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
#Subscribed13 tweets will receive 50% off first shipment
The Zuora Community is Ground Zero
The Face of Innovation
HIGH TECH
SAAS
CLOUD
MEDIA
DEVICES
TELECOM EDUCATION
HEALTH CARE
BUSINESS SERVICES
CONSUMER
The Global 2000
20 Billion
Contracted Invoice Volume
1 New Product Created Every Hour
On Average …
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
"Prompt response even though was delegated non urgent"
Lauren Wood,
"The response was quick and detailed."
Jalal Radwan,
"Amazing as usual. Thanks Rossi.”
Juan Delard de R.
We analyzed 6 years of data
1 million conversations with subscription economy leaders
“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
Importance of each of the 9 things
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9
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 SubscripNon 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
NCR Silver
automated commerce, billing and finance
launched new service
in just 2 months
Bill Plummer
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”
with complex usage billing models
hands-off invoicing for thousands of clients
in multiple countries
Firehost Katrena Drake
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
DIRECT DEBIT
Handling of Exceptions
Xplornet
Xplornet processes hundreds of thousands of payments in
hours
Across multiple payment methods
And manages payment exceptions and retries
automatically
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 SubscripNon
Provision Service
WEB
SITE
BILLING
CRM
PLAT
FORM
News InternaKonal
Implemented “Holiday Stops”
allowing hundreds of thousands of subscribers
to suspend service
in a matter of weeks
online or via call center
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
Dyn
and 3 days better business operations
Our monthly close is 3 days shorter
I get 3 days better intelligence
every single month
Gray Chynoweth
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 OperaNng 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
Recurring Profit Margin
Growth Efficiency Index
Retention Rate
Your current applications don’t give you the metrics you need
SendGrid
And visibility into future revenues
When the board calls
we‘re able to give them actuals from prior months
Jim Franklin
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
EnKtlements
Website
Provisioning
Commerce
Billing
Finance
Payments
GL
quoKng
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 SubscripNon Economy
These are the 9 Keys to Success in the Subscription Economy
The 9 Keys Require Different Systems
The 9 Keys Require a Different Approach
to COMMERCE
Change to Tesco instead of Target
• Amazon cart
PROBLEM :
• Don’t support consumption-based pricing models
• Can’t Deal with Time
• Can’t nurture subscriber relationships
• Are not multi-channel
Shopping Cart Commerce
Relationship Commerce
Pricing Engine
Features blurb
For Infinite Levels Of Monetization
ü Flat Fee ü Per Unit ü Volume ü Prepay ü Tiered ü Annual ü Monthly ü Quarterly ü Free Trials ü Discounts
ü Overage ü Smoothing ü Rollover ü Uplifts ü Tiered Overage ü 2 Years ü 5 Years ü 18 Months ü Specific Months ü Semi-Annual ü Promotions
Lifecycle Orders
Features blurb
To Manage Changing Levels Of Relationships
ü Subscribe Orders
ü Upgrade Orders
ü Downgrade Orders
ü Renewal Orders
ü Cancellation Orders
ü Add-On Orders
Multi Channel Platform
Features blurb
Enabling Commerce Anywhere, Anytime
ü Subscription Quotes
ü 360 Sync
ü ZDK
ü REST APIs
ü Ruby and Java Toolkits
Configurability
Features blurb
Enabling Rapid Deployments Of Tailored Experiences
ü Quote Wizard
ü Reusable Page Components
ü Product Selector
ü Account Selector
ü List Components
ü Discount Configuration
Pricing Engine
Lifecycle Orders
Multi-Channel Platform
P o w e r s R e l a t i o n s h i p C o m m e r c e
Configurability
The 9 Keys Require a Different Approach
to BILLING
Invoicing vs Billing
• Create clear, accurate invoices
• Scale from 1 to 10 million invoices
• Tame the complexity of payments and collections
• Support any payment method
Payment Automation
Breadth of gateways
Exception Management
Adjustments & Write-Offs
Billing Automation
On demand or batch rating
Notifications and Alerts
Trigger Based Billing
Invoice Presentment
Template Configuration
Template Library
Invoice Delivery
The 9 Keys Require a Different Approach
to FINANCE
1494 A.D.
Luca Bartolomeo Pacioli
inventor of Double Entry Bookkeeping
Can’t differentiate between one time and recurring amounts
Can’t spread revenue over time Can’t handle subscription changes
PROBLEM :
• Don’t differentiate between one-time and recurring amounts
• Can’t spread revenue over time
• Don’t know what to do when subscriptions change
Double Entry Bookkeeping
Subscription Finance
Accounting Close Tools Tools to accelerate your month-end close
Define rules to manage complex revenue recogniKon policies Tag charges with revenue revenue and deferred revenue GL accounts Tag charges with with revenue recogniKon rules Control revenue recogniKon trigger dates View earned and deferred revenue reports
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Revenue Recognition Tools That handle complex revenue rules
Define rules to manage complex revenue recogniKon policies Tag charges with revenue revenue and deferred revenue GL accounts Tag charges with with revenue recogniKon rules Control revenue recogniKon trigger dates View earned and deferred revenue reports
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Chart of Accounts to track charges through the revenue lifecycle
Create or import your chart of accounts Tag charges with GL account codes Tag transacKons such as payments, credits, refunds, adjustments etc with GL account codes
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Easy Accounting Integration to unburden your IT team
Generate debit and credit journal entries to simplify your general ledger updates Align journal entries with GL accounts
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Tight Security Controls For audit peace of mind
Create custom user roles Associate roles with granular user permissions Control visibility and user acKons on sensiKve financial data
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Reuse the audit peace of mind screen shot from the website
Revenue Rules Engine
Auditability
Accounting Periods
Chart of Accounts
Trial Balances
Journal Entries
Journal Entries
F u l l S u b s c r i p t i o n S u b l e d g e r
A subscription subledger for your general ledger
General Ledger
The 9 Keys Require Commerce, Billing and Finance to
work together
Book Order & Ship It
Invoice & Collect For It
Recognize It
Traditional Business
Commerce Billing Finance
Order
Invoice
Subscription Business
Order
Invoice
Subscription Business
Revenue
Invoice
Subscription Business
Orders Invoices
Revenue
Subscription Business
Subscription Business
Subscription Business
Introducing T h e f i r s t r e l a t i o n s h i p b u s i n e s s m a n a g e m e n t s y s t e m
Demo
T h e f i r s t r e l a t i o n s h i p b u s i n e s s m a n a g e m e n t s y s t e m