“Subscribed Connect Munich,” hosted by Zuora, brought together pioneers and leaders in the field of subscriptions to engage in conversations about the continually evolving landscape of sustainable growth and modern business strategies. This event offered a wealth of valuable knowledge and presented cutting-edge technologies that empower businesses to thrive in the current subscription economy.
Designed for business leaders, Subscribed Connect Munich was the perfect networking opportunity for those who are ready to redefine their approach to business operations and embrace digital services that are shaping the future.
A foreword from John Phillips
As the General Manager for Zuora in Europe, I had the pleasure of kicking off the “Recurring Growth” keynote at Subscribed Connect, Munich. I was excited to set the stage for a thought-provoking discussion about the boom we’ve seen in business model innovation and the drive towards recurring relationships.
To kick things off, we delved deep into the realm of modern business practices, and I highlighted some crucial aspects that emphasize the importance of adapting to the dynamic landscape of the subscription economy. One of the key points I raised that I think is important to reiterate here was the significant shift that occurred about 15 years ago. This marked the transition to what we now call the Subscription Economy, where the traditional idea of ownership gave way to “usership.”
We aptly named this fascinating journey of the Subscription Economy over the past decade, “The World Subscribed.” This journey witnessed a transformative shift from the old-school way of selling products to the new, modern approach of providing services and experiences to customers. This shift has reshaped the very essence of businesses and how they interact with consumers.
From here, we addressed the challenges related to market saturation, especially in industries like Streaming and Software as a Service (SaaS). Some companies are grappling with a surplus of SaaS applications, leading them to trim budgets and consolidate. This indicates that focusing on recurring revenue for its own sake might not be a sustainable long-term strategy.
It was then my pleasure to talk through our vision of the future of subscription strategy: The Recurring Growth Flywheel. This concept emphasizes the need for businesses to craft unique, customer-centric offerings and provide personalized experiences to nurture enduring relationships with their customers. This approach is designed to maximize Customer Lifetime Value (CLV) and serve as the foundation for sustainable growth.
It was crucial here to highlight the key role of monetization technology in enabling and sustaining this recurring growth. We at Zuora believe that the right technology is the linchpin for aligning customer needs with value, which, in turn, fosters strong and lasting customer relationships that drive business success.
I then got to share some great examples of modern businesses that are making a real impact in this space; Companies like ABB and Philips who are leading the way by focusing on purpose-driven cultures and innovation. They’ve adopted a holistic approach to subscriptions, not just concentrating on company profits but also on societal and environmental well-being. I have no doubt that this strategic shift positions them for long-term success in the subscription economy.
With the keynote complete, we set the stage for an engaging and thought-provoking discussion about the future of modern business, and got a chance to dive even deeper into these topics with the opportunity to explore the intricacies, challenges, and opportunities for 2024 and beyond in several breakout sessions…
To start, we had an enlightening discussion on taking a dynamic stance on user relationships and the transformative impact this has on revenue. Here are some of the key takeaways:
In this session, we delved into the concept of recurring growth and how it emphasizes the importance of fostering long-lasting relationships, consistently delivering value, and how it can drive innovation, revenue, and customer loyalty.
- A key topic explored was “Digital Relationships,” which focuses on creating meaningful digital connections and providing a diverse range of services that cater to evolving customer needs.
- We discussed how these digital relationships go beyond mere transactions, aiming to establish profound, long-term connections with your customer base.
- Offerings need to be flexible to attract a broader range of customer.
Following our insightful discussion on recurring growth, we proceeded with an equally engaging breakout session that explored innovative approaches to monetizing and increasing revenue in the ever-evolving landscape of digital subscription businesses:
- Equipment-as-a-Service (EaaS) is on the rise. This is where physical equipment is included in subscription packages, expanding value and monetization opportunities for businesses. EaaS involves leasing or renting equipment on a subscription basis, making costly assets more accessible.
- We discussed the strategy of bundling digital services with physical goods and one-time purchases within subscriptions, diversifying revenue streams. This approach benefits both customers and companies, enhancing monetization and adding value.
- Deloitte Digital shared their approach to building a successful hybrid EaaS strategy. Key considerations included careful planning, market understanding, pricing models, and operational logistics to create a seamless and valuable experience for subscribers.
Alongside our recurring growth and revenue strategies breakout sessions, we also discussed how Zuora is rising to the challenge and helping businesses to innovate and scale with these models:
Growth Through Flexible Monetization At Scale
- Zuora’s role in shaping the future of publishing and media technology is focused on addressing industry challenges and achieving sustainable growth.
- Dynamic Offers, a key feature of Zuora’s product offering, empowers commercial stakeholders to effectively test and manage price elasticity, enabling timely and tailored deals for prospects and customers, resulting in increased engagement and conversions.
- The Zuora product suite, as a whole, provides a comprehensive set of tools for optimizing key metrics like Customer Acquisition Cost (CAC), Average Revenue Per User (ARPU), and Customer Lifetime Value (CLV).
- The suite also automates critical processes, empowering subscribers and enhancing their overall experience.
With Zuora’s innovation outlined, that wrapped up our breakout sessions, and we moved on to a culminating moment of our event – the panel of experts. We asked our panel to elaborate further on the significance of prioritizing customers and harnessing data (utilizing the Recurring Growth Flywheel and the appropriate technology) as the key to enduring success…
Our Panel – A Wealth of Insights
The panel discussion at our event brought together industry experts who have navigated the shift to subscriber-led models and tackled challenges in the Subscription Economy. The insights shared in this discussion shed light on how businesses are addressing market saturation, subscription fatigue, and the “value-disconnect” while maintaining a strong focus on customer satisfaction.
1.Navigating the Shift to Subscriber-Led Models
Thomas Gerlach, Senior Manager of Digital Strategy at Thermomix, shared their transformative journey, highlighting the shift from traditional digital product sales to providing “unlimited access to a growing recipe treasure.” This transition demanded a fundamental reevaluation of their operational processes, as they ventured into the realm of recurring revenue models. Thomas explained, “While the subscription product was a success from the first day, we had to learn a lot about the operational processes of a recurring revenue model. Looking back now, it felt like a ‘learning-by-doing’ approach with recurring payments and the financial processes.”
Srikanth Akkiraju, Head of Solutions & Software at Philips, explained how the success of a transformative journey relies on a joint effort and being able to test, learn, and iterate at speed.
“A couple of things that we have been doing to set ourselves apart are allowing teams to be agile, to deliver fast, but also to fail fast, and making sure we are focused on impact and not just delivering for the sake of delivering. Another aspect [of fostering success] is really working with the ecosystem in a fusion of teams. Working together with them on a continuous basis instead of having a transactional relationship.”
Sinan Keilani, Assistant Vice President at ABB Ability Marketplace, emphasized this point, shedding light on their company-wide commitment to a low-carbon society, which is not just a team mission, but a driving force for innovation, particularly in digitalization. This commitment pushes them to adapt and requires a lot of consideration around the tech they employ. Sinan explained, “The main challenge we and our industries face is that this involves dramatic changes in aging infrastructure.”
In summary, these discussions revealed how businesses are actively embracing subscriber-led models, undergoing significant technology and operational transitions, and passionately pursuing sustainability goals. These endeavors, marked by a “learning-by-doing” spirit and a focus on addressing infrastructure challenges, provide a glimpse into the dynamic landscape of modern business strategies.
2. Addressing Market Saturation and Subscription Fatigue
In this part of the discussion, we explored the critical aspects of addressing market saturation and the looming issue of subscription fatigue, all while maintaining a strong commitment to customer satisfaction.
Thomas emphasized the paramount importance of prioritizing the customer experience and perceived added value. To achieve this, Thermomix consistently conducts in-depth research, gathers customer feedback through surveys, and vigilantly monitors customer satisfaction. Moreover, they possess the advantage of enhancing functionality to their devices “over-the-air,” allowing them to continuously meet the ever-increasing expectations of their customers. Thomas says their success is down to the technology and their flexibility in the market: “We are able to react to the increasing expectations of our products.”
Srikanth expanded on this perspective, emphasizing the need to choose the right technology for the task at hand: “If you look at what we are used to, we are used to one-time payments. We are used to one-time deals with our customers, and switching that from one-time relationships to as-a-service and more subscription and long-term relationships is where the challenge of my role is. We have to make sure that we can bring the best in class technology from outside, and use that to make the change.”
Sinan then shared his concerns about the growing challenge of subscription fatigue and the administrative complexities inherent in scaling subscription models: “Subscription fatigue is a big concern for us. The more scalable the subscription model is, the more administratively taxing it can become. Our approach is to model them as ‘frame contracts’ where large portfolios are transparently priced and available on demand. The other way to reduce that is to drive contract value through usage.”
This approach fosters clarity and trust between the company and its subscribers. Furthermore, they’re committed to driving value by closely aligning it with actual usage, ensuring that billed amounts are in harmony with customers’ budgets. This method not only enhances customer satisfaction but also streamlines the subscription experience for both the company and its subscribers.
It’s clear that both revenue model innovation and adopting the right technology are core drivers these businesses are considering to counteract market saturation and subscription fatigue.
3. Essential Technologies for Recurring Growth
We then explored the vital technologies that underpin the success of recurring growth models and how businesses leverage them to achieve their objectives.
Thomas underscored the significance of recognizing their strengths and collaborating with experienced partners for pivotal processes: “For running the business, we have selected experienced partners and platforms that are experts in disciplines like revenue recognition or payment processing.”
This approach ensures that critical functions are carried out efficiently and accurately, contributing to the overall success of their recurring growth strategy. Additionally, they place a strong emphasis on crafting the benefits and unique selling propositions of their customer-facing products, creating a compelling value proposition.
Sinan further identified a suite of specific key technologies that are indispensable for achieving success in ABB’s subscription-based model. These include CPQ (configure, price, quote) systems, which enable precise configuration and pricing of offerings. E-commerce technology plays a pivotal role in facilitating seamless online transactions. The presence of entitlement and licensing systems ensures that customers receive the right level of access and usage rights. And lastly, a robust Customer Relationship Management (CRM) system is essential for comprehensive measurement, helping to track and analyze customer interactions and metrics.
4. The Trajectory of the Subscription Economy and Zuora’s Role
Thomas anticipates many more changes in the nature of B2C subscriptions: “I have the feeling that the Subscription Economy (in the B2C context) is still in an early phase. Subscriptions to content are already common. But when it comes to hardware, services or functionality, there is still a way to go. I hope that Zuora continues to offload the subscription businesses from operational efforts to allow them to keep their customers happy with their services and products.”
Sinan envisions a shift in the industrial space towards including physical components in the subscription model. He sees Zuora’s role as removing operational obstacles, allowing companies to focus on market and customer-level challenges like leasing schemes, liabilities, maintenance, and scalability of services.
Srikanth further added that employing the right technology is what helps businesses like Philips overcome obstacles that might otherwise slow them down: “The technology is really helping Philips make a change and accelerate the change. Bringing in the right technology, which is standard and which has been tried and tested in other areas and with other customers somewhere else, helps us to make sure that our value to our business increases, and the time spent by our business in mundane tasks reduces.”
In conclusion, our panel discussions provided valuable insights into the evolving landscape of subscription models. Thomas and Sinan emphasized the importance of customer-centric strategies and the pivotal role of technology in shaping the future of the Subscription Economy, each offering unique perspectives from their respective industries.
Thanks to All Our Guests and Sponsors
Subscribed Connect Munich owes its success to the esteemed guests and sponsors who supported the event. We express our heartfelt gratitude to doubleSlash, Deloitte, Avalara, Worldpay and all those who contributed to making this event an outstanding success.
The event’s focus on subscriber-led growth and the transformative power of AI offered attendees invaluable insights and actionable strategies for navigating the ever-evolving business landscape. A huge thankyou to our guest speakers Thomas Gerlach (Vorwerk), Srikanth Akkiraju (Philips), Sinan Keilani (ABB), Amadeus Petzke (Monitor Deloitte), and many more!
Want to Learn More?
Stay tuned for more updates and join us in our mission to redefine modern business in the era of recurring growth. As we bid adieu to Munich, we invite you to explore the exciting announcements from Subscribed Connect London, offering a deeper dive into the realm of subscription-based growth. Watch and share recordings of all the Subscribed Live keynotes, customer stories, and product demos from Subscribed Connect London here.
To discover how Zuora can help your business thrive, connect with one of our experts today.