Identifying the Levers that Drive Your Subscription Business Model

By Erika Malzberg September 22, 2016

Zuora CFO Tyler Sloat recently appeared on CFO Thought Leader, a lively, groundbreaking digital network whose mission is to serve up personal firsthand accounts of CFOs who are driving change within their organizations.

In Episode 097, Identifying the Levers that Drive Your Business Model, Tyler discusses how much companies need to spend to acquire a customer and reveals his CFO mind-set, explaining why customer churn is the boogie man of the subscription economy.

Here’s the intro to his discussion…

“When I engage with CFOs who are going through these kinds of shifts [to a subscription model], the biggest challenge for them is the realization that this business model is fundamentally different.

The business model cares about acquiring a customer. But it’s not just that. You now have this perpetual cycle of a relationship with that customer. It goes from quote to cash to renewal, and then it repeats, and it repeats, and it repeats — whereas previously the business model was pretty simple. You build a product, you sell a product, you get a margin on a product, and you move on. You then build another product and sell the product. There was no recurring billing.

Being able to understand what that business model is, is probably the hardest first step for the CFO. And the CFO has to own it. The CFO needs to start to think about what the levers are that now drive this new business for your company. And what are you going to hold up as the metrics by which you will define success or not?

Click on the image below to listen to the full podcast as Tyler reveals the levers that drive the subscription business model:

tyler-sloat

And download our free Subscription Finance Success Kit for info about recurring revenue optimization, subscription metrics, and more.