Subscribed 2013 Sydney Keynote


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Zuora CEO Tien Tzuo opening keynote from Subscribed Sydney. The Subscription Economy Global Conference.

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Subscribed 2013 Sydney Keynote

  1. 1. The World is Moving to a Subscription Economy BUY NOW 2001! 2011   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
  2. 2. Amazon Prime slide
  3. 3. #Subscribed13  tweets  will  receive   50%  off  first  shipment  
  4. 4. The Zuora Community is Ground Zero
  5. 5. The Face of Innovation
  7. 7. The Global 2000
  8. 8. 20 Billion Contracted Invoice Volume
  9. 9. On Average … 1 New Product Created Every Hour
  10. 10. 10X Growth AUG 2012 AUG 2013 1,536,533 10,012,288
  11. 11. Investing in Technology
  12. 12. 60X 25X 10X Faster Syncs Faster bill runs More capacity
  13. 13. Investing in Customer Success Customer Success Staff 2012 2013
  14. 14. 100 100 90 93 91 95 98 94 96 97 97 "Prompt  response  even  though  was   delegated  non  urgent" 75 Lauren  Wood, 50 "Amazing  as  usual.   Thanks  Rossi.”   "The  response  was  quick     and  detailed." 25 Juan  Delard  de  R. Jalal  Radwan, 0 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13
  15. 15. We analyzed 6 years of data 1 million conversations with subscription economy leaders
  16. 16. “What is the best way to price?”
  17. 17. “How do I reduce churn?”
  18. 18. “How should I compensate my sales force?”
  19. 19. “How do I reduce the number of failed credit card transactions?”
  20. 20. “Should I charge a setup or implementation fee?”
  21. 21. “How do I account for multi-year contracts?”
  22. 22. “As I expand internationally, what payment or tax issues will I encounter?”
  23. 23. “Should I offer monthly or annual billing periods?”
  24. 24. We analyzed 6 years of data A picture starts to emerge
  25. 25. You are trying to Price Acquire Bill Collect Nurture Account Measure Iterate Scale
  26. 26. Importance of each of the 9 things 100%   90%   80%   70%   60%   50%   40%   30%   20%   10%   0%   1   2   3   4   5   6   7   8   9  
  27. 27. Support Cases Categorized By 9 Things Iterate 11% Scale 9% Price 11% Acquire 12% Measure 9% Bill 14% Account 11% Nurture 11% Collect 12%
  28. 28. Introducing  the  9  Keys  to  Success  in  the  SubscripNon  Economy    
  30. 30. Simple per-unit pricing Infinite pricing options
  31. 31. A new way to think about pricing ?   2220000000  
  32. 32. Increase Cash Flow Increase Loyalty and Retention Outflank the competition Grab Market Share Pivot into a new segment Expand Internationally Drive Down Cost of Sales
  33. 33. The Ability to Price in support of your business goals is the first Key for Success in the Subscription Economy
  34. 34. It sounds easy
  35. 35. But it’s Harder Than It Seems Gateways Connect to CRM Billing Notify Immediate or delayed payment provisioning fulfillment Self service vs assisted flows Connect to accounting
  36. 36. We live in a B2Any world B2C B2B
  37. 37. NCR  Silver   Bill  Plummer   launched new service automated commerce, billing and finance in just 2 months
  38. 38. The Ability to Quickly Acquire Customers in a B2Any World is the second Key for Success in the Subscription Economy  
  39. 39. Billing used to be simple Ship Bill
  40. 40. $10   new customers Ship Existing customers Bill Pro-rate Usage
  41. 41. Every bill is an interaction with your customer 1   Confused  customers   2   Weeks  to  generate  bills   3   Billing  Errors   4   Lost  Revenue   “But  I  signed  up  for  the   $100/month  plan”  
  42. 42. Firehost   Katrena  Drake   hands-off invoicing for thousands of clients with complex usage billing models in multiple countries  
  43. 43. The Ability to Create Accurate, Clear Invoices at Scale is the third Key for Success in the Subscription Economy  
  44. 44. Electronic payments Credit Cards Debit Cards Non-electronic payments Wire transfers Manual Lockbox Multiple card types Catch exceptions Retries Card updaters Notify delinquents Suspend service Write off payment Country specific banking rules Receive payment Reconcile
  45. 45. The need to automate DIRECT DEBIT
  46. 46. Handling of Exceptions
  47. 47. Xplornet   Xplornet processes hundreds of thousands of payments in hours Across multiple payment methods And manages payment exceptions and retries automatically
  48. 48. The Ability to Tame the Complexity of Payments is the fourth Key for Success in the Subscription Economy  
  49. 49. Build Valuable Relationships
  50. 50. The Secret: Give Customers Control of the Relationship
  51. 51. Remember the nd Key: 2 Acquire? Subscribe
  52. 52. Subscribe Renew That Was Just the Beginning Suspend Add-on Upgrade
  53. 53. WEBSITE   CRM   BILLING   Validate  CC   PLATFORM   Confirm  Sign   Up   Sign  up   Validated   Create   Account   Create   SubscripNon   Create  Bill   Welcome   Email   Link  Account   Provision   Service   Process   Payment  
  54. 54. News   InternaKonal   Implemented “Holiday Stops” in a matter of weeks allowing hundreds of thousands of subscribers to suspend service online or via call center
  55. 55. The Ability to Nuture And Develop Deeper Customer Relationships is the fifth Key for Success in the Subscription Economy  
  56. 56. “I’ve got this massive spreadsheet I use to track Revenue”
  57. 57. “It’s Taking Longer and Longer to Close My Books”
  58. 58. “It’s becoming harder to harder to reconcile financial info across all my different systems”
  59. 59. “The IT department used to be known as Dr. No …. But now, it’s the finance department”
  60. 60. There’s no accounting for subscriptions Booking Subscription Billing Cash Revenue
  61. 61. Dyn   Gray  Chynoweth   Our monthly close is 3 days shorter I get 3 days better intelligence and 3 days better business operations every single month
  62. 62. The Ability to Easily and Quickly Account for Bookings, Billings, Cash and Revenue is the sixth Key for Success in the Subscription Economy  
  63. 63. 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  
  64. 64. 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     Retention Rate Recurring Profit Margin Growth Efficiency Index
  65. 65. Your current applications don’t give you the metrics you need
  66. 66. SendGrid   Jim  Franklin   When the board calls we‘re able to give them actuals from prior months And visibility into future revenues
  67. 67. The Ability to Instantly Access Subscription Economy Metrics is the seventh key for Success in the Subscription Economy  
  68. 68. Pricing iteration is crucial to support growth
  69. 69. You can’t afford this … “The next available engineer will see you in 6 months”
  70. 70. The ability to Rapidly Iterate On Your Pricing and Acquisition Strategies is the eighth key for Success in the Subscription Economy  
  71. 71. Why build all this into your service? Secure Billing Rating Pricing Taxation Payments Rev Rec Mission Critical Scalable
  72. 72. When you could do this?
  73. 73. Integrate with an ecosystem that supports your service Website   Customer   support   orders   invoices   Commerce   quoKng   checks   Provisioning   events   Inventory   account   status   Fulfillment   account   balance   metrics   EnKtlements   Billing   Payments   Finance     GL  
  74. 74. The ability to Run on a Scalable, Reliable, Mission Critical Infrastructure is the ninth key for Success in the Subscription Economy
  75. 75. Introducing  the  9  Keys  to  Success  in  the  SubscripNon  Economy    
  76. 76. These are the 9 Keys to Success in the Subscription Economy
  77. 77. The 9 Keys Require Different Systems
  78. 78. The 9 Keys Require a Different Approach to COMMERCE
  79. 79. Change  to  Tesco  instead  of  Target  
  80. 80. •  Amazon cart
  81. 81. PROBLEM : •  Don’t support consumptionbased pricing models •  Can’t Deal with Time •  Can’t nurture subscriber relationships •  Are not multi-channel
  82. 82. Shopping Cart Commerce Relationship Commerce
  83. 83. ü Overage ü Flat Fee ü Smoothing ü Per Unit ü Rollover ü Volume ü Uplifts ü Prepay ü Tiered Overage ü Tiered ü 2 Years Features  blurb   ü Annual ü 5 Years ü Monthly ü 18 Months ü Quarterly ü Specific Months ü Free Trials ü Semi-Annual ü Discounts ü Promotions Pricing Engine For Infinite Levels Of Monetization
  84. 84. ü Subscribe Orders ü Upgrade Orders ü Downgrade Orders Features  blurb   ü Renewal Orders ü Cancellation Orders ü Add-On Orders Lifecycle Orders To Manage Changing Levels Of Relationships
  85. 85. ü Subscription Quotes ü 360 Sync Features  blurb   ü ZDK ü REST APIs ü Ruby and Java Toolkits Multi Channel Platform Enabling Commerce Anywhere, Anytime
  86. 86. ü Quote Wizard ü Reusable Page Components ü Product Selector Features  blurb   ü Account Selector ü List Components ü Discount Configuration Configurability Enabling Rapid Deployments Of Tailored Experiences
  87. 87. Powers Relationship Commerce Pricing Engine Lifecycle Orders Multi-Channel Platform Configurability
  88. 88. The 9 Keys Require a Different Approach to BILLING
  89. 89. Invoicing vs Billing
  90. 90. •  Create clear, accurate invoices •  Scale from 1 to 10 million invoices •  Tame the complexity of payments and collections •  Support any payment method
  91. 91. Billing Automation Invoice Presentment Payment Automation On demand or batch rating Template Configuration Breadth of gateways Trigger Based Billing Template Library Exception Management Notifications and Alerts Invoice Delivery Adjustments & Write-Offs
  92. 92. The 9 Keys Require a Different Approach to FINANCE
  93. 93. 1494 A.D.   Luca Bartolomeo Pacioli   inventor of Double Entry Bookkeeping
  94. 94. Can’t handle subscription changes Can’t spread revenue over time Can’t differentiate between one time and recurring amounts
  95. 95. PROBLEM : •  Don’t differentiate between onetime and recurring amounts •  Can’t spread revenue over time •  Don’t know what to do when subscriptions change
  96. 96. Double Entry Bookkeeping Subscription Finance
  97. 97. ✔ ✔ ✔ ✔ ✔ 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   Accounting Close Tools Tools to accelerate your month-end close
  98. 98. ✔ ✔ ✔ ✔ ✔ 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   Revenue Recognition Tools That handle complex revenue rules
  99. 99. ✔ ✔ ✔ 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     Chart of Accounts to track charges through the revenue lifecycle
  100. 100. ✔ ✔ Generate  debit  and  credit     journal  entries  to  simplify  your   general  ledger  updates       Align  journal  entries  with  GL   accounts   Easy Accounting Integration to unburden your IT team
  101. 101. ✔ Reuse  the  audit   peace  of  mind   screen  shot  from   the  website   ✔ ✔ Create  custom  user  roles       Associate  roles  with  granular   user  permissions       Control  visibility  and  user   acKons  on  sensiKve  financial   data   Tight Security Controls For audit peace of mind
  102. 102. Full Subscription Subledger Accounting Periods Revenue Rules Engine Chart of Accounts Journal Entries Trial Balances Auditability Journal Entries
  103. 103. A subscription subledger for your general ledger General  Ledger  
  104. 104. The 9 Keys Require Commerce, Billing and Finance to work together
  105. 105. Traditional Business Commerce Billing Finance Book Order & Ship It Invoice & Collect For It Recognize It
  106. 106. Subscription Business Order Invoice
  107. 107. Subscription Business Invoice Order
  108. 108. Subscription Business Invoice Revenue
  109. 109. Subscription Business Orders Invoices Revenue
  110. 110. Subscription Business
  111. 111. Subscription Business
  112. 112. Introducing The first relationship business management system
  113. 113. Demo
  114. 114. The first relationship business management system