The Business Show 2014 - Subscribing to the Future

Dominic Smith Marketing Director

Cerillion Technologies

Subscribing to the future

The Subscription Revolution

Competitive Pressures

Pricing Strategies

Cloud Billing Applications

What to look for

What to avoid!

Summary

Agenda

27-Nov-14 www.cerillionskyline.com Slide 2

The Subscription Revolution

Individual product sales

Unpredictable revenue

High cost of sales

Loyalty tactics:

Reward points

Warranty registrations

Selling a *relationship*

Regular customer contact

Guaranteed revenue

Upsell and cross-sell

Renewals and upgrades


PRODUCTS SERVICES

Subscription Examples


Consumer

Digital Services Goods as a Service

Enterprise Education

Automotive

Increased revenue at The Met cinema (California) from $700k / year to $1.5 million

$20/month subscription for unlimited cinema viewings

Movie Subscriptions?


Industry Adoption of Subscriptions


Maturity

Gro

wth

Telecoms

Utilities

Digital Services

IaaS / PaaS

Retail Automotive

Insurance

Publishing

Media

Public Sector Transport

Education

Healthcare Not for Profit

Bubble Size = Current Market Size



Porter’s Five Forces Michael E. Porter, Harvard Business School (1979)

Diagram courtesy of Graham Childs, Wikimedia Commons

Used to determine the attractiveness of a market

Applies to both Product and Service markets



Threat of Substitute Products

• Physical products replaced by digital

• Over-the-top (OTT) services

Threat of New

Entrants

Bargaining Power of

Customers

• Online comparison services

• Social Media

• Low barriers to entry for digital services

• Competitors from lower cost locations

• New entrants with more financial power

Subscriptions – what customers think


Over-paying?

All I Can Eat

Simplicity

Predictable Cost

Lower Quality

Locked-in

Gym Membership Statistics (USA)

$55/month average subscription

$39/month average wasted from under utilisation

67% of members never go to the gym!


Subscriptions – one-size-fits-all?

Source: http://www.statisticbrain.com/

Other Pricing Strategies


Freemium

Bundling

Pay per Use

Greater market awareness / penetration

Pre-qualified leads for upsell

Average 1% conversion rate

No loyalty to free version

Try out a premium service

Flexible control of spend

Higher price per unit

Adds value to the principal offering

Increases penetration for niche offerings

Diminishes the value of niche offerings

Subscriptions – Pricing Flexibility


Freemium Bundling

Pay Per Use

Prepay

Rewards

Discounts

Promotions

Subscriptions: Consumers vs Businesses

• One-size-fits-all approach to market

• Light touch sales process (order-taking)

• Automatic payments (e.g. recurring credit card, direct debit, etc)

• Tailored offers unique to each enterprise

• Active selling & account management

• Managing enterprise structure/cost centres

• Offline payments (Net 30) B

usi

ness

-to-C

onsu

mer

(B2C)

Busin

ess-to

-Busin

ess (B

2B)


Subscribing to the future

Club Memberships

• Annual subs

• Monthly subs

• Day passes

• Prepay “lifestyle”

Enterprise Software

• Per seat

• Transactions

• Bundles + overage

• Pay as you go

Retail Goods

• Goods-as-a-Service

• Base product/ maintenance

• Upsell add-ons/upgrades

Cosmetic Surgery

• Care plans

• Spread cost of high value items

• Botox-as-a-Service ?!


The Rise of Cloud Technology

Increased Business Agility

Software-as-a-Service (SaaS)

Platform-as-a-Service (PaaS)

Infrastructure-as-a-Service (IaaS)


So how can this be achieved?

Pricing flexibility (mix subscription / usage models)

Designed for B2C and B2B services

Enterprise SLAs (billing / payment data!)

Transaction processing performance & scalability

Company stability and billing expertise

What to look for in a Cloud Billing app


SaaS Checklist

Online service with no hardware required

Implement in days/weeks

Try before you buy

Configuration but not customisation

Vendor independent services

Regular software updates

Easy data import / export

Pay for what you use

Multi-device support


What to avoid!

“Cloud-based” Systems

In summary

The subscription revolution is gathering momentum in all industries

Competitive pressure means that simple subscriptions must evolve to more sophisticated charging and billing models

The new generation of cloud billing applications means that flexible and scalable billing is no longer the preserve of on-premise systems

Beware of “cloud-based” systems that are not all they seem


Any questions?

Cerillion Skyline is a next generation Cloud Billing solution

for digital and non-digital services

Meet us at Stand 618

www.cerillionskyline.com @skylinebilling


Customers

Products

Billing

Payments

Financials

Collections

Usage

Security

Reports

Integration