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DISRUPTING THE TRADITIONAL BUSINESS MODEL
Kim BenitoVP, Global Services APAC, Zuora
Kevin Noonan
Lead Analyst, OvumDavid TanPartner, Deloitte
Digital
DISRUPTING THE TRADITIONAL
BUSINESS MODEL
• Transition from traditional to personalized access and purchase of goods & services
• Overview: 6 enablers of transformational change
• Observations, Challenges and Suggestions
Digital Transformation journeyTransition from traditional offerings towards personalized goods & services
page05
Competitive, and comparative pricing points to improve value for money
Increased use of internet enabled connected devices
Exponential rise in media consumption of multi-screen video services worldwide
Decreased costs of Digital goods & services catalogue
Personalisation is becoming essential
Digital revenue models i.e. subscription or one time payment offer a strong audience engagement that can improve repeat sales.
TRANSFORMATIONAL CHANGE
6 Enablers of transformational changewithin any organisation
01
A Strong Compelling ReasonA strong, compelling reason to motivate transformational change
02
A Clear Vision and StrategyA clear vision and strategy, but with room for agility and iteration
03
A Multi-year JourneyThe patience to know that transformation is a multi-year journey
04
Put the Customer at the CenterThe need to put the customer at the centre of the transformation equation.
05
Proving Success with SkepticsThe importance of demonstrating to skeptics that different actions can lead to different results
06
Over-communicationThe need to over-communicate to employees, customers, stakeholders, shareholders
01External market factors,
industry shifts and changes in buyer
preferences that create a compelling reason for
change.
A STRONG COMPELLING REASON
Unlimited access Core driver towards digital enabled goods & services access and purchase journey
page09
Unlimited access to product & services in real-time
Access to first look products and premium services
Regular renewal, upgrades and maintence of products and services
Highly personalised product and services at disposalDelivery of highest quality of product and services on-time
The ability to always be at the forfront of technology, fashion and trends
None of the above
0
100
200
ANZ: Adoption drivers (2016)ANZ Australia (A) New Zealand (NZ)
Source: Ovum’s B2C Subscription survey (August 2016); N=300
ANZ consumers are embracing both subscription and one time payment modes in the digital transformation era
page010Source: Ovum’s B2C Subscription survey (August 2016);
N=300
1% 2-9% 10-20% 21-30% 31-40% 41-50% 51% and
above
0%5%
10%15%20%25%30%35%40%45% 40%
32%
21%
6%1% 0% 0%
ANZ: Percent of monthly household disposable income for subscription
services (2016)
2-9% 10-20% 0-1% 21-30% 51% and
above
41-50% 31-40%0%5%
10%15%20%25%30%35%40%45%
39%
22%19%
12%
4% 2% 1%
ANZ: Percent of monthly household disposable income for one time
payment (2016)
Almost a third (32-39%) are spending aggressively on subscription and one time payment in the transformation era. So will a hybrid model i.e. transaction and subscription video on demand suit this market?
Subscription based revenue models Fast penetrating every business segment; media sector leading adopter
page011Source: Ovum’s B2C Subscription survey (August 2016);
N=300
83 81
5446 43 40 36 36 34 30 30 27 23 22 21 21 21 19 18 18 17 17 17 16 14
8 5 2
ANZ: Subscription Services by Segments (2016)
02Embracing agile iteration within an established enterprise
A BOLD VISION…BUT WITH ROOM FOR ITERATION
Myth Gen Z (14-25 age) are core customers for digital goods & services
page013
Some of pivotal survey highlights are:
• Almost one-third (36%) of Gen Y (26-35 age) and silent generation (71+ age) have been using any form of subscription service from less than an year.
• Population aged between 26-50 years, control more than half (56%) of total subscription services across ANZ market in 2016. 26-35 36-50 14-25 51-70 71+
34 2813 11 11
36
24
34
9 7
14
108
94
9
13
2
16
8
ANZ: Subscription Services Longev-ity (2016)
Less than 1 year2-5 years6-10 years
More than 10 years
Source: Ovum’s B2C Subscription survey (August 2016); N=300
03Managing
expectations during a multi-year
transformation
TRANSFORMATION: A MULTI-YEAR JOURNEY
04
PUTTING THE CUSTOMER AT THE CENTRE
Designing and delivering an engaging experience for a new set of customers and buyers
Transformation continuous process integration of new goods & services to
improve engagement is pivotal
page016
Connected life paradigm is fast becoming reality. This paves way for service providers to enhance their goods & services offering into multiple segment such as connected healthcare, education, and wealth management.
22%
37%
29%
9%
3%
ANZ: Connected Life ser-vices
likely spend by age (2016)14-25 26-35 36-50 51-70 71+
52
175 5 5
17 8 5 8 4 6
19
21
11 14 1410
10 14 7 8 4
12
4
24 20 15 510 9 11 14
8
ANZ: Value add connected life services
priorities (2017-2019)Top 1 Top 2 Top 3
Source: Ovum’s B2C Subscription survey (August 2016); N=300
Building a life-time trust and loyalty is essential for sustainability
page017
30 21 13 14 10 7 12
39
2522 28
15 13 14
26
18 28 20
6 8 3
18
15 11 5
6 4 3
15
1 6 10
1 2 0
ANZ: Consumers Future Preference
14-25 26-35 36-50 51-70 71+
As consumers move to the next wave of personalization, they will demand for highly trusted global and regional service provider (boundary-less goods & services) offering unique value proposition to enable connected life.
Source: Ovum’s B2C Subscription survey (August 2016); N=300
05the importance of demonstrating to
skeptics that different actions can lead to
different results
PROVING SUCCESS WITH SKEPTICS
06The need to over-communicate to employees, stakeholders, customers during times of change
OVER-COMMUNICATION
CHECK OUT ZUORA ACADEMYAll the info you need to build and run an amazing subscription business.
https://www.zuora.com/academy/