why subscriptions are good for customers…and business by brent leary
DESCRIPTION
As consumers adopt new technologies and adapt their lifestyles to take advantage of what it can do for them, they are gravitating towards companies willing to shift the way they have always done business in order to provide services more suitable to tech savvy people. This session will discuss what is driving the growth of The Subscription Economy, how new business models are creating better opportunities to extend relationships with customers, what metrics are being used to measure the health of a subscription business, and share case studies of companies that have successfully made the transition product based businesses to subscription offerings.TRANSCRIPT
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Why Subscrip-ons are Good for Customers…and Business
Brent Leary CRM Essen/als @BrentLeary
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Fed up and not taking it anymore…
@brentleary
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Enter the Subscrip-on…
@brentleary
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The Evolu-on of Customer Behavior
80% of execu-ves said their customers are changing how they obtain access to goods and services”
Economist -‐ 2013
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What’s changed with Customers …what hasn’t?
@brentleary
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Making the most of a flee-ng moment
"The aLen-on economy is not growing, which means we have to grab the aLen-on that someone else has today."
@brentleary
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Making the most of a flee-ng moment
@brentleary
"You can’t buy aLen-on like you used to…"
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Speed THRILLS. Lack of it KILLS
@brentleary
300 Milliseconds to connect ac/ons to experiences
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What is the
9
By 2015, 35% of Global 2000 companies will generate revenue through subscription-based services and revenue models.
1999! Today
Subscrip-on Economy?
BUY NOW SUBSCRIBE
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10
Dollar Rubber Club
Condoms
Salon
Media
StudyDog
Child Learning
Disney
Content
Bespoke Post
Luxury Items
Savvy Money
Finances
Spice Guides
Date Idea
Spo-fy
Music
Businesses Can Subscribe To Anything
NeZlix
Movies
VMWare
Virtualiza<on
Google Apps
Apps
Amazon
Infrastructure
Dex One
Marke<ng
Intacct
GL
DelTel
Phone System
Concur
Travel/Expense
CRM ServCorp
Virtual Office
Consumers Can Subscribe To Anything
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Why Subscrip-ons?
• Technology • Demand • FAIR Business Models • Opportunity to stay connected to customers
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Beats by Dre
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Beats Music
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Spo-fy…and Framily
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Dre, Beat Up…
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The Birth of a Subscrip-on Company
“Before we knew we were going to be a marke-ng company, we knew we were going to be a subscrip-on company.”
Dharmesh Shah -‐ Hubspot
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The Birth of a Subscrip-on Company
“it's -me to think about business as a collec/on of customers and find ways to drive loyalty, repeat purchases, and greater revenue..”
Brian Bell-‐ CMO of Zuora
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Become a Data Geek...not a HiPPO
Subscrip-on Companies are Data-‐Driven
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Not this kind of hippo
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hippo
This Kind of HiPPO
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Be A Geek…A DATA Geek
“The great thing about fact-‐based decisions is that they overrule the hierarchy.”
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The Milkman, Data & Subscrip-ons
@brentleary
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Data-driven Subscription Businesses Align by Buyer Persona
Owner Oscar Team (1-50 employees)
MidMarket Mary Team (50-500 employees)
Enterprise Erica Team (500+ employees)
Group Sales & On-Boarding 1-to-1 Sales & On-Boarding Advanced Sales & On-Boarding
Oscar Marketing
OscarSales
Oscar Services
Mary Marketing
Mary Sales
Mary Services
Erica Marketing
Erica Sales
Erica Services
Ø Replaced marketing, sales, and services meetings with buyer persona meetings Ø Re-organized seating around cross-functional buyer persona teams Ø Customized marketing SLA, sales effectiveness, and customer success metrics to persona
@brentleary
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Consistent Persona Metrics
Metric Oscar Mary Erica LTV/CAC 5.2 11.5 19.0
CAC $6,250 $15,500 $28,750 MRR Churn 1.3% 0.7% 0.5% Avg MRR $425 $1250 $2725
LTV $32,700 $179,000 $545,000 Months to Payback
14.7 12.4 10.6
MRR Growth (Q2Q)
18% 27% 34%
MRR / Rep $4,750 $7,250 $10,500 NPS 47 65 62
Leads per Cust. 540 2,400 6,625
@brentleary
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DATA AS AN ADD-‐ON SERVICE
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Subscrip-on Companies are Customer-‐centric
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Subscribing to Ties???
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Base: All respondents (n=1026) Q.7 At which point you would start to feel …? TOA Technologies - 2011
Founda-on of Customer Service
United States
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Mayday: Customer-‐Centricity in Ac-on
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Oracle President on Subscrip-ons
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Amazon Subscribe & Save
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The Subscrip-ons Require Different Approach to Business
• Focus on Mone-zing Customer Rela-onships vs. Selling Units
• Pay-‐as-‐you-‐Go Pricing Plans • B2Any: Sell to Consumers & Businesses
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Prime Time
• Over 10 Million Members
• Membership doubled in last 2 years
• Es-mated to grow to 25 Million members by 2017
* Morningstar, 2013
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Prime Time • Increase their purchases on Amazon from $400 a year to $900 a year aEer they join*
• Spend 130% more than regular Amazon customers*
• May be responsible for as much as 20% of Amazon’s overall sales in the U.S (BusinessWeek)
* Prac/calEcommerce.com
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Oracle President on Subscrip-ons
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Time to be FAIR…Doubly FAIR
• Fast…and Flexible • Analytical…and Agile • Interactive…and Integrated • Reliable…and Responsive
@brentleary
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And the Emmy goes to…neZlix???
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The Subscrip-on Metrics System
Recurring Revenue • Monthly • Annual
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The Subscrip-on Metrics System
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The Subscrip-on Metrics System
Easy as ACV – Annual Contract Value
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Pyramid of Customer Loyalty
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Thank You!
@BrentLeary BrentLeary.com