Establishing & Managing Recurring Revenue Model - Optimizing the Revenue Opportunity


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Today, the ability to increase revenue through recurring revenue is driving successful companies. However continuing to insure or improve, customer satisfaction and retention through recurring revenue models requires a new breed of billing. Bringing the features, benefits, and capabilities that will enable companies to offer the products or services that their subscribers want and will buy on a recurring basis, what some call 'recurring revenue,' is critical. In this session you will learn how the right subscription management system can drive new revenue and understand the capabilities you will need to effectively manage your recurring revenue-based business. Also, discover how to increase customer satisfaction with a subscription management system and become aware of what is key in your system so you have minimal impact to IT or financial operations.

Bob Harden, Former Software Director - Global Corporate Systems, Experian
Jon Gettinger, SVP, Marketing, Aria System

Presentation delivered at CFO Dimensions 2013 -
Track: Operational Effectiveness | Session: 5

Published in: Business, Technology
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  • Recurring revenue is a multi-step process offering:More customer touch pointsIncreased innovation opportunitiesLower cost of business
  • Understanding that billing is just one piece of the puzzle and that with each step things can get very complicated will help you to choose the right solution for you that will help you achieve your company goals as well as meet your billing needs. And let’s face it….billing solutions must all address the same core areas. However, how a subscription billing systems helps you optimize recurring revenue and be more competitive depends on how well it addresses advanced needs of the company such as reducing revenue leakage, increasing customer profitability, ……Systems that are designed to automate key actions based on process triggers, or associate accounts and service plan in formalized hierarchies for example enable customers to avoid common customer care issues and keep focused on their business. [Note to speaker – you can add info around automated inclusions and exclusions, automated dunning to prevent revenue leakages, and universal changes to support growth and directional changes of the company]
  • If we want to provide some context about Experian, this is an Experian approved slide that we can use. I used this at Open World.
  • This was our starting point with the business, i.e. go build us something and when you’re halfway done we’ll provide the plans.
  • I think these business considerations are fairly common.
  • I think these business considerations are fairly common.
  • I’ve read case studies, talked to vendors and integration partners and listened in on case study presentations at Open World. Successful Billing Transformation projects seem to have these characteristics in common. If we use this as is, it needs to be lifted off the Experian template.
  • I want to…..Grow my business (aka How do I grow my subscription business?)Easily introduce new product or servicesMake it easy for customers to buy from meSell my product any way I want – handle transaction complexityHave an easy time managing a growing customer baseSee how my business is doing in real-timeQuickly respond to changing business conditions (aka How do I respond quickly to changing market conditions?)Be able to change my offers depending on how my customers like them Easily change how I charge for my products or servicesChange how I charge customers if it works better for my business, even if some customers have already bought the serviceTest and change my pricing oftenIncrease efficiency in my business (aka How do I simplify my finance activities without impacting accuracy?)Automate workflows and approvalsConfigure ordersKeep my customer’s happy (aka How do I give great customer experience?)Ensure my solution reliability
  • Establishing & Managing Recurring Revenue Model - Optimizing the Revenue Opportunity

    1. 1. 1© 2013 Establishing & Managing Recurring Revenue Model - Optimizing the Revenue Opportunity Robert Harden Jon Gettinger Former Director, SVP, Marketing, Global Billing Solutions, Aria Systems Experian
    2. 2. 2© 2013 The Recurring Revenue Market Landscape
    3. 3. 3© 2013 From One-Time Sales to Recurring Revenue © 2013 Proformative. Proprietary and confidential3 By 2014, streaming media is expected to hit $70B 137% Online movie streaming is up from 2011 Companies that are not offering subscription options as part of their product mix should put a priority on assessing the value of developing a subscription strategy. — Gartner 2011 47%of U.S. Businesses have adopted or are considering adopting a recurring revenue business model $857 The average consumer spend in monthly subscriptions $6B Expected 2013 global virtual goods revenue
    4. 4. 4© 2013 Recurring Revenue 35% of Global 2000 companies with non-media digital products will generate incremental revenue of 5% to 10% through subscription-based services and revenue models. Source: Gartner, Inc., Building a Strategy for the Subscription Economy, April 11, 2011 Source - IDC The Case for SaaS-based Subscription Billing and Management, Dec 2012 . . .will grow at 35% CAGR 2012-2014 . . . projected at $485 M in revenue in 2014 Cloud Billing . . .
    5. 5. 5© 2013 5 Drivers Here’s Why Market Expansion Access new markets, take expensive one time purchases and offering them on subscription/usage basis. Lifetime Value Offer existing customers new ways to purchase goods and services aligned with department purchase cycles. Competitive Differentiation Recurring revenue offerings stand out from the crowd and enable businesses to attract new customers. Innovation Recurring revenue is the foundation for the “sharing economy” and enables innovative new business models. Consumer Preference Enabling customers to pay over time, or pay for what they use, recurring revenue offerings are perceived as more friendly. Recurring Revenue Deployments Wall Street Friendly “Cloud billing market will grow at 35% CAGR 2012-2014”* *Source - IDC The Case for SaaS-based Subscription Billing and Management, Dec 2012
    6. 6. 6© 2013 Recurring Revenue Model Options Subscription Usage Subscription + Usage • Fixed payment for a good or service over a specific period of time — a day, a month, a year • Charges per use or per unit of service • Combines fixed subscription for service level, with “overage” billed as extra charges
    7. 7. 7© 2013 Looking at Business Differently
    8. 8. 8© 2013 Then and Now
    9. 9. 9© 2013 • Sell products & services • Online storefront • CRM integration • Provision services • Customer communication • Track & manage usage • Respond to customer inquiries • Calculate charges & create invoices • Process payments • Dunning • Reports • Dashboard Billing in a Recurring Revenue World Acquire & Expand Track & Respond Calculate & Bill Analyze & Report Activate & Notify
    10. 10. 10© 2013 . . .Gets Complex Quickly Acquire & Expand Track & Respond Calculate & Bill Analyze & Report Activate & Notify • Services Activated • Communications • Frequency • Product Add-on’s • Upgrades • Pricing Tiers • Regional & International • Multi-tier Usage • Thresh-holding • Accumulation • Pooling • Overage • Rating Controls • Proration • Co-Termination • Charge Alignment • Credits & Refunds • Ad-Hoc Invoicing • MRR • Delta MRR • TCV • DSO • Uptake • Churn Rate • Event Notifications • Terms • Change Quotes & Orders • Entitlement Management • Sell products & services • Online storefront • CRM integration • Provision services • Customer communication • Track & manage usage • Respond to customer inquiries • Calculate charges & create invoices • Process payments • Dunning • Reports • Dashboard
    11. 11. 11© 2013 Case Study
    12. 12. 12© 2013 About Experian Leading global information services company providing data and analytics tools to clients around the world Revenue: US $4.7 bn EBIT: US $1.25 bn In top 50 of FTSE-100 Employees: c. 17,000 Offices in 40+ countries Largest markets: US, Brazil, UK Corporate headquarters: Dublin
    13. 13. 13© 2013 A New Opportunity Business expansion Experian to open a new credit bureau in Australia and potentially other markets outside the U.S. Expand existing operations in other markets outside the U.S. Products to be defined New product delivery platform, in design stage Monetization models to be defined Constraints: Support existing business while facilitating new business Support existing business processes while standardizing across BU’s and regions
    14. 14. 14© 2013 Business Challenges Low cost to serve Limited start-up investment Minimize ongoing IT costs – cost certainty Low touch processes Shared services approach? Rapid time to market Accelerated ramp-up Additional products / services Reach un-served or underserved market segments New products / services New monetization models? Maintain existing market segments
    15. 15. 15© 2013 Business Challenges Integrate with existing systems (CRM / ERP) Don’t leave money on the table Products for markets Monetization models Right pricing for subscriptions / usage Up-sell / cross-sell? Reduce churn Identify revenue recognition rules Capture relationships, not orders “Foot in the door” opportunities Maximize customer value over time
    16. 16. 16© 2013 Cloud Based solution Billing CRM Cloud-based integration tool Manage client provisioning from CRM/Billing Out of the box analytics Integrated with Oracle ERP Recurring revenue models wherever possible Subscription (with overages) Annual to reduce churn Usage Prepaid where practical Flexibility Solution
    17. 17. 17© 2013 Benefits of a Cloud Based Solution Cost benefits: Eliminated up-front hardware/software deployment costs Predictable ongoing costs Low touch processes Share technology risk with vendor Vendor manages technology, we manage business Improved time to market Initial ramp-up New products / services / plans Repeatable solution Scalability
    18. 18. 18© 2013 Needed to Transform Billing Business Driver Client Centered Approach Standards & Processes Out-of-the-Box Technology Measuring Success Strategy first, not systems Improve client experiences Enforceable standards, Executive buy-in KPI’s measure strategy success Eliminate the C-word
    19. 19. 19© 2013 Consider A Solution That Can . . . Let’s you innovate and experiment Quickly respond to changes/opportunities Get your recurring revenue business to market in weeks/months Delight customers over time, all the time
    20. 20. 20© 2013 Thank You for Attending!
    21. 21. 21© 2013 Thank You Sponsors! PLATINUM GOLD SILVER DIAMOND