Preparing for the Board Room: Subscription Metrics (Subscribed13)

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Deloitte - Andy Main, Customer Solutions Leader
TrackVia - Pete Khanna, CEO

The measurement of success is fundamentally different in the Subscription Economy. Communicating the health of your business to the Board requires a unique approach, with a new set of forward-facing metrics. Come hear from two visionary CEO’s about how they measure and communicate the health of their business.

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Preparing for the Board Room: Subscription Metrics (Subscribed13)

  1. 1. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   Making  The  Case  for  Subscrip5on   Business  Model  with  your  Board  of   Directors Andy Main Global Customer Solutions Leader Deloitte Consulting LLP
  2. 2. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   In The Next 60 Minutes, You Are Going To Rethink How You Do Business With A Subscription Model and have a great story to take to your Board of Directors.
  3. 3. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   It’s Always Good To Show The Board That You Followed A Process. Business    Strategy   Business Results Business Operations What do we need to do to position our business operations? Technology What technology solutions and architectures do we need? Organization How should we structure our organization? Issues What business problem are you trying to solve? What is the business model? þ þ þ þ
  4. 4. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   Now, Get the Attention of your Board! What is Subscription Business? 4   Rather  than  selling  products   or  services  individually,  a   subscrip7on  model  sells   periodic  use  which  builds   brand  loyalty  into  a  long   term  recurring  revenue   streams   Grow   Revenue   Diversify   Business   Cut  Costs   Improve   Customer   Sa5sfac5on  
  5. 5. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   Then What Do You Say To Them? Tell Them Where To Chase The Money. 5 Chase  The   Money   Role  of  the     Subscrip5on  Model   Grow  revenue     Enable  scalability  –  Subscrip7on  solu7ons  increase  total   addressable  market,  leading  to  increased  transac7on   volumes  to  grow  revenue.     Improve   customer   sa5sfac5on     Customer  Targe5ng  and  Ease  of  Access  –  Subscrip7on   solu7ons  significantly  increase  customer  sa7sfac7on  as  they   are  more  flexible  and  configurable  towards  the  specific  needs   of  a  customer  and  enterprise     Cut  costs   Costs  –  Leveraging  Subscrip7on  technology  is  also  a  key   enabler  to  shiM  CAPEX  costs  into  OPEX  cost   Accelerated  5me  to  market  –  Subscrip7on  model  enables     the  rapid  development  of  solu7ons,  that  can  be  released  to   market  in  waves  -­‐  much  shorter  7me  to  market  for  new   business  areas   Business   Diversifica5on   Zuora’s  Nine  Keys  to     Subscrip5on  Success    
  6. 6. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   Continue To Make the Case It’s Great for our Business and for our Customers + Business Predictable and constant revenue stream Provides payment in advance Revenue stream from recurring subscriptions is considerably greater than the revenue from simple one- time purchase Higher average customer lifetime value, Greater potential for upselling and cross-selling + Customer Convenient by buying a product on a regular basis to save money and time. Shift CAPEX costs into OPEX cost Subscription pricing makes it easier to pay for expensive items, since it can be paid for over a period of time Access to communities with similar interests Ongoing product updates available in the subscription Data Center Consolidation Consolidate and standardize your data center and network components Virtualize Moving  produc5on   applica5ons  to  efficient   capacity     Automate Pre-­‐provisioned   plaMorms    such  as   Applica5on  Servers,   Web  Servers   Platform Host  basic  applica5ons,   web  applica5on,   intranets,  legacy   systems     Business Applications Providing  business   applica5ons  to   enterprise  customers   A  COMPANY  WHO  GOT  IT  RIGHT   §  #  Users  –  Named  /   Concurrent   §  #  Transac7ons  /  Type   §  #  Hours   §  #  GBs   §  Square  Feet   §  Kilowa3s  Consumed   §  #  Transac7ons  managed   §  #  Calls,  #  Minutes   WHAT  YOU  CAN  SUBCRIBE  TO   Selling  capacity   Selling  the  pla_orm       Selling  soMware/ solu7ons   SERVICES  OFFERED   .  
  7. 7. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   So You Think You Got Them? Start To Tell Them What is Different 7   BUY NOW SUBSCRIBE Rela5onships   (Long-­‐term,  adop7on,  loyalty)   Sell  Units     Fixed,  SKU  Based   One-­‐Time  Transac5ons   Backwards  Looking  Metrics   Flexible,  Plan  Based     (Edi7ons,  Bundles,  Usage)   Recurring   (upgrades,  add-­‐ons,  renewals)   Forward  Looking   (ARR,  MRR,  Churn,  Renewals)   Growth  Model   Pricing  Model   Commerce   Model   Financial   Model  
  8. 8. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.     Do  you  have  evidence  that  customers  will  pay  for  our   products/services  via  a  subscrip7on  model.  What  will   we  sell  this  way  and  to  whom?       Are  we  ready  to  move  to  the  high-­‐touch   customer  engagement  model  that  goes   with  subscrip7on?  How  are  you  going  to   provide  an  acceptable  cost  to  serve?   Can  we  accurately  monitor,  meter,  rate  and  bill   what  has  been  consumed?  Can  we  get  to  the   lowest  level  of  granularity  to  reflect  that  in  our   value  proposi7on?     USAGE   MANAGEMENT   PROVING     VALUE   CUSTOMER   ENGAGEMENT   VALUE   PROPOSITION   What  are  the  metrics  and  KPIs  we  need  to   keep  an  eye  on?     Here’s the type of questions they’ll ask on Business Operations YOU  
  9. 9. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.     Do  you  have  evidence  that  customers  will  pay  for  our   products/services  via  a  subscrip7on  model.  What  will   we  sell  this  way  and  to  whom?       VALUE   PROPOSITION   Get Ready SampleAnswers Subscription Model •  Customers are demanding usage based pricing from us •  We have tested this with our customers •  Our customers will pay upfront for the service on a monthly basis •  We are offering bundles, configurable options, and tiered pricing •  We have created a new subscription services delivery platform from a company called Zuora and it does everything from the subscription order to monthly billing and collecting from the customer
  10. 10. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   Can  we  accurately  monitor,  meter,  rate  and  bill   what  has  been  consumed?  Can  we  get  to  the   lowest  level  of  granularity  to  reflect  that  in  our   value  proposi7on?     USAGE   MANAGEMENT   Get Ready SampleAnswers Subscription Model •  Yes we can monitor usage vs. the limited visibility we have of usage data •  We will collect usage metrics and unlike today where we don’t know installed base, we will have full knowledge of how our customers use our products and services •  We are doing usage based pricing on different subscription plans to give our customers options – one time buys, by the user, by the minutes of consumption – we can get really granular
  11. 11. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   How  are  we  going  to  manage  our   customer  rela7onships  with  this   Subscrip7on  Model?   CUSTOMER   ENGAGEMENT   Get Ready SampleAnswers SUBSCRIPTION MODEL •  We’ve factored into our subscription pricing and margins, the additional cost in our contact centers to handle customer inquiries •  Good news here is that the renewal cycles generate net new opportunities, vs. our one-off services today that limit customer interaction •  It frees up more selling time for net new customers •  Unlike today, we will get early warning on attrition based on usage trends and take actions to retain our customers •  We are using social communities to have our customers talk to one another, share their stories on how they are getting value from our services– this will create longer term customer loyalty
  12. 12. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   PROVING     VALUE   What  are  the  metrics  and  KPIs  we  need  to   keep  an  eye  on?     Get Ready SampleAnswers SUBSCRIPTION MODEL This is going be very healthy for our business: Improved Forecast Accuracy Increase Total Addressable Market and New Customers Increase In Length and Profitability of Customers Relationships Increase in Annual Recurring Revenues Increase in deals At or Above Margin Thresholds Reduced SG&A as % of Revenue Faster Quote Turn-A-Round Time Vastly Improved Cash Conversion Cycle
  13. 13. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   Technology Architecture Show Them How YouAre Mixing Clouds To DoAll Of This PaaS  based  cloud  integra7on  layer   delivering  middleware  and  API   connec7vity  between  the  components  of   the  proposed  cloud  solu7on  vendors.   Campaign  Management   Contracts,  Configure,  Price,  Quote   Order  and  Subscrip7on    Management   Invoicing  &  Billing   Sales,  Service,     Marke7ng,    Custom  Apps   Sales   Social  Business     Customer  &  Partner  Portal   Cloud  Glue   The  stack  bundles  pla_orm  independent   leading  SaaS  applica7ons  providing     complemen7ng  capabili7es   Sales  Planning  &  Compensa7on   Human  Resource   Salesforce.com  is  the  leading   provider  to  act  as  hub  for  cloud-­‐ based  opera7ons.       Service   Marke5ng   Force.com  and  App  Exchange   Social  Business   CLOUD MIX TM Zuora  as  the  leading  provider  of   Subscrip7on  Management   Solu7ons  
  14. 14. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   Organizational Change Is Everyone Ready To Do This? •  Is everyone lined up and ready to go? Employees need to know how they contribute to the Subscription Business Model •  Leadership challenge is to get everyone headed in the same direction, with a shared purpose The ultimate proof is seen in employees actions Subscrip5on  Model  Business  Readiness  Playbook   Develop metrics to gauge adoption and benefits of how the business is trending Adjust/develop business processes to fully utilize the underlying Subscription Model technologies The buy-in activities to secure support for the Subscription Model Business Value and Measurement Business Processes and Systems Deliver information to employees, set goals, set roles, and train people on how to run the Subscription business Organization Readiness, Communication and Training Leadership Alignment and Stakeholder Enrollment
  15. 15. Copyright  ©  2013  Deloi3e  Consul7ng  LLC.  All  rights  reserved.   What To Do Next… Hope  you   Took  Good   Notes…   Give  it  a   Shot!   Contact     Andy  Main  for   advice  or  help.   amain@deloiAe.com     1 2 3
  16. 16. Preparing for the Board Room: Subscription Metrics Pete Khanna CEO
  17. 17. Agenda TrackVia Overview Connecting the Dots 4 Key Essentials in the Subscription Economy Wrap Up & QA
  18. 18. TrackVia Overview
  19. 19. TrackVia Overview
  20. 20. Big Picture Culture People 1 2 Growth 4 Capital 3
  21. 21. The Nine Keys to Subscription Success $ PRICE   ACQUIRE   BILL   COLLECT   NURTURE   ACCOUNT   MEASURE   ITERATE   SCALE  
  22. 22. ACQUIRE NURTURE MEASURE ITERATE Foundation Building S u b s c r i p t i o n S y s t e m s Business Alignment Flexibility Customer Focused Predictability
  23. 23. Success Cycle Vision   Reality   React   Scale  
  24. 24. You Can’t Make Bricks without Clay Engagement   Rate   Conversion   Rate   Cohort   Growth  CAC   Payback   Customer   Feedback   LTV   Renewal   Rate  Feature   Usage   LTV/CAC   Churn  %   UV  to  Trials   Growth   Time   Compe77on   Organic   Growth  Rate  
  25. 25. Connect the Dots Growth   Time  
  26. 26. Summary Measure React Innovate Scale Operating DNA Product Mentality Inclusive Proactive
  27. 27. Q&A Thank You!

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