Zuora CMO, David Gee, kicks off Subscribed 2016 in Sydney with a powerful keynote addressing the global impact the Subscription Economy is making on businesses, consumers, and technology. He shares the stage with Michael Addison, Group Manager at Energy Australia, and Danny Gravell, CIO at Sensis.
5. Unilever Buys Dollar Shave Club
European giant to pay $1 billion for startup in challenge to
P&G
6. A GLOBAL PHENOMENON
80%
Of customers are
demanding new
consumption models
– The Economist 2014
50%
Of people in France
are moving away from
traditional ownership
- Institut Français
D’opinion Publique
(IFOP)
80%
Of German
companies have
dealt with the issue
of subscription
business models.
- IDG Research
Services
$420B
Spent on
subscriptions in the
US in 2015; up from
$215B in 2000.
- Credit Suisse
7.
8. THE BEST COMPANIES HAVE
REINVENTED THEMSELVES—AWAY
FROM PRODUCTS
#nogutsnoglory
9. IN THE LAST 15 YEARS, 52% OF THE
FORTUNE 500 COMPANIES
HAVE DISAPPEARED
Average life expectancy 15 years
20151955
Average life expectancy 75 years
vs.
23. SUBSCRIBER
IDENTITY
Demographic data
Behavioral data
Financial data
#dataisgold
Name
Email
Twitter
TRADITIONAL RECORD
Phone
Company
Facebook
SUBSCRIBER IDENTITY RECORD
Purchases
Products
Local Pricing
Promotions
Adjustments
Customer Moments
Usage metrics
Add-Ons
Payment history
Refund history
Lifetime Value
Renewal Value
Aging balance
New world:
Old world:
26. A Changing Landscape
Social change driving shift in housing
demands
• Urban Living
• Aging population
Technology disrupting energy industry
• Energy efficiency
• Solar & Storage
• Electric vehicles
• Digital meters & data
Regulatory changes challenging the
norm
27. The Embedded Networks Company
• Working with developers, builders and
property managers to deliver energy
services to the customers in multi-tenanted
buildings
• Evolving Business Model disrupts the
status quo
• Customers “subscribe” to a range of
energy products & services that we
manage
• Approach: Launch => Learn => Evolve
28. Why Zuora?
• SaaS based platform – rapid delivery,
digital customer experience, agile scaling
– cost effective (ROI & TCO)
• “Best in Class” subscription principles and
processes
• Feature rich capabilities and strong
roadmap (i.e.: reporting engine)
• Alignment to compliance needs (e.g.: ISO
2700x, PCI-DSS & Australian Privacy
Policy
29. THE NEW VP GROWTH
From selling things to monetizing outcomes
#morevalue
30. GROW RELATIONSHIPS NOT
TRANSACTIONS
Growth in the old world
1. Selling more units
2. Lowering per-unit cost
3. Increasing prices
Growth in the new world
1. Acquiring more customers
2. Lowering churn
3. Increasing value per
customer
31. 1. Acquire customers for a new
service
2. Expand into a new geography
3. Move into a new segment
4. Launch new pricing model
5. Cross-sell or upsell new
offerings
6. Reduce churn
7. Grow your sales team
8. Acquire or spin-off business
8
STRATEGIES
FOR GROWTH
48. Product Growth Finance
THE PROBLEM STATEMENTS
IT Leadership
Fragmented
view of
subscribers
Systems
can’t
support
your
pricing and
packaging
Outdated
view of
your
business
Disparate
systems
with rigid
architectures
No single
view of your
subscription
business
49. THAT’S WHY WE BUILT ZUORA
A unified platform for the subscription economy
Platform
Integration Scalability Reliability Security Compliance Extensibility
Pricing &
Packaging
Billing AnalyticsPayments Revenue
Subscriber
Manageme
nt
Quoting
Pricing
Bundling
Entitlements
Rating
Taxation
Billing
Collections
Dashboards
Sub. Identity,
Report Builder
Segmentation
Triggers
Credits
Adjustments
Online
Payments
Offline
Payments
GL Integration
Revenue
Recognition
Accounting
Close
Roll-Up
Cross-sells
Upsells
Renewals
360 Sync
Configuration
Guided Selling
Rules Engine
50. BUILD YOUR ENTIRE BUSINESS
UNDER ONE ROOF AND AROUND
YOUR SUBSCRIBERS
51. WHAT DOES IT LOOK LIKE WHEN
YOU’RE DOING IT RIGHT?
#subscriptionbliss
52.
53. THE FUTURE IS BRIGHT
Transformation is the opportunity
WELCOME TO OUR THIRD SUBSCRIBED SYDNEY
I’m so excited to be here today with all of you in Sydney to talk about the future of business.
This is our biggest event here ever.
So what is the one major thing that brought us all to this room today?...
David enters from downstage, energetic.
WE NOW LIVE IN A SUBSCRIPTION ECONOMY
This is what we’ve been talking about for the past 8 years… the arrival of the subscription economy
A better way of doing business…At the heart of the Subscription Economy is the idea that customers are happier subscribing to outcomes they want, when they want them, rather than purchasing a product with the burden of ownership
Those of you in SaaS, you got this from the beginning – but now everyone else is moving this way too
YOU SEE IT IN THE HEADLINES…
Not a week passes without someone sending me news about a new subscription service
Forbes, NYT, Fortune, Mad Money
Announcements form huge brands: Spotify, PlayStation, Adidas, even completely new airlines like SurfAir.
Plus, Dollar Shave Club acquired by Unilever for $1B.
Dollar Shave Club (which isn’t profitable) has signed up 3.2 million members for its mail-order service that ships out disposable razors and other grooming products for a flat monthly fee.
THIS IS A GLOBAL PHENOMENON
The Subscription Economy is not something that is limited to a few regions, we see this change happening around the world
Studies have been done – by the Economist, by independent research groups across the globe
In this last year we’ve been asked to hold our Subscribed events in London, Paris, Tokyo, Stockholm, Tel Aviv, and San Francisco, and now our first third one in Australia
4/5 people in the UK have a subscription service
76% of younger consumers (16-24) have subscriptions and place significant important on the convenience of not having to regularly buy products and having instant access to what they need
And while millennials are helping drive widespread adoption of subscription services, data shows that more mature audiences rely on the automatic and recurring delivery of products and services in their daily lives.
This is a global phenomenon that is only getting started. In fact…
THE BEST COMPANIES HAVE REINVENTED THEMSELVES AWAY FROM PRODUCTS
Completely rethinking their value proposition
Adopting new business models
Building new kinds of relationships
Just take a look at the fortune 500…
IN THE LAST 15 YEARS, 52% THE FORTUNE 500 COMPANIES HAVE DISAPPEAREED
Since 2000, 52 percent of the names on the Fortune 500 list are gone, either as a result of mergers, acquisitions or bankruptcies
50 years ago the life expectancy of a Fortune 500 firm was around 75 years. -- Now it’s less than 15 years and declining all the time
But what is interesting to look at is:
WHO SURVIVED THIS MASS EXTINCTION?
Let’s look at the companies that are still around, and thriving…
GENERAL ELECTRIC (GE)
GE started out by making and selling light bulbs in the days of Thomas Edison. But today GE has transformed into a diverse conglomerate with 300,000 employees that generates most of their revenue from services, not products.
“The digital company. That is also an industrial company”
But in commercials during the Oscar’s, GE ran commercials with the tagline “The digital company. That is also an industrial company.” (People are starting to realize that GE is an exciting digital company solving the world’s problems – now everyone wants to work there. Employees keep getting ‘ambushed’ by friends for jobs)
This message show’s the value GE is placing on digital – this adaptation and focus is what allowed them to survive and remain on the F500 list
IBM
IBM was #61 in 1955 and #24 on the 2015 Fortune 500 list.
IBM originally sold commercial scales and punch card tabulators and they now sell IT services.
IBM has completely transformed from a product manufacturer to a business services giant.
IBM is now working on Watson – a technology platform that uses natural language processing and machine learning to reveal insights from large amounts of unstructured data. They are now in the business of cognitive services – a pretty exciting departure from where they started
Talk about HP. They’ve gone from A to B. Why are they facing these strategic headwinds?
AMAZON, GOOGLE, APPLE, FACEBOOK, SALESFORCE
These guys are the relationship-makers
These are some of the top brands on the Fortune 500 list, all whom were not yet thought of 75 years ago
These brands rose to the risen to the top so quickly multi blillion dollar comapnies by focusing on defining relationships
Think about it: You have an ID or a personal profile that you use in all your ongoing interactions with these brands: Apple, Amazon, Gmail/Google+, Facebook, Salesforce Chatter, etc.
They know your purchase history, your account usage, your preferences, your friends, - they can provide personalized recommendations and a tailored experience based on this knowledge
THAT is what sets them apart from the Wal-mart’s of the world. And look at what’s happening to their business:
Google earnings: 21% year-over-year increase in revenue. $4.88 billion in net income on $21.5 billion in revenue during the second quarter of 2016.
Facebook earnings: Total revenue grew by 59% year-over-year to $6.4 billion, and advertising revenue was up 63% to $6.2 billion. $2.05 billion in net income during the second quarter of 2016.
Amazon earnings: $857 million in the second quarter on $30.4 billion in revenue; Amazon web services revenue was up to $2.57 billion — ahead of the $2.53 billion that analysts were expecting. That’s up from $1.57 billion in the same quarter a year ago, a jump of about 64%.
UBER, NETFLIX, AIRBNB, BOX
Then you have companies like Uber, Netflix, Spotify, Box --- the new disruptors with a new value proposition
These companies came in and took everyone by storm – they invented completely new markets, new services, new business models, new technology platforms.
Leaving many established companies trying to play catch-up
As consumers we love these brand, we love these services, we love the value they provide us. Value that goes way beyond what a single product could ever give
My guess is that it won’t t be long before they are topping the F500 list
WHAT IS THE COMMON THREAD?
Whether you are GE, Amazon or Uber --- all these companies are succeeding because they recognized that customers in the digital world are different.
Delivering services; customer value
They realized:
You can’t get comfortable in your established business
You have to deliver value to your customers beyond a singular product
The “one-size fits all” approach isn’t going to cut it anymore
All these companies understand that….
THE WAY PEOPLE BUY HAS CHANGED FOR GOOD
The world is changing because customers have changed in this digital age. You and I, we, have new expectations as consumers
1. Outcomes, not ownership.
2. Customization not generalization.
3. Constant improvement, not planned obsolescence.
We want a new way to engage with businesses...
The subscription market in Australia is booming
Entertainment: Spotify, Foxtel, Stan, Presto, and Netflix
Automotive: GoGet
Food: Harvest Box and Hello Fresh
Beauty: Bellabox
Technology: Atlassian and design tool Canva
WE WANT THE SUBSCRIOPTION EXPERIENCE
We want to subscribe to services because subscription services meet our demands and deliver our desired outcomes better than a singular product
On going value
On-demand Fulfillment
Anywhere, real time
Memorable experiences that are consistent across all channels and interactions
Personalized offers tailored for our unique needs
We may be the last generation who needs a car and/or learns to drive
The Subscription Economy is:
A NEW ERA – WITH A NEW IMPERATIVE FOR ALL COMPANIES : TURN YOUR CUSTOMERS INTO SUBSCRIBERS
building long term subsriber relationships is the only thing that can set you apaprt to day.
This is your key to success
This is what we’re here to talk about today
HAVING SUBSCRIBERS MEANS A NEW WAY OF THINKING
It’s no longer about a product-first mindset or single transactions - That was the old world
In the new world it’s about starting with the subscriber first – and developing multi-channel experiences to meet them wherever they are
This new way of thinking effects every single department, every single person in your company
It’s creating a new set of roles and is transforming roles and reinventing careers
Whether you are in: Product, Sales, Marketing, Finance, IT, etc.
THE CHALLENGE IS: old, legacy systems weren’t built for this new world, this new mindset, these new roles…
THE NEW VP PRODUCT
From one-time products to continuous innovation
A CPO used to design individual products, but is now focused on delivering outcomes and on-going value through designing service-based experiences. To design products that people truly love, today's CPO has to have a deep understanding of individual customer needs and expectations
Subscribers = ongoing relationship ; constant opportunities to interact with them, every interaction is a chance to know them better interaction
HELLOFRESH
Healthy meal delivery service
Chef-created, easy to prepare recipes. Meals are interesting yet simple. Fresh food for a balanced and varied diet.
Subscribers = ongoing relationship ; constant opportunities to interact with them, every interaction is a chance to know them better interaction.
That understanding comes from building a relationship and leveraging the data they are collecting…
IT STARTS WITH YOUR SUBSCRIBER IDENTITY
Traditional record vs Subscriber identity record
Demographic data
+ Behaviorial data
Financial Data all combined
Your data is gold
THE NEW PRODUCT IMPERATIVE
Know your subscribers
Innovate constantly
Deliver experiences
To give you more insight into how this is playing out in Australia, it is my pleasure to introduce Mike Addison, Group Manager at Energy Australia
Mike enters from downstage, energetic.
THE NEW VP GROWTH
From selling things to monetizing outcomes
Growth has changed. It’s not about units and margins.
FOCUSED ON GROWING RELATIONSHIPS NOT TRANSACTIONS
Growth in the OLD WORLD
Selling more units
Lowering per-unit cost
Increasing prices
Growth in the NEW WORLD
Acquiring more customers
Lowering churn
Increasing value per customer
8 STRATEGIES FOR GROWTH – after talking to hundreds/thousands of subscription companies
CHANCES ARE YOU ARE THINKING ABOUT:
One or more of these things:
Acquire customers for a new service
Expand into a new geography
Move into a new segment
Launch new pricing model
Cross-sell or upsell new offerings
Reduce churn
Grow your sales team
Acquire or spin-off business
THIS MEANS PRICING & PACKAGING IS YOUR STRATEGIC WEAPON
This goes way beyond CPQ
This is about usage based, experimentations, you need to test and iterate
It’s about flexibility and agility
Gives you the ability to price by cohort
You can identify your highest and lowest value customers
THE NEW GROWTH IMPERATIVE
Digital transformation
Build relationships
Monetize anything
THE NEW CFO:
From cost-accountant to business model architect
Finance is a changing. Moving from reporting to guiding and predicting and leveraging new analytics
NEW CFO NEEDS A NEW INCOME STATEMENT
Recurring revenue
Churn
Recurring Profit Margin
Growth Efficiency
THE NEW FINANCE IMPERATIVE
Own the model—adopt subscription financials –
New metrics – 3 that matter
MRR, ACV, Growth Efficiency Index
The NEW CIO
From rigid standards to enabling agility
Monolithic ERP
To be a contrarian, we can make the case today that ERP is dead. That’s Oracle + Netsuite.
New world: systems that support growth and flexibility
And relationships not transactions
Gartner: FROM SYSTEMSO OF RECORD TO SYSTEMS OF INNOVATION
Not the rearview mirror vs. looking out the front of the car
OR history channel vs discovery channel
THE NEW RULE FOR IT
Deliver agility to your business –
Unlocking innovation
flexibility, speed.
Key is new ecosystem is centered around subscriber
To tell us more about how this is taking place in Australia today, I’ve invited Danny Gravell, CIO of Sensis to join me today.
He has extensive experience as an IT leader having worked across the telecommunications, media and advertising, and financial services sectors.
He joined Sensis in June 2011, and was appointed CIO in 2012 and leads the Product and IT teams at Sensis.
Please join me in welcoming—Danny Gravell.
Danny enters from downstage, energetic.
The final role that is transforming is the CEO
Break down the silos, build a subscription culture
You are leading the charge of turning customers into subscribers - a whole new vision for your company and you need to help everyone get on board
THIS IS HOW YOU OPERATE TODAY
Siloed departments
Marketing
Product
Sales
Finance
IT
Operations
THE NEW RULE FOR CULTURE
Subscribers are now at the center of your business
Wrap your entire org around them
This new way of thinking effects every single department, every single person in your company
It’s creating a new set of roles and is transforming roles and reinventing careers
Whether you are in: Product, Sales, Marketing, Finance, IT, etc.
THE CHALLENGE IS: old, legacy systems weren’t built for this new world, this new mindset, these new roles…
THIS IS WHY WE BUILT ZUORA
A unified platform for the Subscription Economy
A system specifically designed to needs of modern subscriber-centric and service-based companies
Zuora helps companies:
Keep customers consistently engaged in long-term relationships,
Experiment with new business models
Achieve their growth goals
Build a subscription culture
Set the foundation for a better, healthier, more predictable business
BRING YOUR ENTIRE BUSINESS UNDER ONE ROOF AND AROUND YOUR SUBSCRIBERS
A single view of your subscribers.
A modern cash ecosystem.
Price and bill for anything
All your revenue in one place
Tee Up Tom’s Session
This afternoon, Tom, our SVP of Product will show you how Zuora helps you turn your customers into subscribers
Through a live demonstration, you’ll get to see exactly what it looks like when every department in your organization focuses on the customer relationship
These are the outcomes you’ll want to optimize your subscription business
WHAT DOES IT LOOK LIKE ACROSS AUSTRALIA, NEW ZEALAND, AND SOUTHEAST ASIA WHEN YOU’RE DOING IT RIGHT?
THE FUTURE IS BRIGHT
Transformation is the opportunity
In addition, we have an amazing wealth of information on line at the Subscribed Academy
Top Assets:
9 Keys to Building a Successful Subscription Business
Defining a Winning Subscription Price Model
Guide to Innovative Subscription Pricing Strategies