http://bit.ly/IOTeBook
The Internet of Things is an unavoidable disruption for most businesses. With gadgets that connect people with data and incredible new services, the future is at our fingertips. IoT has created a new way of doing business, and the customer relationship is at the center of everything. So what does that mean for you?
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Revenue Relationships in The Internet of Things
1. Slide 1 − Zuora Confidential, not for distribution beyond intended recipientSlide 1 − Zuora Confidential, not for distribution beyond intended recipient
Why Zuora
Zuora Provides a BluePrint to Succeed in the Subscription
Economy!
Revenue
Relationships in
The Internet of
Things
By Travis Huch
2. Confidential and Proprietary Information. Do not distribute beyond intended audience.
Agenda
2
• Why the IoT is bigger than any single trend
• The Five Revenue Relationships in IOT that matter
• Every model for increasing revenue in IoT
• The Disrupters
• IoT devices from Kickstarter
• Success patterns for enterprises
• The challenges
• Summary
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3
The World is
Changing
Gartner Says the Internet of
Things Installed Base Will Grow to
26 Billion Units by 2020 and is a
$3.8 Trillion New Era
- Gartner Press Release 12/12/13
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This is a Huge Shift – B2C
Connected Home
Connected Car
Connected Self
Connected Consumer
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Construction
Telematics
This is a Huge Shift – B2B
Embedded Diagnostics
Building Control Systems
6. Slide 6 − Zuora Confidential, not for distribution beyond intended recipient 6
Twine Wireless Sensor
Zuli Smart Plug
Smart Things
StickNFind
The Kickstarter IOT Disrupters
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7
Are You
Building
A Device?
Are You
Building A Way To
Have A
Relationship
With Millions Of
Or
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The Five Ways to Build a Relationship with
Millions
(DON’T J UST BUILD A DEVICE)
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1. Information As A
Service
2. Bundle Play
3. Pay As You Go
4. Loyalty Play
5. Device Only
( D ATA P L AY )
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9
Information Play
Traditional revenue came from large
gene sequencing machines
Now able to leverage cloud for compute
storage and contextual sharing
Subscription to consumables as well
as the aggregated data from machines
Collaborative research /Comparative
use
BENEFIT: Recurring revenues that
are increasing significantly YOY
#1
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10
Benefit: Nanthealth instantly gains
massive access to distribution and
guaranteed revenue stream. 400+%
YOY growth 98% adherence.
Bundle Play #2
The device is a cap on a prescription
drug bottle. Glows to remind the patient
to take drug. If cap not opened,
caregiver notified over the network.
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11
Usage-based Insurance. The
Metronome transmits your mileage.
Costs $.03 to
$.06 per mile on average $30 - $60 per
month
Benefit: Urban drivers can save an
average of $400 per year
Pay As You Go #3
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12
Belly provides loyalty solutions that
drive consumers into retail locations
with incentives and offers. Repeat
business is the best business.
Benefit: 7-11 benefits from not
having to engineer and manage its
own loyalty solutions.
Loyalty Play #4
+ =
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13
Nike FuelBand uses gamification
and social media to drive customers
to set goals, and connects them
with the Nike community. The end
user just buys the band
Benefits: Nike Inc’s global
revenues increase by 16% in
2012, its highest growth in 15
years
Increased customer insight
Device Only Play#5
14. Slide 14 − Zuora Confidential, not for distribution beyond intended recipient
DREAM BIG
“Hey, I don’t want you to lose that dog I sold you.
Let’s put a GPS collar on him.”
“Oh, I’ll just pick up Ironman from where Johnny just
stopped watching on Netflix in the house and I’ll
stream it to the back seat of the Yukon so he doesn’t
miss the big fight”
“I’m just going to send you a new water filter for your
fridge. The one you have in there is so gross.”
“My beacon picked you up on the way in Sally, here is
your Americano just like you like it.”
“Travis, I don’t think you should keep going up this
hill. You’re already at 155 BPM. “
15. Slide 15 − Zuora Confidential, not for distribution beyond intended recipient
Infinite
pricing options
Success Patterns for Enterprises
• Prepare for a business model transformation
• Leverage the usage data of how and when and where to
improve the user experience and create a relationship
• Specialize on what you’re good at – you can’t build everything
• Think about tiered value as part of the architecture
• Build for change – future-proof your solution
• Enable customers to identify themselves as power-users.
The who in the relationships are key
• Set a bar for success of recurring vs. one-time revenues for
Year 1
16. Slide 16 − Zuora Confidential, not for distribution beyond intended recipient
BUT, There are Challenges
• The systems to manage
inventory is not the
systems that will
manage the relationship
• Rate of change
• The new 2 tier
distribution: Device sold
on Amazon - The
subscription sold direct.
• Churn
17. Slide 17 − Zuora Confidential, not for distribution beyond intended recipient
Infinite
pricing options
And Inherent Complexity in IOT
• Hardware is different than the
service
• Length of service period and
contract
• Connectivity may be bundled
• Notion of peak or seasonal usage
• Multiple Units of Measure (devices,
users, storage, etc
• Different categories of buyers
• The pricing you start with will
change!
18. Slide 18 − Zuora Confidential, not for distribution beyond intended recipient
Can you engage and manage at
scale?
Can you change pricing in weeks?
Can you move from one basic unit
to another (users, GB, devices)
Can you handle the use cases?
(renewals, upsells, downsells)
Is sales part of the experience
(quoting)?
International and regional pricing?
Will you support electronic
payments?
Questions to
Consider
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Our Experience with Internet of
Things
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Autonet Mobile
20
• Remote start
• Unlock
• Find my car
• Geofencing and breadcrumbs
• Remote Diagnostics
• In car WiFi for any application
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Summary
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• Business model innovation is as important as
tech
• Build a tiered value architecture
• Build flexibility into the system
• Focus on your core strengths – don’t build
everything
• How can you make the user experience great?
22. Slide 22 − Zuora Confidential, not for distribution beyond intended recipient 22
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23
Thank You!
travis@zuora.com
@travishuch
Let me know if you are interested
in participating in our IoT panel
discussion at Subscribed 2014!