Revenue Relationships in The Internet of Things

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The Internet of Things is an unavoidable disruption for most businesses. With gadgets that connect people with data and incredible new services, the future is at our fingertips. IoT has created a new way of doing business, and the customer relationship is at the center of everything. So what does that mean for you?

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Revenue Relationships in The Internet of Things

  1. 1. Slide 1 − Zuora Confidential, not for distribution beyond intended recipientSlide 1 − Zuora Confidential, not for distribution beyond intended recipient Why Zuora Zuora Provides a BluePrint to Succeed in the Subscription Economy! Revenue Relationships in The Internet of Things By Travis Huch
  2. 2. Confidential and Proprietary Information. Do not distribute beyond intended audience. Agenda 2 • Why the IoT is bigger than any single trend • The Five Revenue Relationships in IOT that matter • Every model for increasing revenue in IoT • The Disrupters • IoT devices from Kickstarter • Success patterns for enterprises • The challenges • Summary
  3. 3. Confidential and Proprietary Information. Do not distribute beyond intended audience. 3 The World is Changing Gartner Says the Internet of Things Installed Base Will Grow to 26 Billion Units by 2020 and is a $3.8 Trillion New Era - Gartner Press Release 12/12/13
  4. 4. Confidential and Proprietary Information. Do not distribute beyond intended audience. This is a Huge Shift – B2C Connected Home Connected Car Connected Self Connected Consumer
  5. 5. Confidential and Proprietary Information. Do not distribute beyond intended audience. Construction Telematics This is a Huge Shift – B2B Embedded Diagnostics Building Control Systems
  6. 6. Slide 6 − Zuora Confidential, not for distribution beyond intended recipient 6 Twine Wireless Sensor Zuli Smart Plug Smart Things StickNFind The Kickstarter IOT Disrupters
  7. 7. Confidential and Proprietary Information. Do not distribute beyond intended audience. 7 Are You Building A Device? Are You Building A Way To Have A Relationship With Millions Of Or
  8. 8. Slide 8 − Zuora Confidential, not for distribution beyond intended recipient The Five Ways to Build a Relationship with Millions (DON’T J UST BUILD A DEVICE) 8 1. Information As A Service 2. Bundle Play 3. Pay As You Go 4. Loyalty Play 5. Device Only ( D ATA P L AY )
  9. 9. Confidential and Proprietary Information. Do not distribute beyond intended audience. 9 Information Play Traditional revenue came from large gene sequencing machines Now able to leverage cloud for compute storage and contextual sharing Subscription to consumables as well as the aggregated data from machines Collaborative research /Comparative use BENEFIT: Recurring revenues that are increasing significantly YOY #1
  10. 10. Confidential and Proprietary Information. Do not distribute beyond intended audience. 10 Benefit: Nanthealth instantly gains massive access to distribution and guaranteed revenue stream. 400+% YOY growth 98% adherence. Bundle Play #2 The device is a cap on a prescription drug bottle. Glows to remind the patient to take drug. If cap not opened, caregiver notified over the network.
  11. 11. Confidential and Proprietary Information. Do not distribute beyond intended audience. 11 Usage-based Insurance. The Metronome transmits your mileage. Costs $.03 to $.06 per mile on average $30 - $60 per month Benefit: Urban drivers can save an average of $400 per year Pay As You Go #3
  12. 12. Confidential and Proprietary Information. Do not distribute beyond intended audience. 12 Belly provides loyalty solutions that drive consumers into retail locations with incentives and offers. Repeat business is the best business. Benefit: 7-11 benefits from not having to engineer and manage its own loyalty solutions. Loyalty Play #4 + =
  13. 13. Confidential and Proprietary Information. Do not distribute beyond intended audience. 13 Nike FuelBand uses gamification and social media to drive customers to set goals, and connects them with the Nike community. The end user just buys the band Benefits: Nike Inc’s global revenues increase by 16% in 2012, its highest growth in 15 years Increased customer insight Device Only Play#5
  14. 14. Slide 14 − Zuora Confidential, not for distribution beyond intended recipient DREAM BIG “Hey, I don’t want you to lose that dog I sold you. Let’s put a GPS collar on him.” “Oh, I’ll just pick up Ironman from where Johnny just stopped watching on Netflix in the house and I’ll stream it to the back seat of the Yukon so he doesn’t miss the big fight” “I’m just going to send you a new water filter for your fridge. The one you have in there is so gross.” “My beacon picked you up on the way in Sally, here is your Americano just like you like it.” “Travis, I don’t think you should keep going up this hill. You’re already at 155 BPM. “
  15. 15. Slide 15 − Zuora Confidential, not for distribution beyond intended recipient Infinite pricing options Success Patterns for Enterprises • Prepare for a business model transformation • Leverage the usage data of how and when and where to improve the user experience and create a relationship • Specialize on what you’re good at – you can’t build everything • Think about tiered value as part of the architecture • Build for change – future-proof your solution • Enable customers to identify themselves as power-users. The who in the relationships are key • Set a bar for success of recurring vs. one-time revenues for Year 1
  16. 16. Slide 16 − Zuora Confidential, not for distribution beyond intended recipient BUT, There are Challenges • The systems to manage inventory is not the systems that will manage the relationship • Rate of change • The new 2 tier distribution: Device sold on Amazon - The subscription sold direct. • Churn
  17. 17. Slide 17 − Zuora Confidential, not for distribution beyond intended recipient Infinite pricing options And Inherent Complexity in IOT • Hardware is different than the service • Length of service period and contract • Connectivity may be bundled • Notion of peak or seasonal usage • Multiple Units of Measure (devices, users, storage, etc • Different categories of buyers • The pricing you start with will change!
  18. 18. Slide 18 − Zuora Confidential, not for distribution beyond intended recipient  Can you engage and manage at scale?  Can you change pricing in weeks?  Can you move from one basic unit to another (users, GB, devices)  Can you handle the use cases? (renewals, upsells, downsells)  Is sales part of the experience (quoting)?  International and regional pricing?  Will you support electronic payments? Questions to Consider
  19. 19. Confidential and Proprietary Information. Do not distribute beyond intended audience. Our Experience with Internet of Things 19
  20. 20. Confidential and Proprietary Information. Do not distribute beyond intended audience. Autonet Mobile 20 • Remote start • Unlock • Find my car • Geofencing and breadcrumbs • Remote Diagnostics • In car WiFi for any application
  21. 21. Confidential and Proprietary Information. Do not distribute beyond intended audience. Summary 21 • Business model innovation is as important as tech • Build a tiered value architecture • Build flexibility into the system • Focus on your core strengths – don’t build everything • How can you make the user experience great?
  22. 22. Slide 22 − Zuora Confidential, not for distribution beyond intended recipient 22
  23. 23. Confidential and Proprietary Information. Do not distribute beyond intended audience. 23 Thank You! travis@zuora.com @travishuch Let me know if you are interested in participating in our IoT panel discussion at Subscribed 2014!

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