARR chart, we’ve built a Net Churn table because we are able to capture renewal, Renewal Price Increase, Renewal Price Decrease, Back to Base, and Attrition transactions at the customer level aggregating all the way up.  When you combine that with variables like customer segmentation, industry, region, or even CS rep; the analysis becomes very powerful.

Revenue Recognition

We set up a Subscription Revenue Schedule that essentially acts like a deferred revenue schedule.  We can send this right to your accounting system to post ledger entries (or you can just use our accounting product to manage it!).

Now all of this assumes you are using our built-in CPQ tool to drive Quotes and Orders.  But we’ll chat about that in another post!  Would love your feedback, let us know your thoughts.