success in the subscription economy - brian bell, cmo of zuora

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Success in the Subscription Economy: Relationship-driven Businesses

B R I A N B E L L C H I E F M A R K E T I N G O F F I C E R , Z U O R A February 2013

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What is the

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By 2015, 35% of Global 2000 companies will generate revenue through subscription-based services and revenue models.

1999 Today

Subscription Economy?

BUY NOW SUBSCRIBE

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Consumers Are Embracing The Subscription Economy

“This movement is inadvertently creating a new economic engine that has the potential to reorganize our economy” Sarah Horowitz, The Atlantic

• Designer ties - $11/month (Tie

Society) • Toys for Kids - $23/month (Spark Box) • Convenience – PRICELESS!

• Movies - $5/month (Netflix)

• Bikes - $10/month (Capital Bikes)

• Music - $5/month (spotify)

• Car - $30/month (zipcar)

SUBSCRIBE

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The Tech Industry is Embracing The Subscription Economy

“The global market for SaaS will grow from $21.2 billion in 2011 to more than $92.8 billion in 2016”

Forrester

SUBSCRIBE

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The Media Industry is Embracing The Subscription Economy

“By 2015, more than 40% of media and digital products companies around the world will use subscription services for their fulfillment, billing and renewals” Gartner

SUBSCRIBE

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On Premise Giants Are Buying Their Way Into The Subscription Economy

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“Software giants face tough choices as their core businesses come under attack from pure SaaS players” Peter Golmacher, Cowen Group

IBM acquires DemandTec

SAP pays $3.4Bn for SuccessFactors

Oracle pays $1.4Bn for RightNow

HP takes on Amazon’s cloud services

SUBSCRIBE

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Dollar Rubber Club

Condoms

Wonder Sitter

Baby Sitting

Babbaco

Kids Toys/Activities

Rent the Runway

Women’s Dresses

Bespoke Post

Luxury Items

Mystery Tackle Box

Fishing

Spice Guides

Date Idea

Spotify

Music

Businesses Can Subscribe To Anything

Test Tube

Beauty Samples

Workday

HR

Google Apps

Apps

Amazon

Infrastructure

Zendesk

Helpdesk

Intacct

GL

RingCentral

Phone System

Concur

Travel/Expense

Salesforce

CRM

ServCorp

Virtual Office

Consumers Can Subscribe To Anything

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Why the Subscription Economy ?

Technology Trends

Smart Money Business Model Demand

Subscribe

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The Subscription Economy Requires a Completely Different Approach to Building Businesses

Subscription Economy

Monetizing Customer Relationships

Pay-as-you-Go Pricing Plans

Multiple Orders Over a Lifetime

B2Any: Sell to Consumers & Businesses

Complex, Interrelated Bookings, Billings, & Revenue

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Sell Units

Forced to Pick a Customer Segment

Price Per Unit

One-Time Orders

Simple Financial Metrics

Product Economy

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hasm

The Old World

The New World

12 CFO GM

Business Leaders Struggle With The Limitations Of Existing Systems

Why is it so hard to GROW my business

Why Can’t I Make My Processes FLOW Why Can’t I Find

What I Need to KNOW

COO VP of Sales

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The Strategies Required to Grow a Subscription Business are Very Different

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The Subscription Business Model Is Based Upon Long Term Recurring Relationships

Acquire New Relationships

Increase the Value of Your Relationships

Maintain Relationships

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Packaging & Pricing Strategy

Acquire New Customers

Increase Value Per Customer

Reduce Churn

Launch First Product X

Add-on Options X

Monthly vs Annual Options

X X X

Higher Editions X X

Lower Editions X X

Product Bundles X

Pricing Tiers X X

Usage & Overage X X X

Multiple Currencies X X

Renewals X

Pricing Changes X X

Regional Pricing X

Pricing & Packaging Strategies Drive Growth

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The Processes Required to Make a Subscription Business Flow are Very Different

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Commerce

Billing

Finance

Book Order & Ship It

Invoice & Collect For It

Recognize It

Product Business

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Subscription Business

Quote-To-Cash Renewals Payment Failures Account Suspension Amendments Account Management

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Subscription Business

Commerce

Billing

Finance

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What you Need to Know with a Subscription Business Model is Very Different

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Traditional Income Statement

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Revenue ARR

$0

$100

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Subscription Economy Income Statement

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

Retention Rate

Growth Efficiency Index

Recurring Profit Margin

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The Three Key Metrics of the Subscription Economy

ARR less Churn less Non-Growth

Spend

Recurring Profit Margin

How much of your ARR you

keep every year.

How much does it cost you to acquire $1 of

ACV

Retention Rate

Growth Efficiency

“ The metrics for Cloud computing is fairly different from traditional enterprise software. ” Bessemer Venture Partners – Top 10 Laws for Cloud Computing

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But how do you run a customer focused company…

…with systems meant for the old world?

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Your Systems Today

CRM ERP GL

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I Need a System That Helps me Grow , Flow and Know in the Subscription Economy

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An Integrated Relationship Business Management System

Service Rating & Billing

Secure PCI Payments

Billing & Payments History

Billing Consolidation

Taxation

Payment lifecycle mgmt

Accounting Periods

Accounting Close

Revenue Recognition

Aging Balances

Subscription Metrics

Reporting

Finance

Accounting & Finance

Billing

Billing Ops Commerce

Subscription Service Catalog

Flexible Pricing Models

Multi Channel Commerce

Cross and Upselling

Subscriber Renewals

Product Marketing

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Plugs Into Your CRM and GL

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Our Mission: Help you succeed in the Subscription Economy

FLOW: Run and flow your subscription business processes efficiently.

GROW: Build and grow your subscription business and revenue.

KNOW: Have the right metrics to optimize your subscription business.

Z-Business Helps You Grow, Flow and Know

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N E W Y O R K W A S H I N G T O N D . C . R i t z C a r l t o n B u c k h e a d , A T L A N T A

March 6, 2013 5-9pm EST

http://www.subscribed.com/at.html

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