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Subscribed 2017: Turn Customer Data Into Winning Subscriber Experiences
This document discusses how subscription businesses are using customer data to improve the subscriber experience. It notes that subscription revenues are growing much faster than traditional businesses by delivering value-based pricing, personalization, and constant improvement. The document advocates building a unified subscriber identity record that combines financial, behavioral, and demographic data to gain insights. It describes Zuora's Insights product which computes predictive indicators like churn probability and engagement score by applying data science techniques to help companies improve conversion, expansion, and retention.
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Subscribed 2017: Turn Customer Data Into Winning Subscriber Experiences
- 1. ≈ TURN CUSTOMER DATAINTO WINNING SUBSCRIBER EXPERIENCES Matthew Darrow, VP of Product @ Zuora Carl Gold, Chief Data Scientist @ Zuora
- 2. ≈ Matthew Darrow VP of Product CarlGold Chief Data Scientist
- 3. WE NOW LIVEIN A SUBSCRIPTION ECONOMY #shifthappens
- 4. THE WORLD. SUBSCRIBED. 78% Ofpeople in the UK subscribe to at least one product or service - You Gov Study 2016 50% Of people in France are moving away from traditional ownership - Institut Français D’opinion Publique (IFOP) 80% Of German companies have dealt with the issue of subscription business models. - IDG Research Services $420B Spent on subscriptions in the US in 2015; up from $215B in 2000. - Credit Suisse
- 5. THAT’S WHY SUBSCRIPTIONREVENUES ARE GROWING 9X FASTER THAN S&P 500
- 6. HOW DID THESESUBSCRIPTION BUSINESSES GROW SO FAST ?
- 7. OUTCOMES Value-Based Pricing PERSONALIZATION Tailored Experience CONSTANTIMPROVEMENT Ongoing Value THEY DELIVER ON THE SUBSCRIPTION EXPERIENCE
- 8. of customers employ usage-basedpricing models 78% OUTCOMES VALUE-BASED PRICING
- 9. SAAS COMPANIES REGULARLY TWEAKTHEIR PRICING pricing changes per quarter 1 1 $100M + 40%+ 25 %make more pricing changes have usage- based pricing revenue from usage charges
- 10. you r SLACK SAID “FAIR ISFAIR” o only get billed for what you use o don’t pay for users that haven’t logged in o get pro-rated credit for inactive pre-paid users fair billing policy
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- 12. of customers offer personalizedservices85% PERSONALIZATION TAILORED EXPERIENCE
- 13. THE ECONOMIST TURNEDSOCIAL VISITORS INTO 1K NEW SUBSCRIBERS IN 8 MONTHS o cross-referenced Twitter followers with those registered on Economist.com o tweeted at registered readers featuring timely content o invited non-registered users to subscribe to newsletters and prompted paid users to try the app let’s connect! “People who have registered on our website and are active on social media are our most effective audience segment for driving conversions”
- 14. subscription status content viewed twitter followers vsregistered users
- 15. of customers update theirservices 3 times a year 95% CONSTANT IMPROVEMENT ONGOING VALUE
- 16. you r INTERCOM BUILT AFEATURE NO ONE ASKED FOR o Faster ticket resolution o No need for both parties to be online at the same time o A personalized subscriber experience video messaging “We recently created a feature in Intercom that none of our customers were asking for… video replies”
- 17. average revenue per user issueresolution times offline interruptions
- 18. Engagement Score Name Payments Last Login Address Account Balance Invoices BillingFrequency Segment API Calls Renewal Date Email Utilization MRR ARPU Churn Probability They combine their financial, demographic, and behavioral data … to maximize subscription business growth SLACK : Are we maximizing revenue per account? THE ECONOMIST: Who are my best conversion, upsell and cross-sell candidates? INTERCOM : What areas of my product should I invest in? AND MORE… Who are my champions? Who is at risk of churn? WHAT DO ALL THESE COMPANIES HAVE IN COMMON ?
- 19. SUBSCRIBER IDENTITY RECORD Segment Favorite Actions Usage Pulse Momentum Usage Intensity Utilization FinancialImpact Expansion Potential Projected Revenue Comparisons Journey Churn Potential Lifetime Value Engagement Score Persona Powered by a Subscriber ID
- 20. Capturing more marketshare 50% of American Households subscribe to Prime Owns the Subscriber ID Tracks your lifetime browsing and purchase history Delivers the Subscription Experience Real-time offer suggestions and 1HR delivery Losing e-commerce market share Grew 11.8% QoQ while market grew 15% QoQ Does not know the Subscriber ID 15 years, 1.5M employees across 5K stores don’t know you Lack of choice for subscribers Light pick-up, delivery, payment gateways, and e-commerce only 3% of business
- 21. COMPANY CULTURES ARESHIFTING THEIR FOCUS TO THE SUBSCRIBER 01 Product manager Build capabilities based on most used features 04 Product marketing Price products to value 02 Finance Prevent churn before it happens 05 Sales Configure tailored offers based on usage patterns 03 Customer Success Prescribe best practices with consultative account management 06 Marketing Send targeted campaigns with relevant messaging
- 22. BUT EVERY DEPARTMENT ISUSING THEIR OWN TOOL Marketing Sales Customer Success Support Finance Operations Send Campaigns Work Opportunities Manage Outreach Resolve Issues Forecast and Plan Share Performance
- 23. o Out ofdate information o Missing metrics o Duplicate records o Partial data o Incorrect data WHICH RUNS ON A FRAGMENTED VIEW OF YOUR SUBSCRIBERS
- 24. THAT’S WHY WEBUILT INSIGHTS
- 25. COMBINE FINANCIAL, BEHAVIORAL,AND DEMOGRAPHIC DATA FOR EVERY DEPARTMENT TO SHARE - No duplicate accounts - Real-time metrics - Full financial history Anchored by Zuora, the system of truth
- 26. COMPUTE YOUR MOSTVALUABLE LEADING INDICATORS FOR CONVERSION, EXPANSION, AND RETENTION FINANCIAL, BEHAVIORAL AND DEMOGRAPHIC DATA SOURCES PREDICTIVE INDICATORS TAILORED INDICATORS 60+ STANDARD INDICATORS Persona Usage Intensity Daily Active Users Sessions Per Week Contracted Utilization Add-ons Available Lifetime Value Churn Probability Conversion Probability Engagement ScoreINTERNAL
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- 28. DATA SCIENCE 101 Understand Discover factors drivingoutcomes Predict Forecast outcomes in advance Influence Take action towards better results
- 29. CHURN PROBABILITY & ENGAGEMENTSCORE Analyzes account actions and usage data to predict renewals, upsells, down-sells and churn CHURN PROBABILITY A 0% - 100% probability of events calibrated to match real outcomes (i.e., conversion, upsell, churn) ENGAGEMENT SCORE An easy-to-use summary of account health ranking from 1-100 with 1 being the lowest probability of a good outcome and 100 being the highest
- 30. INTERPRETABLE PREDICTIONS IT’S AREQUIREMENT, NOT A LUXURY “ It’s a human job to make interventions that improve outcomes ” 01 Understand causes of the outcome 02 Understand variables correlated with the outcome 03 Design effective customer segments 04 Send targeted sales & marketing campaigns
- 31. SCORE DECOMPOSITION The Engagement Score decomposesinto point values for each contributing metric decompositi on Provides insights into each accounts relative strengths and weaknesses relativity Helps you decide what actions to take and how to prioritize them prioritizatio n Not all accounts are the same differenc e
- 32. METRICS-FIRST METHODOLOGY Regressio n Standard Features Black Box Standard Features Regression Insights Features Black Box Insights Features Units(TopDecile) Inacademia o Data is fixed and the focus is on algorithms o Naïve young data scientists brag about what algorithm they use In the real world o Best accuracy is achieved with good metrics, not algorithms o Many books and articles corroborate our own experience on this o Yet the fixation on algorithms continues for many
- 33. INSIGHTS DATA &METRICS PROCESS 3. model algorithm Model algorithm selects more predictive metrics that have sensical correlation to compute the score 1. design metrics Zuora guides design of metrics with customer 2. analyze metrics Insights data science process analyzes and proposes new metrics based on best- practices 4. maintain interpretabilityMaintaining interpretability throughout the entire process
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- 35. LEARN MORE Visit us@ The Learner’s Lounge
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Editor's Notes
- #4 WELCOME LIVE IN A SUBSCRIPTION ECONOMY This is what we’ve been talking about for the past 8 years… the arrival of the subscription economy A better way of doing business… At the heart of the Subscription Economy is the idea that customers are happier subscribing to outcomes they want, when they want them, rather than purchasing a product with the burden of ownership Those of you in SaaS, you got this from the beginning – but now everyone else is moving this way too
- #5 THIS IS A GLOBAL PHENOMENON The Subscription Economy is not something that is limited to a few regions, we see this change happening around the world Studies have been done – by the Economist, by independent research groups across the globe In this last year we’ve been asked to hold our Subscribed events in London, Paris, Tokyo, Stockholm, Tel Aviv, and San Francisco, and now our first third one in Australia
- #6 what we want to do is share a bunch of insights
- #8 Outcomes - 78% of customers employ usage based pricing models Custom - 85% of our customers offer services that can be personalized Constant improvement - 95% update their services 3 times a year (introduced a new rateplan)
- #20 Quote from Subrata @ The Economist For the first time, the publisher will be able to analyze data on subscriber behavior so that it can nurture relationships. “One of the reasons we’re doing this is to start to own our own data. The data used to be held hostage by the vendors we had and we had to pay them to get hold of our own data. From the mid-term of your subscription, we want to check your behavior. We don’t want, when we send you a renewal offer, to have you decline. We want to make sure your engagement is there.”
- #31 It is a human job to make interventions that improve outcomes Churn reduction (etc.) are not problems with one-size fits all solutions Repeat: Materially influencing customer behavior is not going to be easy Interpretability is a requirement, not a luxury Understand causes of the outcome Understand variables correlated with the outcome Design effective customer segments Targeted Sales & Marketing campaigns for maximum effect
- #33 Worse than bragging about an algorithm is keeping an algorithm secret I'll tell you about the algorithms we use, but not about the metrics
- #34 Zuora owns & understands subscription data Subscription data model can be complex! Source of truth on account outcomes Zuora guides design of metrics with customer Insights Data Science Process analyzes and proposes new metrics based on best-practices Model algorithm selects most predictive metrics that have sensical correlation to compute the score Maintaining interpretability throughout the entire process