sydney subscribed 2016: metrics that matter - an operational framework for running your subscription...
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Metrics that Matter: An Operational Framework for Running Your
Subscription Business
More Bookings. More Profitably.
Attract, reach and convert guests with
the leading cloud platform for hotels.
The world’s leading subscription management
platform
Iain HasselVP Finance, Zuora
John BurkeCFO, Siteminder
are demanding new consumption models
6.8 BILLION 80% OF CUSTOMERS
Potential subscribers on mobile, social, web
- The Economist 2014
WE NOW LIVE IN A SUBSCRIPTION ECONOMY
Every Industry is Shifting
Consumer Goods
Communication
Healthcare Internet Of Things Technology
Education Entertainment
Music
From a focus on products…
…to a focus on relationships
customer
product
channels
service
channels
experience
subscriber
US 13%28%
AU 24%43%UK 25%23%
51%
“Over half of companies are in the process of changing or have changed the way they price and deliver their goods & services.”
BUSINESSES ARE RESPONDING TO NEW CONSUMPTION
MODELS
To succeed, leaders must adjust their business models to focus on Annual Recurring Revenue (ARR)
ARRn + ACV - Churn = ARRn+1
THE BASIC BUILDING BLOCKS
THE THREE MAIN DRIVERS:
• Efficient ARR growth• Churn measurement
and management• Balancing a strong
recurring profit margin with a need to continually enhance your product
Annual Recurring Reven
Measured by Growth Efficiency Index (GEI)
No single number is correct. Adapt to your business
Can no longer apply growth at any cost
Pricing and packaging and sales compensation plans must adapt
Efficient ARR growth
ChurnChurn
Measure in a way that provides the best insight into your business:
- Raw dollar churn - Net retention - Cohort analysis If you spend a lot to
acquire customers, your churn needs to be very low
Recurring Profit Margin
Measured as Recurring Costs (R&D, G&A, COS) against entering ARR
Align the business around growing spend in proportion to ARR growth