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2001! 2011

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By 2015, 35% of Global 2000 companies will generate revenue through subscription-based services and revenue models.

April 2011: Building a Strategy for the Subscription Economy

The World is Moving to a Subscription Economy

Amazon Prime slide

#Subscribed13 tweets will receive 50% off first shipment

The Zuora Community is Ground Zero

The Face of Innovation

HIGH TECH

SAAS

CLOUD

MEDIA

DEVICES

TELECOM EDUCATION

HEALTH CARE

BUSINESS SERVICES

CONSUMER

The Global 2000

20 Billion

Contracted Invoice Volume

1 New Product Created Every Hour

On Average …

10X Growth

10,012,288

1,536,533 AUG 2012

AUG 2013

Investing in Technology

25X 10X 60X Faster Syncs Faster bill runs More capacity

Customer Success Staff

2012 2013

Investing in Customer Success

100 90 93 91 95 98 94 96 97 97

0

25

50

75

100

Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13

"Prompt response even though was delegated non urgent"

Lauren Wood,

"The response was quick and detailed."

Jalal Radwan,

"Amazing as usual. Thanks Rossi.”

Juan Delard de R.

We analyzed 6 years of data

1 million conversations with subscription economy leaders

“What is the best way to price?”

“How do I reduce churn?”

“How should I compensate my sales force?”

“How do I reduce the number of failed credit card transactions?”

“Should I charge a setup or implementation fee?”

“How do I account for multi-year contracts?”

“As I expand internationally, what payment or tax issues will I encounter?”

“Should I offer monthly or annual billing periods?”

We analyzed 6 years of data

A picture starts to emerge

You are trying to Price Acquire Bill Collect Nurture Account Measure Iterate Scale

Importance of each of the 9 things

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 2 3 4 5 6 7 8 9

Price 11%

Acquire 12%

Bill 14%

Collect 12%

Nurture 11%

Account 11%

Measure 9%

Iterate 11%

Scale 9%

Support Cases Categorized By 9 Things

Introducing the 9 Keys to Success in the SubscripNon Economy

PRICE

ACQUIRE

BILL

COLLECT

NURTURE

ACCOUNT

MEASURE

ITERATE

SCALE

Simple per-unit pricing

Infinite pricing options

2220000000

? A new way to think about pricing

Increase Cash Flow

Drive Down Cost of Sales

Outflank the competition

Grab Market Share

Increase Loyalty and Retention

Pivot into a new segment

Expand Internationally

The Ability to Price in support of your business goals

is the first Key for Success in the Subscription Economy

It sounds easy

Billing

Gateways

fulfillment

provisioning

Immediate or delayed payment

Connect to CRM

Notify

Connect to accounting

Self service vs assisted flows

But it’s Harder Than It Seems

We live in a B2Any world

B2C B2B

NCR Silver

automated commerce, billing and finance

launched new service

in just 2 months

Bill Plummer

The Ability to Quickly Acquire Customers in a B2Any World

is the second Key for Success in the Subscription Economy

Billing used to be simple

Ship Bill

$10

new customers

Existing customers

Pro-rate Usage

Ship Bill

Confused customers

Weeks to generate bills

Billing Errors

Lost Revenue

1

2

3

4

Every bill is an interaction with your customer

“But I signed up for the $100/month plan”

with complex usage billing models

hands-off invoicing for thousands of clients

in multiple countries

Firehost Katrena Drake

The Ability to Create Accurate, Clear Invoices at Scale

is the third Key for Success in the Subscription Economy

Electronic payments Non-electronic payments

Credit Cards Debit Cards Wire transfers

Catch exceptions

Multiple card types Country specific

banking rules

Retries Card updaters

Manual Lockbox

Receive payment

Notify delinquents

Write off payment Reconcile Suspend service

The need to automate

DIRECT DEBIT

Handling of Exceptions

Xplornet

Xplornet processes hundreds of thousands of payments in

hours

Across multiple payment methods

And manages payment exceptions and retries

automatically

The Ability to Tame the Complexity of Payments

is the fourth Key for Success in the Subscription Economy

Build Valuable Relationships

The Secret: Give Customers Control of the

Relationship

Remember the 2nd Key: Acquire?

Subscribe

That Was Just the Beginning

Subscribe

Renew

Suspend

Add-on

Upgrade

Sign up

Validate CC Validated

Create Bill Process Payment

Create Account

Link Account

Confirm Sign Up

Welcome Email

Create SubscripNon

Provision Service

WEB

SITE

BILLING

CRM

PLAT

FORM

News InternaKonal

Implemented “Holiday Stops”

allowing hundreds of thousands of subscribers

to suspend service

in a matter of weeks

online or via call center

The Ability to Nuture And Develop Deeper Customer

Relationships is the fifth Key for

Success in the Subscription Economy

“I’ve got this massive spreadsheet I use to track Revenue”

“It’s Taking Longer and Longer to Close My Books”

“It’s becoming harder to harder to reconcile financial info across all my

different systems”

“The IT department used to be known as Dr. No …. But now, it’s the finance

department”

There’s no accounting for subscriptions Booking

Subscription

Billing

Cash

Revenue

Dyn

and 3 days better business operations

Our monthly close is 3 days shorter

I get 3 days better intelligence

every single month

Gray Chynoweth

The Ability to Easily and Quickly Account for

Bookings, Billings, Cash and Revenue is the sixth Key for


You used to track these metrics

Revenue $100 COGS (30) Gross Profit 70 OperaNng Expenses S&M (20) G&A (10) R&D (20) Total Op Ex (50)

Net Income $20

Now you track these metrics

ARR $100 Churn (10) Net ARR 90 COGS (20) G&A (10) R&D (20) Recurring Profit 40 Growth (40) Net New ARR 40 Ending ARR $130

Recurring Profit Margin

Growth Efficiency Index

Retention Rate

Your current applications don’t give you the metrics you need

SendGrid

And visibility into future revenues

When the board calls

we‘re able to give them actuals from prior months

Jim Franklin

The Ability to Instantly Access

Subscription Economy Metrics is the seventh key for


Pricing iteration is crucial to support growth

You can’t afford this …

“The next available engineer will see you in 6 months”

The ability to Rapidly Iterate On Your Pricing and

Acquisition Strategies is the eighth key for


Why build all this into your service?

Pricing

Payments

Taxation

Billing

Rev Rec

Secure

Mission Critical

Scalable

Rating

When you could do this?

Integrate with an ecosystem that supports your service

Customer support

Inventory

Fulfillment

EnKtlements

Website

Provisioning

Commerce

Billing

Finance

Payments

GL

quoKng

orders

invoices

checks

events

account status

account balance

metrics

The ability to Run on a Scalable, Reliable, Mission

Critical Infrastructure is the ninth key for


Introducing the 9 Keys to Success in the SubscripNon Economy

These are the 9 Keys to Success in the Subscription Economy

The 9 Keys Require Different Systems

The 9 Keys Require a Different Approach

to COMMERCE

Change to Tesco instead of Target

•  Amazon cart

PROBLEM :

•  Don’t support consumption-based pricing models

•  Can’t Deal with Time

•  Can’t nurture subscriber relationships

•  Are not multi-channel

Shopping Cart Commerce

Relationship Commerce

Pricing Engine

Features blurb

For Infinite Levels Of Monetization

ü Flat Fee ü Per Unit ü Volume ü Prepay ü Tiered ü Annual ü Monthly ü Quarterly ü Free Trials ü Discounts

ü Overage ü Smoothing ü Rollover ü Uplifts ü Tiered Overage ü 2 Years ü 5 Years ü 18 Months ü Specific Months ü Semi-Annual ü Promotions

Lifecycle Orders

Features blurb

To Manage Changing Levels Of Relationships

ü Subscribe Orders

ü Upgrade Orders

ü Downgrade Orders

ü Renewal Orders

ü Cancellation Orders

ü Add-On Orders

Multi Channel Platform

Features blurb

Enabling Commerce Anywhere, Anytime

ü Subscription Quotes

ü 360 Sync

ü ZDK

ü REST APIs

ü Ruby and Java Toolkits

Configurability

Features blurb

Enabling Rapid Deployments Of Tailored Experiences

ü Quote Wizard

ü Reusable Page Components

ü Product Selector

ü Account Selector

ü List Components

ü Discount Configuration

Pricing Engine

Lifecycle Orders

Multi-Channel Platform

P o w e r s R e l a t i o n s h i p C o m m e r c e

Configurability


to BILLING

Invoicing vs Billing

•  Create clear, accurate invoices

•  Scale from 1 to 10 million invoices

•  Tame the complexity of payments and collections

•  Support any payment method

Payment Automation

Breadth of gateways

Exception Management

Adjustments & Write-Offs

Billing Automation

On demand or batch rating

Notifications and Alerts

Trigger Based Billing

Invoice Presentment

Template Configuration

Template Library

Invoice Delivery


to FINANCE

1494 A.D.

Luca Bartolomeo Pacioli

inventor of Double Entry Bookkeeping

Can’t differentiate between one time and recurring amounts

Can’t spread revenue over time Can’t handle subscription changes

PROBLEM :

•  Don’t differentiate between one-time and recurring amounts

•  Can’t spread revenue over time

•  Don’t know what to do when subscriptions change

Double Entry Bookkeeping

Subscription Finance

Accounting Close Tools Tools to accelerate your month-end close

Define rules to manage complex revenue recogniKon policies Tag charges with revenue revenue and deferred revenue GL accounts Tag charges with with revenue recogniKon rules Control revenue recogniKon trigger dates View earned and deferred revenue reports

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Revenue Recognition Tools That handle complex revenue rules

Define rules to manage complex revenue recogniKon policies Tag charges with revenue revenue and deferred revenue GL accounts Tag charges with with revenue recogniKon rules Control revenue recogniKon trigger dates View earned and deferred revenue reports

✔

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Chart of Accounts to track charges through the revenue lifecycle

Create or import your chart of accounts Tag charges with GL account codes Tag transacKons such as payments, credits, refunds, adjustments etc with GL account codes

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Easy Accounting Integration to unburden your IT team

Generate debit and credit journal entries to simplify your general ledger updates Align journal entries with GL accounts

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Tight Security Controls For audit peace of mind

Create custom user roles Associate roles with granular user permissions Control visibility and user acKons on sensiKve financial data

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Reuse the audit peace of mind screen shot from the website

Revenue Rules Engine

Auditability

Accounting Periods

Chart of Accounts

Trial Balances

Journal Entries

Journal Entries

F u l l S u b s c r i p t i o n S u b l e d g e r

A subscription subledger for your general ledger

General Ledger

The 9 Keys Require Commerce, Billing and Finance to

work together

Book Order & Ship It

Invoice & Collect For It

Recognize It

Traditional Business

Commerce Billing Finance

Order

Invoice

Subscription Business

Order

Invoice


Revenue

Invoice


Orders Invoices

Revenue




Introducing T h e f i r s t r e l a t i o n s h i p b u s i n e s s m a n a g e m e n t s y s t e m

Demo

T h e f i r s t r e l a t i o n s h i p b u s i n e s s m a n a g e m e n t s y s t e m