If you came to Subscribed London just for some information about how to better price and package, you were kind of missing the point, according to John Phillips, General Manager EMEA for Zuora who opened this year’s conference.
Because the Subscription Economy—and thus our annual Subscribed events around the world from London to Tokyo, San Francisco to Melbourne, New York to Paris—are not just about pricing. If you think subscriptions are an exercise for the marketing team, you are very mistaken. It goes deeper than that. It’s about how to build relationships with your customers, and understand and build on the value that they see from your product. Doing so enables businesses to build recurring revenue relationships. And will change the nature of your entire company.
So Subscribed London was all about the nuts and bolts of how to build a great subscription business. More specifically, the event is amazing stories, all about how people are transforming their businesses.
After an inspiring and heartfelt discussion on diversity and inclusion, and the intro and welcome from John Phillips, Zuora CEO Tien Tzuo reflected back on the last 10 years of the Subscription Economy and looked ahead with his crystal ball to make some predictions for the next 10, including a look at the Zuora product to see how it’s meeting the changing needs of customers and businesses. He also engaged in conversation with change agents from Philips Health and Which? to talk about changing customer expectations, building relationships, and leading change.
Then the enthusiastic crowd dispersed around Tobacco Dock to seek out information across 5 breakout tracks: B2B Subscriptions: Grow & Transform; B2C Subscriptions: Delivering Subscriber Value; The Subscription Ecosystem; Zuora Product; and RevRec Summit to hear from experts, innovators, trailblazers, and thought leaders from companies such as Thales, Trustpilot, Medius, Volkswagen, Heidelberger, Husqvarna, Philips, Time Inc UK, Centrica, DAZN, JP Morgan, Worldpay, Xactly, and GoCardless.
Along with our Subscribed Institute https://zuorainternprd.wpengine.com/subscribed/institute/,(our Subscription Economy think tank), the day was jam-packed with great sessions, inspirational insights, and practical takeaways.
Read on for a few highlights:
CUSTOMER EXPECTATIONS AND ORGANIZATIONAL CHANGE
“You can feel that there is an incredible future. You can feel it as a consumer, and you can feel it in your industries. How do we avoid getting ‘ubered.’ Actually if we transform, we can change.” – Tien Tzuo, CEO Zuora, @tientzuo @zuora
“The world around us is changing. With connected devices, we know a lot more about our customers—and they know that we know that and they expect a lot more.” – Gil Adato, VP head of new business development and connected value propositions (IoT), Philips, @PhilipsHealth
“It’s not about coming up with a fluffy business case based no a strategy deck. It starts with a deep understanding of our consumer and how to deliver value.” – Gil Adato, VP head of new business development and connected value propositions (IoT), Philips, @PhilipsHealth
“uGrow was our first step into digital space. Forget about our products, the bottles, the monitors. This was about how do we support our customers? How do we provide a platform to better track development of their kid, provide emotional support. It transcends the product. It’s about having consumers engage with us. It’s not about the product.” – Gil Adato, VP head of new business development and connected value propositions (IoT), Philips, @PhilipsHealth #uGrow
“We measure everything we do across 4 KPIs. The first one is scale: how many people can we attract. Second is engagement: how many that we attract, stay long-term. The third is outcomes: what is the outcome that we can deliver to our customers, but also outcomes of partners. The fourth is monetization: the business could say yes, but the market could say no—we always have to tweak between the business and the market.” – Gil Adato, VP head of new business development and connected value propositions (IoT), Philips, @PhilipsHealth
“Our business model needed to evolve, to be made current for a subscription economy. We need to change technology because we lack capabilities to provide for seamless user journeys, for customers and for our internal teams.” – Denis Haman, CTO of Which? @WhichUK
“We need to change our products and user experience which means we need to change our processes. It’s a whole organizational change. In a way, it’s ironic because customers probably won’t notice it. We will have done a really good job if customers don’t notice it.” – Denis Haman, CTO of Which? @WhichUK
“We’re in the age of the customer. Their expectations in terms of service and flexibility and choice, that’s the new norm. You either embrace this and get comfortable with it as something that you simply have to do, or you’re disrupted.” – Denis Haman, CTO of Which? @WhichUK
“Adoption is the key. This is not a tech transformation; it’s an organizational transformation. Business units need to understand the waves of transformation that will come will make biz more agile and capable, but business units need to gear up for this with new attitude, new skills, new people.” – Denis Haman, CTO of Which? @WhichUK
“If you’re an established customer with an existing customer base then you will grow the fastest if you’re able to respond to their needs.” – Carl Gold, Chief Data Scientist Zuora, @carl24k @zuora
“Organizational structures we have today are about scale. But now we’re moving to this environment where we have to be customer-centric: design the the product, price it, build marketing into this, etc. What happens when your organization says it needs to be more customer-centric. The new world is about agility.” – Tien Tzuo, CEO Zuora, @tientzuo @zuora
“Any company with a loyalty model is stunted because they basically can’t get to a full subscription model — and this is all they can launch without agility and working cross-functionally.” – Tien Tzuo, CEO Zuora, @tientzuo @zuora
B2B SUBSCRIPTIONS: GROW AND TRANSFORM
“With digital, it’s not business as usual. You have to go back to your go to market strategy.” – Stephen Lizou Chief Value Officer, Thales Group @Thales_UK
“Pricing is an awakening. You have to give your customers the tools.” Stephen Lizou Chief Value Officer, Thales Group @Thales_UK
“Transitioning in the culture from product pricing with an ownership model to something else—pay per use or outcome based—is complicated. It’s complicated to educate your customers who typically bought equipment from you. And internally it’s also complicated. It’s a cultural transformation as well”- Stephen Lizou Chief Value Officer, Thales Group @Thales_UK
“Lessons of customer success: a great cognitive journey. In software companies in particular (but in many companies) you work very silo-oriented. You start to realize that’s not what works. How are you going to create value for the end user if you don’t work cross functionally?” – Anders Fohlin CFO Medius AB @mediusgroup
“You can have the greatest product—but are you really listening to your customers? How are you creating value for your end user?” – Anders Fohlin CFO Medius AB @mediusgroup
“Customer acquisition isn’t just about net new but about keeping the customers who are using the product.” – Tina Shaw, Director of Sales Operations, Europe for Trustpilot, @Trustpilot
“The shocking thing when you step into a volume business is that 80% of deals that close in the quarter are not in the pipeline at the start of the quarter.” – Tina Shaw, Director of Sales Operations, Europe for Trustpilot, @Trustpilot
B2C SUBSCRIPTIONS: DELIVERING SUBSCRIBER VALUE
“If you’re going to do anything with data, the first part of that is to make sure the customer approves of it.” – Jan Kauman, CEO, RIO (Volkswagen Truck & Bus) @volkswagen
“We want to build the world’s first company which recognises that digital is not about the machine, but the utilisation. We are moving into a subscription model.” – Dr. Ulrich Hermann, Chief Digital Officer Lifecycle Solutions at Heidelberg, @heideldruck
“I’m renting my car, my glasses, my music. There’s no reason not to rent my battery. Everything is moving to subscriptions.” – Margaretha Finnstedt, Director of Public Relations and Communication, Husqvarna @UK_Husqvarna
“50% of your products are mostly lying in cupboards. We are taking steps in sustainability with services. This energizes everyone. It goes hand in hand with sharing economy.” – Marinus Van Diggelen, Global Digital Product Consumer Marketing, Royal Philips @diggelenmvan @royalphilips
“First came the idea of bringing solutions to our customers. That’s how we got into subscriptions. We saw that digitally native customers pushed experience skyhigh with seamless experiences. Our products just did one function and people expected more. When you look, you realize there’s still a lot of consumer pains to be solved. From there starts the opportunity of new business models, and the realization that there’s so much more to do with businesses.” – Marinus Van Diggelen, Global Digital Product Consumer Marketing, Royal Philips @diggelenmvan @royalphilips
“In a mature business like ours, retention is key. 80% of our revenue comes from existing customers. That’s huge.” – Sarah Wilkinson, Consumer Marketing Director, Time Inc. UK @TI_Media_UK
“We test offers on a regular basis because we’ve found that offers wear out. Response starts to dwindle until we replace with a new offer.” – Sarah Wilkinson, Consumer Marketing Director, Time Inc. UK @TI_Media_UK
“Content is king. Distribution is queen. Capture on mobile, migrate to living room.” – Chris Haigh, Director of Product, Web, Acquisition, and Retention, DAZN (Perform Media) @daznglobal
“Anyone who’s active and local, we know we’ll be able to keep. But anyone who just swings by we need to work harder on getting them to stick around.” – Chris Haigh, Director of Product, Web, Acquisition, and Retention, DAZN (Perform Media) @daznglobal
“Adding friction to the signup process can actually be helpful. For example adding in email verification. This is an extra field that can create “friction,” but in the end it can lead to a good result.” – Chris Haigh, Director of Product, Web, Acquisition, and Retention, DAZN (Perform Media) @daznglobal
“How can you generate quality subscriptions right at the beginning so that retention isn’t a problem?” – Sarah Wilkinson, Consumer Marketing Director, Time Inc. UK @TI_Media_UK
“One of the things that we found about being an IoT company is that it’s hard to explain to people what we do. The easier way is to show someone. We’re testing different ways to do that. We haven’t found the magic thing. It’s about testing ideas and seeing what gets traction. Telling people about products in a contextual setting is meaningful.” – Anna Gustavvson, Director of PR and Communication, Hive, @HiveHomeUK
THE ZUORA PRODUCT: ZUORA BILLING, ORDERS, ZUORA COLLECT, REVPRO
“Businesses are saying that their biggest challenge is dealing with customer subscription changes.” – JJ Xia, Director of Product Marketing at Zuora @jjxiz @zuora
“What we’re seeing a sheer velocity of subscription changes – this is something that ERP systems just don’t handle.” – Tom Krackeler, SVP Products at Zuora @tomkrackeler @zuora
“What happens when a customer doesn’t pay? How do you collect when a customer doesn’t pay? Collections is harder in a subscription business model. In a traditional biz model, you invoice once and collect once. With subscription model, it’s a lot more complex: more invoices, more payment options, more payment failures.” – JJ Xia, Director of Product Marketing at Zuora @jjxiz @zuora
“Finance leaders need an easy way to get real-time visibility into their revenue. We want finance leaders to become strategic advisors for financial policies.” – Jagan Reddy, SVP Zuora RevPro Product
“The concept of an order has existed for a long time, but the Orders functionality in Zuora is different. It accounts for changes over time, an essential capability in the subscription economy. What does that mean? With Zuora Orders, you can create ramp deals, generate subscription metrics and be compliant with new accounting standards.” – Nathan Creswell, Director of Product Management, Zuora @nathcres @zuora
“On average, companies spend 20 minutes per invoice per month chasing uncollected payments. All that goes away with Collect. The ROI is clear.” – Stephanie Street, Customer Account Manager, Zuora @zuora
“Moving to the subscription economy isn’t just about implementing software. Companies who do it successfully understand that it impacts all parts of their business. They bring together people across all departments in the company to focus on change management and make decisions as part of the ‘implementation’ project.” – Nick Walker, EMEA Director Key Accounts, Zuora @zuora
SUBSCRIPTION ECOSYSTEM: PAYMENTS AND IFRS 15
“By 2020 we’re expecting to see an increase from 14% to 19% where all ecommerce transactions are on a subscription model.” – @worldpay
“I love spreadsheets, but you’re going to run into a problem with spreadsheets sooner or later with IFRS 15.” – Erik Charles, VP of Strategic Marketing at Xactly @erikchaz @Xactly
“Women outperform men in sales by 3% with a higher percentage of quota attainment, but they are actually paid 7% less.” – Erik Charles, VP of Strategic Marketing at Xactly @erikchaz @Xactly
No one payment system works perfectly for all recurring revenue across the subscription model. You can’t optimize for everything at once, but you can choose. If you care about coverage, optimize for that. Or optimize for churn, but know that you’re going to lose on some other things. Some of these things can be improved in the long-term, but not today. The goal is to get to a payment method that you can optimize across all these things.” – @gocardless
SUBSCRIBED INSTITUTE: THINK TANK FOR THE SUBSCRIPTION ECONOMY
“Be careful about adding new metrics to your operating model. It can be an invasive process. You can get lost in decks, and lose your alignment.” – Tyler Sloat, CFO Zuora @tylersloat #subscribed
“Shifting a company to subscriptions and the cloud is a hell of a lot more difficult than starting one from scratch.” – Steve Hare, CFO Sage @steveharecfo @sageuk
“Consultants used to get hired to answer questions. These days we’re getting hired to choose which questions to ask.” – Hugo Pinto, Managing Director Accenture Digital @hugomcpinto @AccentureUK
“What is our North Star metric, and what is our pricing strategy to deliver that?” – Mark Billige, Managing Partner at Simon-Kucher @simonkucher
“In the early days of Salesforce, we would have these huge debates over whether to pursue growth or customer success. And then we would have the same debate 3 months later, because we were growing fast. And the answer was always the same. Customer success.” – Tien Tzuo, CEO Zuora @tientzuo #subscribed
NEW BUSINESSES REQUIRE NEW BUSINESS MODELS AND NEW TECHNOLOGY
“The shift to subscriptions has brought growth back to tech, to the music industry, to publishing — and now even to manufacturing. Every device is becoming a smart product.” – Tien Tzuo, CEO Zuora, @tientzuo @zuora
“To deliver the subscriber freedom that’s required to transform our relationships with our customers, requires a whole different set of technologies. Our businesses need freedom to deliver subscriber freedom. We need a different technology platform. New businesses models require new technology focused on agility not scale. It scales, but it’s not about scaling that model, but about agility: being responsive to your customers’ needs.” – Tien Tzuo, CEO Zuora, @tientzuo @zuora
Thanks to our wonderful partners!
And special thanks to GoCardless for hosting our rocking after party at Steel Yard!
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