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Video/Presentation: http://www.proformative.com/events/establishing-managing-recurring-revenue-model-optimizing-revenue-opportunity Today, the ability to increase revenue through recurring revenue is driving successful companies. However continuing to insure or improve, customer satisfaction and retention through recurring revenue models requires a new breed of billing. Bringing the features, benefits, and capabilities that will enable companies to offer the products or services that their subscribers want and will buy on a recurring basis, what some call 'recurring revenue,' is critical. In this session you will learn how the right subscription management system can drive new revenue and understand the capabilities you will need to effectively manage your recurring revenue-based business. Also, discover how to increase customer satisfaction with a subscription management system and become aware of what is key in your system so you have minimal impact to IT or financial operations. Speakers: Bob Harden, Former Software Director - Global Corporate Systems, Experian Jon Gettinger, SVP, Marketing, Aria System Presentation delivered at CFO Dimensions 2013 - http://www.cfodimensions.com Track: Operational Effectiveness | Session: 5
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1© 2013 Ask, Share, Learn
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Establishing & Managing Recurring Revenue Model - Optimizing the Revenue Opportunity Robert Harden Jon Gettinger
Former Director, SVP, Marketing,
Global Billing Solutions, Aria Systems
Experian
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The Recurring Revenue Market Landscape
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From One-Time Sales to Recurring Revenue
© 2013 Proformative. Proprietary and confidential 3 © 2013 Proformative. Proprietary and confidential3
By 2014, streaming media is expected to hit $70B
137%Online movie streaming is up from 2011
Companies that are not offering subscription options as part of their product mix should put a priority on assessing the value of developing a subscription strategy. — Gartner 2011
47%of U.S. Businesses
have adopted or are considering adopting a
recurring revenue business model
$857The average consumer spend in monthly subscriptions
$6BExpected 2013 global virtual
goods revenue
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Recurring Revenue
35% of Global 2000 companies with non-media digital
products will generate incremental revenue of 5% to 10% through subscription-based services and revenue models.Source: Gartner, Inc., Building a Strategy for the Subscription Economy, April 11, 2011
Source - IDC The Case for SaaS-based Subscription Billing and Management, Dec 2012
. . .will grow at 35% CAGR 2012-2014
. . . projected at $485 M in revenue in 2014
Cloud Billing . . .
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Recurring Revenue Drives Cloud Billing
5
Drivers Here’s WhyMarket ExpansionAccess new markets, take expensive one time purchases and offering them on subscription/usage basis.
Lifetime ValueOffer existing customers new ways to purchase goods and services aligned with department purchase cycles.
Competitive DifferentiationRecurring revenue offerings stand out from the crowd and enable businesses to attract new customers.
InnovationRecurring revenue is the foundation for the “sharing economy” and enables innovative new business models.
Consumer PreferenceEnabling customers to pay over time, or pay for what they use, recurring revenue offerings are perceived as more friendly.
Recurring RevenueDeployments
Wall StreetFriendly
“Cloud billing market will grow at 35% CAGR 2012-2014”*
*Source - IDC The Case for SaaS-based Subscription Billing and Management, Dec 2012
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Recurring Revenue Model Options
Subscription Usage Subscription + Usage
• Fixed payment for a good or service over a specific period of time — a day, a month, a year
• Charges per use or per unit of service
• Combines fixed subscription for service level, with “overage” billed as extra charges
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Looking at Business Differently
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Then and Now
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#CFOD13• Sell products
& services• Online storefront• CRM integration
• Provision services• Customer
communication
• Track & manage usage• Respond to
customer inquiries
• Calculate charges & create invoices • Process payments• Dunning
• Reports• Dashboard
Billing in a Recurring Revenue World
Acquire & Expand
Track & Respond
Calculate & Bill
Analyze & Report
Activate & Notify
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. . .Gets Complex Quickly
Acquire & Expand
Track & Respond
Calculate & Bill
Analyze & Report
Activate & Notify
• Services Activated• Communications• Frequency• Product Add-on’s• Upgrades• Pricing Tiers• Regional & International
• Multi-tier Usage• Thresh-holding• Accumulation• Pooling• Overage• Rating Controls
• Proration• Co-Termination• Charge Alignment• Credits & Refunds• Ad-Hoc Invoicing
• MRR• Delta MRR• TCV• DSO• Uptake• Churn Rate
• Event Notifications• Terms• Change Quotes &
Orders• Entitlement
Management
• Sell products & services• Online storefront• CRM integration
• Provision services• Customer communication
• Track &manage usage• Respond to customer inquiries
• Calculate charges & create invoices • Process payments• Dunning
• Reports• Dashboard
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Case Study
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About Experian
Leading global information services company providing data and analytics tools to clients around the world
Revenue: US $4.7 bnEBIT: US $1.25 bn In top 50 of FTSE-100Employees: c. 17,000Offices in 40+ countriesLargest markets: US, Brazil, UKCorporate headquarters: Dublin
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A New Opportunity
Business expansionExperian to open a new credit bureau in Australia and potentially other markets outside the U.S.
Expand existing operations in other markets outside the U.S.
Products to be definedNew product delivery platform, in design stage
Monetization models to be defined
Constraints:Support existing business while facilitating new business
Support existing business processes while standardizing across BU’s and regions
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Business ChallengesLow cost to serve
Limited start-up investment
Minimize ongoing IT costs – cost certainty
Low touch processes
Shared services approach?
Rapid time to marketAccelerated ramp-up
Additional products / services
Reach un-served or underserved market segmentsNew products / services
New monetization models?
Maintain existing market segments
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Business ChallengesIntegrate with existing systems (CRM / ERP)
Don’t leave money on the tableProducts for markets
Monetization modelsRight pricing for subscriptions / usage
Up-sell / cross-sell?
Reduce churn
Identify revenue recognition rules
Capture relationships, not orders“Foot in the door” opportunities
Maximize customer value over time
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Cloud Based solutionBillingCRM
Cloud-based integration tool
Manage client provisioning from CRM/Billing
Out of the box analytics
Integrated with Oracle ERP
Recurring revenue models wherever possible
Subscription (with overages)
Annual to reduce churn
Usage
Prepaid where practical
Flexibility
Solution
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Benefits of a Cloud Based Solution
Cost benefits:Eliminated up-front hardware/software deployment costs
Predictable ongoing costs
Low touch processes
Share technology risk with vendor
Vendor manages technology, we manage business
Improved time to marketInitial ramp-up
New products / services / plans
Repeatable solution
Scalability
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Needed to Transform Billing
Business Driver
Client Centered Approach
Standards & Processes
Out-of-the-Box Technology
Measuring Success
Strategy first, not systems
Improve client experiences
Enforceable standards, Executive buy-in
KPI’s measure strategy success
Eliminate the C-word
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Consider A Solution That Can . . . Let’s you innovate and experiment
Quickly respond to changes/opportunities
Get your recurring revenue business to market in weeks/months
Delight customers over time, all the time
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#CFOD13Thank You for Attending!
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