This just in: Tracking ARR is too important to be left to spreadsheets

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 SaaSOptics, that do the work to track billing and deferred revenue. But those systems cost big bucks and essentially create a third system of record.

TekStack wanted to solve this revenue operations challenge by building Subscription Management capability right within TekStack. SaaS companies can manage all recurring revenue from one tool, as a by-product of the built-in Opportunity 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.  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

Most Customer Success reps don’t have a clue what a customer owns, what they’ve paid for it, or when its supposed to renew.  Especially challenging when the customer might have multiple products purchased at various times.  We’ve solved that by tracking subscriptions at the Account level.  CSMs can easily track the order history on a subscription, the contracted amount and quantity, as well as the renewal date.   No more need to dig through the contracts folder or verify dat from accounting.

Manage Renewals automatically

It’s not hard to lose track of renewals.  Get ahead of it by tracking Renewal opportunities.  Heck, TekStack actually creates them automatically a set number of days before the end date of the subscription.  Long gone are the days of sending a renewal invoice out and hoping for the best.  By creating an early opportunity your CS team can get ahead of the customer communication and ensure renewal success.  Best part, you wont miss any!

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).

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

This is where those crazy spreadsheets live.  There is a gap between the CRM order and the Accounting invoice process.  Many companies are trying to manage subscription revenue in spreadsheets so they can track the deferral.  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 Opportunties.  But we’ll chat about that in another post!  Would love your feedback, let us know your thoughts.