subscribed 2015: the cfo summit
TRANSCRIPT
Summit Intro “Share data, unblemished and unbiased, in an effort to provide transparency and define best practices, but also create a network for ongoing collaboration that lives on long past this afternoon.”
#subscribed15
Today 1: 30 – 2:30
Metrics + Trends for 2015: Unveiling the Survey
Zuora | Pivotal 2:45 – 3:30
The Path to IPO: The CFO’s Perspective
Zuora | Box | Zendesk | Hubspot
3:45 – 4:30
How Wall Street Values Subscription Businesses
Cannacord | KPMG
4:30– 5:00
Closing Remarks + Libations #subscribed15
IPOs in 2014. or 55 of the IPOs were in Tech. of Tech were either Software or Internet/New Media.
263 20% 73%
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of companies believe their customers are switching to new consumption models.
4 / 5 83% 73%
84%
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Businesses are Responding US 13% 28%
AU 24% 43%
UK 25% 23%
Over half of companies are in the process of changing or have changed the way they price and deliver their goods and services.
51%
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“Innovation is the hottest word in business…
…but most of the discussion centers
around products and services. The
more profound challenge for most
companies now is imagining a new
business model, a new answer to the
fundamental question, how do we make
money?” - Fortune Magazine
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“…vast majority (81%) felt they worked at companies that viewed their finance operation as a ‘strategic business
partner,’ involving the CFO in top-level decision making
as never before…”
- Fortune Magazine
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10% 0% 5% 15% 20% 25% 30% 35% 40%
38% 26%
Traditional tasks
19% 20%
Directly assisting the board/audit committee
18% 24%
Business strategy and other commercial work
15% 16%
Market and shareholder information
10% 14%
Enhancing the efficiency of the finance function
Current
3 years time
How CFOs are allocating their tasks…
…today and tomorrow. Survey
“There’s been an evolution in America in terms of the CFO. The CFO is increasingly being called upon to weigh in on much more strategic decisions involving the company, including everything from transactions to providing assessments of emerging markets and analyses that go far beyond looking at the books and determining whether there will be enough cash to support investment.”
- Fortune Magazine
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“CFOs’ responsibilities go well beyond finance into balancing compliance and risk management with business-performance goals. They have an important role to play in reading and understanding evolving business drivers and helping their companies seize opportunities. CFOs now spend more time on strategy and operating issues and less on budgeting and accounting.”
- Business Week
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o b s o l e t e . Your business model is
everything you think you know Assume this:
doesn’t work anymore. about staying competitive
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The new model
Build a widget. Recognize your revenue.
complex. Sell the widget. Acquire customers & monetize relationships.
free trial
paid subscriptions
add on
upgrade renewal
#subscribed15
The new model
Build a widget. Recognize your revenue.
complex. Sell the widget. Acquire customers & monetize relationships.
free trial
paid subscriptions
add on
upgrade renewal
#subscribed15
Price. Find your sweet spot.Dynamically adjusting pricing and packaging is the
surest way to attract and retain customers, and
multiply the value of your relationships.
Collect. Get paid.Collect payments instantly through automated and
manual channels, while maximizing completed
transactions and minimizing write-offs.
Measure. No paper, no worries.Analytics make forecasting, accounting close and audits
a breeze. Plus, it gives you the right insight into your
subscribers, so you can make smarter decisions.
Acquire. Go get ‘em.Boost subscription rates with tools like flexible
pricing, promotions, integrated quoting and
multi-channel commerce.
Nurture. Build beautiful relationships.Keep your customers engaged and happy. Seamlessly
manage rapidly changing upgrades, conversions,
renewals and other orders.
Iterate. Try something new every day.Subscriptions can involve complex customer
relationships. Zuora lets you iterate and test
what’s working with just a couple of clicks.
Bill. Easy.Subscriptions mean more invoices and more
payments. Automatically generate fast, accurate
bills and deliver them online.
Account. Measure everything. Twice.Zuora plugs straight into your accounting software and
General Ledger. Register subscription transactions
and process deferred revenue with ease.
Scale. Get growing.Zuora is built on a secure, scalable technology
infrastructure. So wherever you start out, we’ll
keep the system running as you grow.
Price
Collect
Measure
Acquire
Nurture
Iterate
Bill
Account
Scale
SUCCESSCYCLE
The Metrics
#subscribed15
The Metrics
Price. Find your sweet spot.Dynamically adjusting pricing and packaging is the
surest way to attract and retain customers, and
multiply the value of your relationships.
Collect. Get paid.Collect payments instantly through automated and
manual channels, while maximizing completed
transactions and minimizing write-offs.
Measure. No paper, no worries.Analytics make forecasting, accounting close and audits
a breeze. Plus, it gives you the right insight into your
subscribers, so you can make smarter decisions.
Acquire. Go get ‘em.Boost subscription rates with tools like flexible
pricing, promotions, integrated quoting and
multi-channel commerce.
Nurture. Build beautiful relationships.Keep your customers engaged and happy. Seamlessly
manage rapidly changing upgrades, conversions,
renewals and other orders.
Iterate. Try something new every day.Subscriptions can involve complex customer
relationships. Zuora lets you iterate and test
what’s working with just a couple of clicks.
Bill. Easy.Subscriptions mean more invoices and more
payments. Automatically generate fast, accurate
bills and deliver them online.
Account. Measure everything. Twice.Zuora plugs straight into your accounting software and
General Ledger. Register subscription transactions
and process deferred revenue with ease.
Scale. Get growing.Zuora is built on a secure, scalable technology
infrastructure. So wherever you start out, we’ll
keep the system running as you grow.
Price
Collect
Measure
Acquire
Nurture
Iterate
Bill
Account
Scale
SUCCESSCYCLE
Growth Efficiency Index Cost to acquire customers in comparison to new ACV
#subscribed15
The Metrics
Price. Find your sweet spot.Dynamically adjusting pricing and packaging is the
surest way to attract and retain customers, and
multiply the value of your relationships.
Collect. Get paid.Collect payments instantly through automated and
manual channels, while maximizing completed
transactions and minimizing write-offs.
Measure. No paper, no worries.Analytics make forecasting, accounting close and audits
a breeze. Plus, it gives you the right insight into your
subscribers, so you can make smarter decisions.
Acquire. Go get ‘em.Boost subscription rates with tools like flexible
pricing, promotions, integrated quoting and
multi-channel commerce.
Nurture. Build beautiful relationships.Keep your customers engaged and happy. Seamlessly
manage rapidly changing upgrades, conversions,
renewals and other orders.
Iterate. Try something new every day.Subscriptions can involve complex customer
relationships. Zuora lets you iterate and test
what’s working with just a couple of clicks.
Bill. Easy.Subscriptions mean more invoices and more
payments. Automatically generate fast, accurate
bills and deliver them online.
Account. Measure everything. Twice.Zuora plugs straight into your accounting software and
General Ledger. Register subscription transactions
and process deferred revenue with ease.
Scale. Get growing.Zuora is built on a secure, scalable technology
infrastructure. So wherever you start out, we’ll
keep the system running as you grow.
Price
Collect
Measure
Acquire
Nurture
Iterate
Bill
Account
Scale
SUCCESSCYCLE
Retention Rate Lost ARR from customers
churning or downselling
#subscribed15
The Metrics
Price. Find your sweet spot.Dynamically adjusting pricing and packaging is the
surest way to attract and retain customers, and
multiply the value of your relationships.
Collect. Get paid.Collect payments instantly through automated and
manual channels, while maximizing completed
transactions and minimizing write-offs.
Measure. No paper, no worries.Analytics make forecasting, accounting close and audits
a breeze. Plus, it gives you the right insight into your
subscribers, so you can make smarter decisions.
Acquire. Go get ‘em.Boost subscription rates with tools like flexible
pricing, promotions, integrated quoting and
multi-channel commerce.
Nurture. Build beautiful relationships.Keep your customers engaged and happy. Seamlessly
manage rapidly changing upgrades, conversions,
renewals and other orders.
Iterate. Try something new every day.Subscriptions can involve complex customer
relationships. Zuora lets you iterate and test
what’s working with just a couple of clicks.
Bill. Easy.Subscriptions mean more invoices and more
payments. Automatically generate fast, accurate
bills and deliver them online.
Account. Measure everything. Twice.Zuora plugs straight into your accounting software and
General Ledger. Register subscription transactions
and process deferred revenue with ease.
Scale. Get growing.Zuora is built on a secure, scalable technology
infrastructure. So wherever you start out, we’ll
keep the system running as you grow.
Price
Collect
Measure
Acquire
Nurture
Iterate
Bill
Account
Scale
SUCCESSCYCLE
Recurring Profit Cost to service your customer
base and organization
#subscribed15
The Metrics
Price. Find your sweet spot.Dynamically adjusting pricing and packaging is the
surest way to attract and retain customers, and
multiply the value of your relationships.
Collect. Get paid.Collect payments instantly through automated and
manual channels, while maximizing completed
transactions and minimizing write-offs.
Measure. No paper, no worries.Analytics make forecasting, accounting close and audits
a breeze. Plus, it gives you the right insight into your
subscribers, so you can make smarter decisions.
Acquire. Go get ‘em.Boost subscription rates with tools like flexible
pricing, promotions, integrated quoting and
multi-channel commerce.
Nurture. Build beautiful relationships.Keep your customers engaged and happy. Seamlessly
manage rapidly changing upgrades, conversions,
renewals and other orders.
Iterate. Try something new every day.Subscriptions can involve complex customer
relationships. Zuora lets you iterate and test
what’s working with just a couple of clicks.
Bill. Easy.Subscriptions mean more invoices and more
payments. Automatically generate fast, accurate
bills and deliver them online.
Account. Measure everything. Twice.Zuora plugs straight into your accounting software and
General Ledger. Register subscription transactions
and process deferred revenue with ease.
Scale. Get growing.Zuora is built on a secure, scalable technology
infrastructure. So wherever you start out, we’ll
keep the system running as you grow.
Price
Collect
Measure
Acquire
Nurture
Iterate
Bill
Account
Scale
SUCCESSCYCLE
One-time Charges Any non-recurring revenue and costs (e.g. hardware / services)
#subscribed15
THIS DOESN’T MEAN WE HAVE A HALL PASS. THERE STILL NEEDS TO BE AN OWNER.
“The benchmark for these metrics don’t exist in the public domain. They are not GAAP.”
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A R R n – Churn + A C V (+/- FX impact) = A R R n + 1
Even the simplest of formulas will evolve…
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The model…
COGS, G&A, R&D
50% Recurring
Profit Margin
Sales, Marketing, Customer Success
BREAK EVEN
0%
100%
50%
ARR Non-Growth Expense
Growth Expense
BREAK EVEN INVEST IN FIELD & GROW FASTER
Sales, Marketing, Customer Success
OR
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Growth is best measured by GEI.
$100M Growth Exp.
1.5 GEI = $65M ARR
Growth
Therefore, if GEI is 1.5 and $100M is spent on growth:
Growth Expense
ARR Growth =
Growth Efficiency
Index (GEI)
Growth Expense
GEI = ARR
Growth
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• incurred to maximize ACV • traditionally sales & marketing efforts • sometimes customer success
• incurred to support the organization • traditionally COGs, R&D, admin functions
GROWTH SPEND NON-GROWTH SPEND
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The model interpreted…
COGS, G&A, R&D
50% Recurring
Profit Margin
Sales, Marketing, Customer Success
BREAK EVEN
0%
100%
50%
ARR Non-Growth Expense
Growth Expense
BREAK EVEN INVEST IN FIELD & GROW FASTER
Sales, Marketing, Customer Success
OR
With a GEI of 1.0 and churn at 15%, you’ll have 35% growth while maintaining break even. But only if deals are collected upfront and you’re cash flow positive. But, if your GEI is 2.0 you’re growth will slow to 10% to break event.
“ “
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Winston Churchill
INTRO
However beautiful the strategy, you should occasionally look at the results.
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10%
60%
50%
40%
30%
20%
70%
80%
90%
100%
0%
34% 40%
90%
62%
> $50M in TTM Rev
> 200 employees
Software Recurring only
Pipeline
• How do you drive pipe • How much do you need
• Quality vs. Quantity
• How long does it last
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PIPELINE: What does your funnel look like?
Of those, 76% clarified that as ORGANIC (website, free trials)
INBOUND is the largest individual source of
pipe (46% listed as primary source)
40% Investing in your website pays off – more than 40% of website visits were unique for majority of respondents
46% 76%
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16%
16%
18%
23%
27%
81-100%
41-60%
0-20% 21-40%
61-80%
PIPELINE: What comes from inbound?
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web visits
IB leads
new S1 pipeline
S2 accepted
bookings
ratios
total to unique
web to IB leads
IB lead to IB opp
S1 to S2
win ration
%
%
%
%
%
%
%
PIPELINE: Report on what the funnel looks like
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Pipe Score w/ Targets IBLeads MQLs #New opps $ New Opps IB lead to S1 Conv Rate IB Leads MQLs # New Opps $ New Opps
IB Lead to S1 Conv Rate
Inbound Organic
Inbound Paid
Events / Other
Outbound
AE
TOTAL
QTD Actuals Plan
PIPELINE: Expose, communicate, align
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New Pipe Creation Workable Pipe (Current QTR) Workable Pipe (Nextt QTR) Pipe Score w/
Targets New Opps
(S!) New Opps
(S1) Accept
Opps (S2) Accept
Opps (S2) Acceptance
Rate Quota Workable
Opps (S1-8) Workable Coverage Quota
Workable Opps (S1-8)
Workable Coverage
Northwest
Northwest
Northwest
Northwest
NoAM Enterprise
EMEA
APAC
ROW total
West
East
Commercial Total
ZBR / Other
Total
Previous Week Total
Previous QTR Total
WoW Delta
PIPELINE: Transition to acquire
Acquire
• How do you model • How do you compensate
• How do you drive efficiency in your Sales Org?
• Accelerate, digest or pull back #subscribed15
77% of respondents sell primarily through a
direct sales approach 52% use a self
service model
65% offer their prospects a
free trial period 20% However, only 47% said less than
20% convert from free trial to customer
ACQUIRE: Selling Approach
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ACQUIRE: How do you organize Sales team segmentation stack rank:
Industry Verticals 31%
Customer Rev 26%
# Employees 21%
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ACQUIRE What percentage of your total sales opportunities close?
1-2% 3-5% 6-10% >10%
5%
37%
21%
36%
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ACQUIRE: How to model quota attainment
> 40 %
12% 10%
40 – 60%
39%
60 – 80%
31%
80 – 100%
7%
> 100%
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ACQUIRE: What’s your overassign
$100M in quota on the street
35% >$90M EXPECT
36% $80-90M EXPECT
25% $70-80M EXPECT
2% $50-70M EXPECT
2% < $50M EXPECT
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ACQUIRE: What is OTE to quota?
16% < 150k
26% < 200k
35% < 250k
13% < 300k
10% > 300k
$1M
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ACQUIRE: What are your commission rates?
9% 5% 35% 6- 10% 37% 11 - 15% 12% 20%
CHEAPSKATES
THE NORM
THE NORM
BREAKING THE BANK
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ACQUIRE: Expose, communicate, align
Current Qtr (Current Week) Current
Week Capacity
Corporate Street Closed
#Deals $ACV RVP / AVP
Commit Best Case Technical Buy Off
# Deals $ACV In Contracts
# Deals $ACV
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Deploy
• Profit or break even
• What KPIs should you hold the implementation team accountable to
• Alignment between Sales Professional Services
• When does subscription start
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DEPLOY
Have an implementation component to their
solution
Charge less than 10% of initial year ACV for
the implementation
75% commence the subscription on contract
signing
Of customers go live within 30 days of contract signing
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Run
• Churn is the Achilles heel of any subscription business
• Who owns renewals
• Support versus customer success
• SLAs and uptime commitments
• How does a company learn from service tickets
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RUN: Are your customers committed?
15% Monthly
4% Semi-Annual
73% 1-2 years
> 2 years 7%
Contract Terms
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Expand
• Who owns the upsell
• Sales efficiency depends on farming the existing base
• New usage, new divisions, new products…can all be leveraged as upsell strategy
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EXPAND Upsells are important – over
40% 20%
>60%
14%
of respondents generate more than
of their bookings from upsells
of companies are changing pricing
At least annually
Only every 3 years
Sales reps are the key – companies generating higher upsells assign reps to manage
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EXPAND
42%
51%
7%
Who Manages Upsells?
Customer Success Team
Sales Reps
Other
35%
65%
Do you pay for results?
no
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Conclusion
“As CFOs we have an opportunity and challenge. Own the business model and drive strategic decisions within our organizations.”
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Conclusion
“To be successful, we need information and collaboration. That is why we are here today.”
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Conclusion
“Let’s make it interactive and informational. Have a goal of exiting with at least five new CFO contacts you can collaborate with post summit.”
#subscribed15