Best of Both Worlds: Bundling Hard Goods and Subscriptions (Subscribed13)
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This document discusses Topcon's transition from selling hardware products to offering subscription-based software solutions. Topcon began introducing online self-service tools in 2009 and moved to a software-as-a-service model between 2010-2013. Most subscriptions are sold as part of hardware kits that include an initial free trial period. Subscriptions sold through distributors must be activated by customers. The presentation covers Topcon's experience developing its subscription business and key lessons learned.
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Best of Both Worlds: Bundling Hard Goods and Subscriptions (Subscribed13)
- 1. Best of Both Worlds: Bundling Hard Goods and Subscriptions Jason Egnal Director, Internet Marketing
- 2. The Nine Keys to Subscription Success $ PRICE ACQUIRE BILL COLLECT NURTURE ACCOUNT MEASURE ITERATE SCALE
- 3. Agenda 1. Introduc=on 2. Billing? 3. 4 Subscrip=on Essen=als 4. Lessons Learned 5. Wrap Up & QA
- 4. About The Presenter Background @Netgear Exper=se J a s o n E g n a l Manage Ecommerce and Internet Marke3ng for NETGEAR's global web proper3es. Establishing and managing corporate web presence. Driving sales through direct marke3ng strategies and programs. Over 15 years of experience in Ecommerce billing systems. Founded, raised capital and sold business with subscrip3on-‐based revenue models.
- 5. NETGEAR W e c h a m p i o n c o n n e c 3 v i t y s o y o u c a n d o m o r e . • 1.2 BN Revenue • Market Cap 1.1 BN • Retail • Commercial • Service Providers • July 2012 Netgear acquires VueZone • Founded 2003, raised $19m • Home Video Monitoring
- 6. Why a Billing System? Background Business Model The Challenge Hardware product operated in the Cloud. Long-‐term rela3onship with customer. Rich, interac3ve service, costly to provide B2B + B2C Direct: VueZone.com Channels: Costco, Amazon, Service Providers. Implement service payment plans before end of first free year. Establish if our customers would pay a recurring service fee. Limited budget.
- 7. Implementa=on Analysis Integra=on Provisioning Product Catalogue • Hardware • Service Plans Tradi3onal ecommerce shopping cart. Inventory Management. Cloud Services. Registra3on. Features by Service Plan. Expira3on.
- 8. 4 Subscrip=on Essen=als Test the market with different offers at different touch points in the customer lifecycle. Price by customer segment. 1 2 P R I C E , A C Q U I R E , R E P O R T , S C A L E Add mul<ple channels, addi<onal languages, mul<ple partners, more customers . 4 Manage a global rollout with country-‐specific pricing, mul<ple en<<es and complex taxa<on. 3
- 9. Subscrip=on Essen=al : Price V u e Z o n e P r i c i n g & P a c k i n g J o u r n e y We ini3ally launched with the first month free First Year Month Free Bundles Tested System/ Service Plan bundles, addi3onal free months, accessory bundles. VueZone Basic/ Premier/Elite Next we offered upgrades Restructured Plan Features App adack! Adach rate explosion.
- 10. Subscrip=on Essen=al : Iterate P R I C I N G B Y C U S T O M E R S E G M E N T S I G N I F I C A N T L Y I N C R E A S E D A T T A C H R A T E Offered all customers the same incen=ves at all touch points Provided different offers to different customers at different =mes Op=mized subscrip=on offer based on channel, past promo=ons, product ownership
- 11. Subscrip=on Essen=al : Report G L O B A L R O L L O U T Account for mul=ple plans with frequent upgrades, downgrades and refunds. Do it globally.
- 12. Subscrip=on Essen=al : Scale G R O W G L O B A L L Y T O D R I V E $ G R O W T H ACME Inc. Began with the US market only, 1 currency, two channels and a small team. Acquisi=on brought mul=ple channels, addi=onal markets, a large accoun=ng department and a global customer support infrastructure.
- 13. Lessons Learned Flexible B E S T P R A C T I C E S Experiment Simplify Understand your billing systems capabili3es and make it conform to your business An un3dy product catalogue is not an un3dy room Keep your billing prac3ces simple
- 14. Wrap Up Test the market at different price points and touch points. Bundle! Know your customer. Where they purchase. How they use your product. Think big -‐ it happens sooner than you’d expect. Your company is global. Subscribers cross borders and currencies with no regard for regula<ons. PRICE ACQUIRE REPORT SCALE
- 15. Q&A Thank You!
- 16. From Hardware to Solutions Introducing Subscription business at Topcon Dave Vopnford Solutions Architect Martijn Hoppenbrouwers Director IT Business Solutions &
- 17. The Nine Keys to Subscription Success $ PRICE ACQUIRE BILL COLLECT NURTURE ACCOUNT MEASURE ITERATE SCALE
- 18. Founded in 1932: Tokyo Op3cal Instrument Company World leader in Precision Measurement and Posi3oning Solu3ons Major Shareholder: Toshiba Corpora3on 3 Major Companies Posi3oning Smart Infrastructure Eye Care About Topcon
- 19. 2009 Road to Saas Emergence as soiware as key component of business model. Tradi3onal ERP no longer suffices 2010 2011 2012 2013 Online self service tools introduced. Stabiliza3on & healthcheck period. Saas as standard. Upgrades, renewals, direct delivery.
- 20. Most, but not all, subscrip3ons are sold as part of kits including hardware. Most, but not all, kits have an ini3al free or pre-‐paid period. Soiware sold to a distributor with subscrip3ons need to be ac3vated by customers. Subscrip3ons need to be tracked by ac3vated device, distributor, end user and ac3vated modules. The hardware needs to be able to check in with SaaS plakorm for available and ac3ve modules. Our Subscrip=on Susiness
- 21. Today At Implementa=on Our Challenges • We were building our first SaaS plakorm. This is a learning process, with many unknowns. It took some itera3ons to get right. • Risk of losing focus – we are a small team that was simultaneously implemen3ng SAP for our company. • Based on our implementa3on experiences we have been able to steadily increase our offerings; upgrades, maintenance packages, online ac3va3ons. • SaaS is being supported by all the regular business func3ons through Zuora, SalesForce and SAP.
- 22. To use available technology and tools as much as possible, in order to leverage exis3ng best prac3ces to the fullest. Maximize our flexibility by minimizing our reliance on on-‐ premise and pre-‐SaaS control-‐centric tools. Our Approach
- 23. Model Distributors Distributor Orders Distributor Invoices Products/Part Numbers Order Triggers Product Triggers Product Modules Sobware Serial Numbers Ac=va=on Codes End User Companies and users Cer=ficates Communica=ons Product Catalog Subscrip=ons End User Invoices Credit Card Data
- 25. All integra3ons created internally with Zuora order builder func3ons: • Create accounts • Create payments func3ons • Create subscrip3ons • Modify subscrip3ons • Process direct and distributor sales • Manage reminders, renewals and upgrades Development
- 26. Topcon created, owned, cloud based SaaS plakorm. Single set of func3ons rolled out to mul3ple product development groups. No implementa3on or consul3ng cost. No added headcount un3l business model had proven revenue! Mission Accomplished
- 28. Q&A Thank You!