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2001! 2011
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By 2015, 35% of Global 2000 companies will generate revenue through subscription-based services and revenue models.
April 2011: Building a Strategy for the Subscription Economy
The World is Moving to a Subscription Economy
Amazon Prime slide
Amazon logo is ragged
Graze.com slide, in style of dollar shave club
HIGH TECH
SAAS
CLOUD
MEDIA
DEVICES
TELECOM EDUCATION
HEALTH CARE
FINANCIAL SERVICES
CONSUMER
Can we show a globe with dots represen=ng the ci=es (or countries
colored in) where we have customers? Or even include past customers. Or even
include pipeline.
Also keep the quote
No reason to list # customers, I’ll speak to it
Zuora Receives £36m For European Expansion
It’s Spreading Around the Globe
The Global 2000
Add VNU, Neopost, GDF Suez, Deutsche Telekom
The Zuora Community is Ground Zero
20 Billion
Contracted Invoice Volume
1 New Product Created Every Hour
On Average …
The Face of Innovation
10X Growth
10,012,288
1,536,533 AUG 2012
AUG 2013
Investing in Technology
25X 10X 60X Faster Syncs Faster bill runs More capacity
Customer Success Staff
2012 2013
Investing in Customer Success
100
90 93 91 95 98
94 96 97 97
0
25
50
75
100
Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13
“Got my answer in 7 minutes!”
Ruggero Ferreti ,
“Am very satisfied with the prompt responses to my query.
Gelai is very helpful ”
Nicoal Wylie,
“Lightning Fast!”
Jason Goodworth,
Why is All This Happening?
Technology Trends Smart Money Business Model Demand
Mobile
Social Businesses want to subscribe
to services
Consumers want to subscribe to services
Wall St. and Sand Hill Value Subscrip=on-‐Based
Companies
Cloud
Today, there is a Better Way To Build a Business
Business Should Be Built on Win / Win Relationships
Business Should Be Built on Stable Recurring Revenue
Graphic doesn’t speak to me. Plus it’s not up and to the right.
Business Should Be Built on Efficient use of resources
Win/Win Relationships One-time transactions
Better Businesses are Focused on
Sustainable, forward-looking revenue
Efficient, consumption- based services
Fair, value-based pricing
Backwards-looking financial reporting
Shipping unit after unit
Fixed, cost-plus pricing
The Subscription Economy Is A Better Way of Doing Business
Building Better Businesses Individual companies instead of people
See spreadsheet I sent
We analyzed 6 years of data
1 million conversations with people building better businesses
“What is the best way to price?”
“How do I reduce churn?”
“How should I compensate my sales force?”
“How do I reduce the number of failed credit card transactions?”
“Should I charge a setup or implementation fee?”
“How do I account for multi-year contracts?”
“As I expand internationally, what payment or tax issues will I encounter?”
“Should I offer monthly or annual billing periods?”
We analyzed 6 years of data
A picture starts to emerge
You are trying to Price Acquire Bill Collect Nurture Account Measure Iterate Scale
You are trying to
Price Acquire Bill Collect Nurture Account Measure Iterate Scale
Price 11%
Acquire 12%
Bill 14%
Collect 12%
Nurture 11%
Account 11%
Measure 9%
Iterate 11%
Scale 9%
Support Cases Categorized By 9 Things
Introducing the 9 Keys to Success in the Subscrip=on Economy
PRICE
ACQUIRE
BILL
COLLECT
NURTURE
ACCOUNT
MEASURE ITERATE
SCALE
Simple per-unit pricing
Infinite pricing options
2220000000
? A new way to think about pricing
Increase Cash Flow
Drive Down Cost of Sales
Outflank the competition
Grab Market Share
Increase Loyalty and Retention
Pivot into a new segment
Expand Internationally
The Ability to Price in support of your business goals
is the first Key for Success in the Subscription Economy
It sounds easy
Billing
Gateways
fulfillment
provisioning
Immediate or delayed payment
Connect to CRM
Notify
Connect to accounting
Self service vs assisted flows
But it’s Harder Than It Seems
We live in a B2Any world
B2C B2B
The Ability to Quickly Acquire Customers in a B2Any World
is the second Key for Success in the Subscription Economy
Billing used to be simple
Ship Bill
$10
new customers
Existing customers
Pro-rate Usage
Ship Bill
Confused customers
Weeks to generate bills
Billing Errors
Lost Revenue
1
2
3
4
Every bill is an interaction with your customer
“But I signed up for the $100/month plan”
The Ability to Create Accurate, Clear Invoices at Scale
is the third Key for Success in the Subscription Economy
Electronic payments Non-electronic payments
Credit Cards Debit Cards Wire transfers
Catch exceptions
Multiple card types Country specific
banking rules
Retries Card updaters
Manual Lockbox
Receive payment
Notify delinquents
Write off payment Reconcile Suspend service
The need to automate
ACH
Handling of Exceptions
The Ability to Tame the Complexity of Payments
is the fourth Key for Success in the Subscription Economy
Build Valuable Relationships
The Secret: Give Customers Control of the
Relationship
Remember the 2nd Key: Acquire?
Subscribe
That Was Just the Beginning
Subscribe
Renew
Suspend
Add-on
Upgrade
Sign up
Validate CC Validated
Create Bill Process Payment
Create Account
Link Account
Confirm Sign Up
Welcome Email
Create Subscrip=on
Provision Service
WEB
SITE
BILLING
CRM
PLAT
FORM
The Ability to Nuture And Develop Deeper Customer
Relationships is the fifth Key for
Success in the Subscription Economy
“I’ve got this massive spreadsheet I use to track Revenue”
“It’s Taking Longer and Longer to Close My Books”
“It’s becoming harder to harder to reconcile financial info across all my
different systems”
“The IT department used to be known as Dr. No …. But now, it’s the finance
department”
There’s no accounting for subscriptions
Booking
Subscription
Billing
Cash
Revenue
The Ability to Easily and Quickly Account for
Bookings, Billings, Cash and Revenue is the sixth Key for
Success in the Subscription Economy
You used to track these metrics
Revenue $100 COGS (30) Gross Profit 70 Opera=ng Expenses S&M (20) G&A (10) R&D (20) Total Op Ex (50)
Net Income $20
Now you track these metrics
ARR $100 Churn (10) Net ARR 90 COGS (20) G&A (10) R&D (20) Recurring Profit 40 Growth (40) Net New ARR 40 Ending ARR $130
Your current applications don’t give you the metrics you need
The Ability to Instantly Access
Subscription Economy Metrics is the seventh key for
Success in the Subscription Economy
Pricing iteration is crucial to support growth
You can’t afford this …
“The next available engineer will see you in 6 months”
The ability to Rapidly Iterate On Your Pricing and
Acquisition Strategies is the eighth key for
Success in the Subscription Economy
Why build all this into your service?
Pricing
Payments
Taxation
Billing
Rev Rec
Secure
Mission Critical
Scalable
Rating
When you could do this?
Integrate with an ecosystem that supports your service
Customer support
Inventory
Fulfillment
EnJtlements
Website
Provisioning
Commerce
Billing
Finance
Payments
GL
quoJng
orders
invoices
checks
events
account status
account balance
metrics
The ability to Run on a Scalable, Reliable, Mission
Critical Infrastructure is the ninth key for
Success in the Subscription Economy
Introducing the 9 Keys to Success in the Subscrip=on Economy
These are the 9 Keys to Success in the Subscription Economy
These are the 9 Keys to Building a Better Business
Build a Business
Live the 9 Keys
Join the Revolution
Join the RevoluJon
www.subscrip=onmanifesto.com via the Subscribed Mobile App via Manifesto signing sta=ons
#subscripJonmanifesto
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