“Oftentimes, people think of subscriptions as “It’s a pricing model,” or it’s simply “you pay something per month.” That’s not what we’re talking about here; we’re not talking about a financial construct. The Subscription Economy is a fundamentally different way of creating relationships between companies and individuals.” – Amy Konary, Global VP, Subscribed Strategy Group, Zuora
In 2021 more people than ever before are saying goodbye to ownership and hello to usership. Sustaining growth amidst economic uncertainties is pushing investors, executives and entrepreneurs towards recurring revenue streams. Businesses are being challenged to think of new ways to connect directly with consumers. And companies are leveraging technology to design exciting new service-based experiences.
That’s why, this week, the global Subscribed experience went virtual in our first ever Subscription Experience event. Across North America, Europe, and Asia Pacific, we gathered business leaders to explore the implications of the accelerating global shift from ownership to usership and to help companies move forward on their journey.
Through virtual keynotes and tailored breakouts, business leaders from companies including Philips, Xerox, GitLab, PagerDuty, Schibsted, and the Thales Group met with industry experts from PwC, Simon-Kucher & Partners, Deloitte, Accenture, BCG, and the Subscribed Strategy Group to unpack essential topics related to subscription business models and the growth of usership.
From manufacturing to SaaS to media, from CFOs to CIOs to product owners, the Subscription Experience offered something for every business leader looking for strategies and insights to succeed with the business model of the future, with discussions ranging from monetization best practices to critical subscription metrics, reducing churn, leveraging the subscriber experience for growth, and more.
Here are just a few choice highlights from the event:
“For the last 120 years, it’s been about more efficient creation of products. More cars, more laptops, more pens, and ultimately it all winds up in our landfill. And that just was not a sustainable model. But there’s a much, much better model now.” – Tien Tzuo, Co-Founder and CEO, Zuora
“If there’s a lesson for businesses, it’s that if you’re not moving to a subscription economy, you’re not going to exist in 3 to 4 years.” – Tien Tzuo, Co-Founder and CEO, Zuora
“It may sound like hyperbole to compare the subscription business model with the invention of the internet or the industrial economy, but it’s absolutely true. Transitions like this happen once in a century.” – Tien Tzuo, Co-Founder and CEO, Zuora
“You don’t need to own a product to get value out of it.”- Amy Konary, Subscribed Strategy Group
“Owning something is a burden, an albatross. Is it going to be obsolete? Is it going to break? You should be able to get what you want when you want it without any of those issues. The subscription model releases you from the burden of ownership.” – Tien Tzuo, Co-Founder and CEO, Zuora
“There is no doubt that every company on the planet has woken up to the fact that they have got to pivot to selling consumption. I don’t think any CEO In their right mind doesn’t believe that this change is inevitable. If you’re not making that kind of transformation, you better have some really good reasons why not.” – J.B. Wood, Technology Services Industry Association (TSIA)
“How exciting is it that instead of trying to sell you a machine with features, we’re sharing with you a capability that will continue to provide value?.” – Jeroen Tas- Philips chief innovation & strategy officer
“The promise of SaaS is the ability to land and expand. That’s dependent on being able to understand usage data, what features and capabilities are being used.” – Romit Dey, PwC
“The SaaS model is the way to go. Especially with COVID, everyone switched to a more self-serve motion. If you really want to go more digital, start talking to your finance team about that.” – Oriana Lemme, PagerDuty
“From the venture capital side, it’s kind of unheard of to be investing in non-recurring revenue companies. It’s gone from being an exception case to being the vast majority. If you’re not making that type of shift to a model that is more sustainable, more predictable – that’s an investor risk.” – Craig Hanson, NextWorld Capital
The big reward of a single transaction doesn’t work anymore. The question is: how do you incentivize building long-term value with the customers? The economics shift. Sales compensation shifts.” – Kevin Stoll, Accenture
“With a subscription model, you can continuously offer more and more value. In terms of services, usage, and value, you can start creating new business models. I’ve asked our R&D leaders when they create something new to articulate it in customer value.” – Jeroen Tas, Philips
“With subscriptions, suddenly Finance and IT teams are talking about customer value metrics. It’s a whole new take!” – Steve Yeager, Zuora
“As part of the evolution of the business, we found the fundamental need to better align along internal teams. We chose to place the customer perspective at the center around which to align.” – Alex Leite, Microsoft
“In the membership economy, that moment of transaction is the starting line, not the finish line. In traditional business, sales is the big games hunter, coming back with giant wooly mammoths. Subscription models are more like farming, it’s not as hard to get started, but it’s about the ongoing care, maintenance, support, and customer success.” – Robbie Kellman Baxter, Peninsula Strategies
“We target SMB business on a very digitalized customer journey. For customers, it’s very easy. We have created a 100% digital customer journey which allows us to offer this solution to SMB that didn’t typically have access to these solutions.” – Mailin Jappe, Acer
“The big reward of a single transaction doesn’t work anymore. The question is: how do you incentivize building long-term value with the customers? The economics shift. Sales compensation shifts.” – Kevin Stoll, Accenture
“When we think about pricing, we think about that number: how should I adjust that number. But in actual fact, monetization is about much more than a number. Take the 10K foot view: What are you trying to do with your pricing?” – Patrick Campbell, Profitwell
“The shift in business models that are driven by digital requires a more innovative way of thinking. Customers may change, ecosystems change, the economics are very different from physical goods. Being digital creates an onus to think harder about how you’re going to manage and package the layers of value.” – John Pineda, BCG
“Through our acquisitions, our product catalog exploded. So we had to really evaluate what our customers are using, and what ties together, and what they find most valuable, and start to retire older SKUs and then bring in new ones as we look to bundle more services.” – Matt Gard, Formstack
“When we work with a client that goes through acquisition, we review the overlap in the customer base, identifying unique segments based on customer needs for products, and willingness to pay. Can you use the same price model – or different price models tailored for each segment?” – Deepak Sharma, Simon-Kucher & Partners
“The promise of SaaS is the ability to land and expand. That’s dependent on being able to understand usage data, what features and capabilities are being used.” All this can be used to inform decisions around pricing and packaging.” – Romit Dey, PwC
“How will we monetize? This requires sorting through the options to generate value and maximize revenue. Deciding on an appropriate consumption-based model depends on a number of factors, including: industry, offering, company’s risk appetite, competitive landscape, and customer preferences.” – Omid Mohammadi, Deloitte Australia
“The thing about metrics like CLV is that they are interesting on their own, but the real value comes when you start to slice them and look at them on a granular basis by things like acquisition channel.” – Buck Brody, ConstructConnect
“We are a business built around monthly recurring revenue (MRR). We use MRR everywhere. Literally when our customer success team pulls up a ticket, they can see how much the MRR the customer generates every month. That helps to align our business.” – Shahin Kohan, President, AIMS360
“You need real-time metrics to be close to the pulse of your business. For every business that’s going into consumption business models and trying to realize the promise: what are you going to sell, what’s the pricing model associated with it, how are you going to manage your customers, and how are you going to measure and report.” – Romit Dey, PwC
“There are 5 essential skills you need to succeed in the subscription economy. #2, subscriber experience, is outside in thinking. Here the focus is on creating a consistent experience for your customers and giving them the flexibility to proactively manage subscriptions.” – Amy Konary
“It’s always about the customer. We always make sure we deliver on the customer process. Even before we had the streamlined processes and systems to support a streamlined customer journey, we always asked ourselves “are the customers getting what they need?” – Mathew Tao, Carbar
“With too many different business systems, our biggest challenge was the inability to cross-sell and upsell different products across our business units. Consolidating provides great opportunities and enables us to build an ecosystem with customer focus.” – Fredrik Schjold, Schibsted
“We don’t want to have to turn around to our customers and say ‘we can’t do that.’ We use our data architecture to make advancements in our processes.” – Mark Allbee, BetterCloud
“We live in an instant culture where people want and need to do things very quickly for their business, and that’s what we’re working towards, and that Zuora is supporting. Zuora allows us to keep engagement with our customers and acts as a lever to help us understand the health of our business.” – Sam Wilmot, Xerox
And that’s just the tip of the iceberg! If you missed the event, or couldn’t take notes fast enough, you can catch replays of all the sessions here.