As subscription businesses, giving customers the flexibility to suspend and later renew their subscriptions is always a good strategy. In fact, we've seen that companies offering the option to suspend and resume have an average churn rate of 25%, as compared to 30% churn rate for those that do not. That means saving one in six would-be customer churns! And in the new reality of COVID-19, this strategy is more important than ever. If your company doesnt offer the flexibility to pause a subscription yet, this is a good chance to help your customers and keep them!
On Wednesday, April 1st, Zuora hosted the first topic in our series of webcasts and open office hours on strategies and tactics for scaling customer engagement during the COVID-19:
How to Suspend or Pause Subscriptions, but Keep Your Customers
Over 200 customers joined experts from our customer success, global implementation, and Subscribed Institute strategy teams to demo best practices, answer questions, and facilitate peer-to-peer discussions. Attendees got the opportunity to:
We started with a 30-minute general session presentation on the subject, and then broke out into smaller "rooms" for further discussion and Q&A.
Here you'll find:
Thank you to those who took part, and we hope this was a useful topic and format for you. Please let us know any feedback.
Stay safe and well!
Q&A: "How to Suspend or Pause Subscriptions, but Keep Your Customers"
Q: What is the pre-work required for this feature?
A: Submit a ticket to Support@zuora.com to have this feature enabled in your sandbox and production environments.
Q: Suspend/resume, is this a leading indicator of churn?
A: Suspending subscription is a churn save. But a better leading indicator is monitoring utilization/usage. 1 in 6 subscribers can be saved. If you use this regularly, you have a 5% less churn rate on-going. This is only one strategy taking on during C-19, but others include discounting. Another is letting people downgrade subscriptions -tiered offerings. Credit forgiveness.
Q: Is the prorated fee, manual or automated upon resumption of service?
A: The prorate fee is automated when the subscription is resumed.
Q: Can we suspend the subscription and keep service going still?
A: Suspending the subscription means the customer does not have access to the system. You could keep the subscription active and add a discount approach to provide access to the system, continue to bill and discount the amount of the rate plan.
Q: Can I cancel the subscription after I suspend it?
A: You must resume the subscription first, then you can process the cancellation.
Q: Can you please confirm what setting we need to update to ensure that all credit notes generated will be applied to the customers account and offset against their next bill?
A: Go to Billing Settings > Billing Rules > Invoice/Credit Memo generation rule, test this setting out to make sure the credit memo displays as you expect. Please review the Knowledge Center for more details
Q: Is the credit memo automatically generated even if we don't recognize revenue on a deferred method?
A: Yes, the credit memo will be created. The revenue rule is associated with the credit memo by the original invoice if its an Invoice related credit memo or associated by the rate plan charge set up if its a standalone credit memo.
Q: Is Credit and Debit memos a more recent feature? My tenant doesnt have that. How is it different from invoice item adjustments?
A: Credit/Debit Memos are part of Invoice Settlement feature. It replaces the Invoice item adjustments. Please review the knowledge center for more information.
Temporary Charges/Rate Plans
Q: How can we add a temporary rate plan charge to a subscription for a certain period of time, instead of suspending the subscription?
A: In the product rate plan charge set up > Timing and Frequency of Charge: End Date > Set to Fixed Period after the charge is triggered: Enter the # of Billing periods > finish setting up the rate plan charge and save. Next, Add the rate plan charge to the subscription, and check the subscription preview to review the subscriptions upcoming charges.
Q: We would like to suspend accounts, but charge a lower flat fee to suspend the account. How would we do that?
A: You would remove the current rate plan charge on the subscription and add a new rate plan charge with the flat fee. You would not suspend the subscription if you continue to invoice the flat fee.
Q: I tried to delete the resume amendment and received an error message. How can I delete the amendment?
A: Once you create any amendment and then create a bill run, the customer account will be picked up in the bill run and may or may not have an invoice/credit memo/debit memo created, but once the bill run is created, it locks the customers' amendments and can not be deleted. If you are not sure if the amendment may be deleted in the same day, then place the customer account in a non-billing batch so it will not be picked up in the bill run.
Q: If we suspend the subscription, will it create the Terms & Conditions amendment automatically?
A: The Terms & Conditions amendment will be created only when you choose to extend the subscription when you enter the resume date.
Q: We are looking to extend the subscribers access and next bill date by 60 days so they have access for an extra 60 days and are billed at next invoice date + 60
A: You will suspend the subscription as of your suspension date and resume 60 days later and you will then choose to extend the subscription by 60 days.
Q: What happens if a suspended sub doesnt get to renew and the date passes?
A: The subscription will end and you will not be able to resume or renew the subscription. It must be renewed before you suspend the subscription.
Q: Can we use Suspend/Resume feature for extending the term of the subscription and not bill the customer?
A: Suspending will stop the future invoicing of this subscription. Once you resume, you have the option of extending the subscription, which will resume the subscription invoicing and terms & conditions.
Q: Would the subscription still end if you included a Terms adjustment in the suspension?
A: You will need to make sure the subscription is still active once you resume the subscription, then you can process a terms and conditions amendment. Once the subscription is suspended, you can not process any amendment.
How to Suspend/Resume in Bulk
Q: Can we suspend the subscriptions in bulk?
A: Yes, you can use API call out, Developer tools, or Workflow to suspend subscriptions
Q: Will the revenue schedules be updated on the original invoice to reflect the suspension period?
A: No, once the invoice is posted, the revenue schedules do NOT change. When you process the suspension, if it generates a negative invoice/credit memo, this will have its own revenue schedule to offset the revenue.
Q: Will MRR (Monthly recurring revenue) still continue if I suspend the subscription?
A: No, MRR will stop as soon as the subscription is suspended.
Q: The KC article states that suspending subscriptions and using NS is a limitation, is this a deal breaker?
A: This is not a deal breaker.Netsuite connector will not report the subscription status as suspended. Once it is suspended, it will generate a credit memo/negative invoice from the suspend date to the end of the service period date.
For example, an invoice is $600 for service period 01/01/2020-12/31/2020, the subscription is suspended 3/24/2020, the next invoice/credit memo will generate for the negative amount $459.02 for service period 03/24/2020-12/31/2020.
The original invoice and negative invoice/credit memo will each have their respective revenue schedule to offset each other, which will be sent to Netsuite.
Use Case Example Questions
Q:Is there a way to not provide any credit?
A: For Monthly subscriptions, you can suspend at the end of the invoice period to prevent a credit. For Annual subscriptions, if you are midway through the subscription, it will automatically generate the credit from the suspend date to the end of the service period. You can hold onto the credit until you resume the subscription, which will generate a new invoice for the resume date until the end of the service period, which you can then apply the credit to this invoice. Please see the example in the slides.
Q: What if we have an annual subscription plan:
Customer's renewal is on May 1, we decide to Suspend from April 1 to June 1 - would Zuora charge them on June 1 for the full annual amount? (and would the subscription renewal date for that person change to June 1, because of the suspension)?
A: You will need to renew the subscription first, next suspend the subscription on 4/1, enter the resume date 6/1. You can choose to extend the subscription after you enter the resume date. You will see a prorated credit for the 1 month suspension period from 4/1-4/30. Next invoice date: 6/1 will have a service period of 6/1-3/31, which will be a prorated amount. If you choose to extend the subscription, it will then create an additional invoice for the service period 4/1-4/30. Please test this out in your sandbox with your environment settings.
Q: What happens to an account that has a renewal during the suspended period?
A: You must process a renewal amendment to the subscription before you suspend. If the subscription is not renewed before the suspension and the subscription ends, you can not resume the subscription, the subscription ends. You will have to create a new subscription if the subscription ends.
Q: How can we suspend one time charges?
A: One time charges will not be credited back, they are billed once only. Suspensions are for recurring and usage charges.
Q: We have evergreen subscriptions but they renew annually how would renewals work during a subscription suspension?I think it wouldnt renew, that would be ideal.
A: Renewals are for termed subscriptions only. Evergreen subscriptions do not have a renewal amendment needed since it does not have an end date.
Q: What if we'd like to offer a two month deferral. We suspend the renewal and we'd like the two months to be invoiced but not collected. We'd like month 3 renewal to collect all 3 months, is that possible?
A: In this case you are not suspending the subscription, you are offering a longer payment terms for the 3 months. When the bill run is created, you can set the invoice and target date to the 3rd month out. The invoice will reflect 3 months of charges and their service periods.
Q: We would like to categorize these suspensions as COVID-19 related. How can we do this for reporting purposes?
A: You can add a custom field on the subscription to label the Amendment as COVID-19. Please read the Knowledge Center on Custom Fields.
Q: We want to do net 90 month 1, net 60 month 2 and net 30 for all other months. How can I set this up?
A: You can use Invoice Split to split up the subscription charges by percentage and net terms.