Freedom Reigns in the Subscription Economy

By Aarthi Rayapura November 15, 2016

“The Subscription Economy is the Freedom Era. The modern subscriber is demanding freedom to consume on their terms. In order to deliver this, we need business freedom” said Tien Tzuo, CEO of Zuora at Subscribed London, 2016. Tzuo’s keynote was centered around the point that doing business in the Subscription Economy is all about freedom. Today’s customers want the freedom from obsolescence and the burden of ownership (I want the latest now), freedom from time and location barriers (when I want, where I want), and freedom to try, buy, upgrade, downgrade, pause, cancel and renew at any time. And in order to offer them all this, businesses in turn need the freedom to grow, experiment and reinvent.

Tzuo went on to talk about entire industries that are shifting to the Subscription Economy, and how they power our lives at home and at work. He called it the “most disruptive business model shift in history.” The Subscription Economy is being driven by modern customers who want experiences and outcomes, but not the burden of ownership. They expect to get what they need when they need it and expect businesses to know who they are, what they care about and constantly customize and upgrade their services. They certainly don’t want to be a nameless, faceless revenue source.

Joining him on stage were executives from Alex Sloley (CFO of Brandwatch), JP Vantil (Head of Commercialization at Hive, a subsidiary of British Gas), Warren Palk (COO of DAZN) and Steve Hare (CFO of Sage). “A subscription business model allows you to track how your customers use your products, monitor the feedback loop and change” said Sloley.

Speaking on customers valuing outcomes and services more than products, JP Vantil (Head of Commercialization at Hive, a subsidiary of British Gas) said “We don’t think we will be the best product in the market, but we will be able to deliver the best service and that’s hard to replicate. And that’s where our value sits, it doesn’t sit with the product.”

Tzuo also spoke about the three archetypes of success – B2B companies who want the freedom to grow (across market segments, geographies, etc), B2C companies who want the freedom to experiment (different pricing and packaging) and the Established Leaders who want the freedom to reinvent themselves (transition from the traditional business model to a subscription business model).

Zuora also released the inaugural Subscription Economy Index at the event. The index shows that Subscription Economy companies are growing 9X faster than S&P 500 company revenues and four times faster than U.S retail sales over 15 consecutive quarters (January 1, 2012 to September 30, 2016).

As Tzuo said “the modern customer is up for grabs.” Are you ready?