SugarCon 2013: How the Subscription Economy is Affecting Businesses and CRM
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Denis Pombriant, Beagle Research Today you can buy almost anything through a subscription from food and wine to clothing and accessories to cars and, yes, software. While most audience members may be familiar with subscriptions from the consumption perspective, subscriptions are changing much of what we know about all aspects of business. Managing a subscription company can be challenging in part because customers are invisible across the Internet. Frequently managers have to rely on insufficient information for decision making. This session explores how subscription companies’ information needs are different and discusses some of the top metrics that subscription managers can obtain from customer data to manage their businesses better.
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SugarCon 2013: How the Subscription Economy is Affecting Businesses and CRM
- 1. Denis Pombriant Managing Principal Beagle Research Group, LLC Driving Success with Subscriptions Making a Win/Win
- 2. The New Paradigm BUY NOW SUBSCRIBE Then Now
- 3. Lots of Tech Examples
- 4. Beyond Tech… “By2015, 35%of Global 2000 companies will generate revenuethrough subscription-based servicesand revenuemodels.”
- 5. Driving the Subscription Economy Technology Trends Economy Business Model Capitalism at its Best
- 6. Vendor Side Less Pretty
- 7. Lower cost of entry Ability to modify agreement almost at will Lower ongoing costs Greater reliability Business Model Advantages
- 8. More customers can suddenly afford your product Greater flexibility Configuring products Taking them to market Rapidly scale your business Eventually more predictable revenue streams, if you manage the business right Vendors Like It Too
- 9. More invoices to process (and get right!) The possibility of customer change at any moment requires great flexibility from your systems Rapid product prototyping SKUs!!! You can’t reach out and touch your customers Can Your Systems Keep Up?
- 10. Four Key Attributes Subscription Reality Capture Big Data Social Media Financial Systems Analytics and Predictive Modeling Develop Metrics
- 11. Customer data – social media Use data – primary system Financial data – financial system Big Data
- 12. They do different things and you need both Analytics Retrospective, How did we do? Predictive modeling What if? Analytics and Modeling
- 14. Recurring Revenue — ARR, MRR Deferred revenue (booked, unbilled, etc.) Customer Churn Rate – Avoidable? Renewals Customer Lifetime Value Value Remaining Gross/Net Attrition — avoidable, unavoidable Metrics
- 15. Customer Churn Rate The historical average of the percentage of customers who leave a service on a monthly basis. Growth [ARR * Retention Rate] + [Unbilled Deferred Revenue for forward 12 months] – [Projected Churn] + Planned Growth Rate * Last 12 months ARR Some Basics
- 17. Retention rate: What % of ARR comes back? How hard is it to keep? Recurring Profit Margin: ARR – Churn – Non-growth Spend Growth Efficiency: Cost of getting $1 of new ACV (affected by marketing costs + onboarding costs + upgrades, renewals, churn etc.) Core Ideas
- 18. In Short… “The metrics for Cloud computing is fairly different from traditional enterprise software.” Bessemer Venture Partners – Top 10 Laws for Cloud Computing
- 19. Metrics Matter
- 20. Conventional ERP ERP + spreadsheets Roll your own Only captures data Still need good analytics You Really Need a System
- 21. Your Business Processes CRM ERP GL
- 22. Lots of Vendors Achdirect, Aria Systems, Ascenduregroup, Batchbill, Bill.com, Billing Circle, Blusynergy, Cannibill, Chargebee, Chargify, Cheddargetter, ChickPea, Cloudability, ,Evapt, Fusebill, Magnaquest, Metanga, Monexa, NetSuite, Paysimple, Recurly, Saasy, Zuora
- 23. Subscription business model is here to stay Your customers see you as an expert You are going to need it as markets continue to shift Embracing it will help you grow your business Use case for analytics and metrics Conclusions
- 24. Beagle Research Group, LLC www.BeagleResearch.com 781-297-0066 Thanks!
Notas do Editor
- Subscribe rather than purchase and save resources for other deploymentsEven the big guys are converting
- Subscriptions are a happening thing. Avis bought ZipcarEither getting a better product or a better customer experience because the service fits your life better than the product alone.Younger demographic is adopting subscriptions and subscription products like bike sharing services
- Technology trends — anything can be delivered as a service through Internet and fast, reliable shippingEconomy and Demand — slack demand in many sectors as people and companies want to preserve cash rather than spend large sums on single deploymentsBusiness Model — Better model for growth, lower overhead, more automated modelCapitalism at its finest — strips out the business clutter, enables vendors and customers to run lean, sets up a recurring revenue stream.
- Vendors find it hard to make the switch because they take in revenue in smaller chunks and Wall Street doesn’t know how to value them.Hard to monetizeHard to explain to Wall StreetHard to keep customersHard to trackBut companies that don’t adopt eventually find that their customers and markets are moving away from them regardless.
- The case for mobile and the need for it are realities that all businesses have to deal with. Over the last decade we’ve seen a growing infrastructure of standards, devices and increasingly powerful networks that have set the stage for very good mobile computing. These components have delivered the basics of mobile computing but most companies still need two very important bits that are unique to their businesses.
- Too often budding subscription companies either try to make a conventional ERP system do the job with great difficulty or they build their own system (not a good use of resources) or they resort to spreadsheets (no controls, easily corrupted)