David Gee is the CMO of Zuora. Gee joined Zuora’s executive management team in 2015 with more than 20 years of experience marketing innovative enterprise and mobile computing products and solutions and having held leadership positions at a number of top global technology companies including HP, Yahoo, and Infloblox.
Tell us a little about what to expect at the Subscribed conference this year.
Subscribed is our annual user conference. It will take place June 5th-7th in San Francisco at the Marriott Marquis and it’s going to be our largest event ever. We’re hoping to get over 2,000 attendees comprising of our customers, prospects, thought leaders, analysts and various decision makers to come spend two and a half days with us. It’s a program that is beyond anything we’ve ever done before and we’re really excited about it and you’re going to hear from industry leaders such as GE, Ford, Caterpillar, Symantec, HP Enterprise and then companies like Fender who do really interesting things in the music industry.
We’re going to talk about design thinking with the CEO of IDEO and we’re going to be talking about some revolutionary interesting subscription models in some places you’d never have expected subscriptions to be taking hold. One is a company called Eleven James, which is high- end watches-as-a-service, where you can replace your high-end watch on a monthly basis and never get stuck with the same one twice. It’s a fascinating story! The other one that I’m particularly excited about is Inspirato, which is really changing vacations to be customized and unique and centered around the subscriber. There are going to be tracks around technology, finance, and business transformation. It’s incredibly valuable.
Your team launched the first ever Subscription Economy Index a few months ago. What exactly is the index and why do we need it?
At Zuora, we have this enormous amount of insight and data into what’s going on in the Subscription Economy based on the fact that we have close to a thousand customers who are billing and running their businesses through our platform So, we wanted to figure out the health of the subscription economy, was it growing and what insights could we glean from that?
We wanted to test the hypothesis that the Subscription Economy businesses are growing and growing faster than the general economy. The first Subscription Economy Index revealed that businesses that have adopted the subscription model are growing about nine times faster than their counterparts in the S&P and about four times faster than US retail sales.
It’s pretty incredible to see and that growth is across multiple industries and it’s across almost every geography where we have a footprint today. So, it’s a universal vindication that adoption of subscription business models allows for faster growth than almost any other business model that we see out there today.
We published our first Subscription Economy Index back last November version two is in development right now. Our goal is to publish the results of the second version of the index at Subscribed.
Did you uncover other trends such as which segment is growing faster, B2B or B2C? What about differences between industries?
B2B grew fastest which was about 22% between 2015 and 2016 and that same time period, B2C was at about 16%, so about a 6% difference. Now the other things that we saw at an industry level were that SaaS, as you would expect, was the fastest grower at 25% o, but both media and telecom were growing at 15%. And if you think about the media space, in particular about newspapers and publishers, who you’d think are really struggling in this shift from print to digital…they are finding new avenues of revenue growth by taking advantage of the subscription model and, providing unique content and experiences to expand their customer base.
While there’s no doubt that the Subscription Economy is growing exponentially, success in this space isn’t all that easy. Businesses have to adapt to new ways real fast and the shadow of “Customer Churn” is certainly a concern…did you look into it as well?
We started to and I think we’ll get deeper into it the second time around and we’ll also have some geographic differentiation as well to highlight. What we learned back in November was that average churn rates are generally between 20% to 30%. SaaS technology companies are on the lower end of that and physical goods are generally slightly higher than the average and not surprisingly, churn is highest for B2C companies.
As a consumer, you find that the cost of switching services can be pretty low unless there’s something really compelling. And what happens when your credit card gets stolen or it’s the one you no longer want to use or it expires? Before you know it, you effectively become a churn. So these are all the things that as a B2C company, you have to get your arms around really quickly. The Zuora platform can help in various ways to negate some of those churn risks.