Tien Tzuo on The CEO Show: Identity Versus Inventory

By Gabe Weisert September 26, 2016

Zuora CEO Tien Tzuo recently sat down for a wide-ranging interview with Robert Reiss of the CEO Show, a nationally syndicated radio show focusing on today’s business leaders. Read the entire article here. 

What is the first thing a business owner should think about when they ask: “How can my business utilize and take advantage of the Subscription Economy?”

As an owner of the business, you certainly think about your customers and their needs. But inside, you are probably thinking about your business model in terms of the products or services that you sell to your customers, whether you are a lawyer and sell hours; a newspaper company, selling issues through a newsstand or through home delivery; or a movie producer selling movie tickets.

We like to tell people to “flip the script on that”; think about your customers but don’t think about your customers as endpoints, as somebody whose sole purpose is to buy your products. Think about them instead of the needs that they have. Then take out a blank sheet of paper and ask, “How can I fulfill those needs with my expertise, and with my assets which are my products?” But really use the technical capabilities that you have today, whatever it is, sensors, internet, etc.

It doesn’t have to be big and complex. You don’t have to be a big manufacturer using sensors. But you know what your customers like through email, through simple marketing applications from companies such as Hubspot. The point is, get to know who your customers are first, and then you can rethink what you do to deliver an outcome they want instead of getting them to buy a physical product that you have.

So you are no longer focusing on inventory, no longer focusing on products, instead you are focusing intently on your customers?

That is exactly right. We are not saying inventory is not important; but if you look at Apple, every day that passes, it matters less how many phones and iPads that they ship. It matters how many Apple IDs they have and what is the value of that Apple ID. For example, a particular Apple ID, they simply buy a Mac every five years. This particular Apple ID subscribes to Apple music, they subscribe to Apple Storage, they have three phones in their family, and they buy a new Mac every single year.

To think about it that way, what other services can you sell to these customers? I would suggest starting to list out all of your customers, maybe you have 100, or 1,000 customers, maybe you have 10,000, and maybe you have a million customers. And then think about what is the value that you are getting per customer. Then, how can you increase the value that you deliver to the customer in terms of the outcomes that they are seeking? Find interesting ways to monetize that. That might go beyond simply trying to sell them a product.

What is an example of how you used the Subscription Economy with a customer?

Newspapers are a fantastic example where we all know that print newspaper is on a permanent decline. People are consuming news less and less in print and they are buying less and less at the newsstand. With that being said, at the same time, the New York Times has always had a loyal customer-base. The Boston Globe and others also have loyal customer-bases. The New York Times is now getting value from that information. As a New Yorker myself, I still consume it. I still read the New York Times in California, because I have a harder time reading a paper that I didn’t grow up with.

But now, instead of thinking of it as selling a newspaper, or worse, trying to sell individual articles — I mean, how do I sell an article? What would people pay online for an article? — newspapers have flipped the script. The New York Times has a million people now that have brand loyalties and will pay money for an engagement with the brand. They don’t care how they consume the news. They just care about the quality of the news. I’ll consume it on my phone. I’ll consume it on my iPad. If I’m on a subway, maybe I will take a paper, or on a Sunday on the weekend, I like to spread it out on my coffee table and I want to read the New York Times magazine.

But think about what you can do for your subscribers. When you break that thinking, look at where the New York Times has gone. They have gone way beyond articles into building communities, building interactive content. They have events, they have premier memberships that give you access to key journalists that you like to follow.

So, they have been able to reignite their growth by not thinking of themselves as selling newspapers, and instead thinking of themselves as having and increasing subscribers around the world, and having a level of engagement with those subscribers that they couldn’t do when they were just selling newspapers.

The Subscription Economy is now about $100 billion. What is its future?

It is getting pretty big, and we believe that all companies one day will move to the Subscription Economy, and this is really the future. These transitions are going to happen much, much faster than you may think. We are going to find ourselves really not having to buy much of anything, and you can satisfy your lives around a set of services.

You are going to see the Millennials do this first. They are going to live in one of these WeLive Apartments that are coming out, because they want to continue their college experience out in the real world. They are not going to own a car—they are going to use a set of transportation services, some public, some private, to get around town. They are not going to own any DVDs or songs, etc. They subscribe to services for their entertainment needs when they need to eat or simply point their phone at one of the services, and food will magically show up in their location. When they want to travel overseas, they are going to sign up for a subscription service that will take care of everything – the plane ride, the boat ride, the hotel, and wrap it all around an interesting experience.

This is going to happen much faster than we think, and that is what the world is going to look like five years from now.

Read the entire article here.