Consumers and corporates boost subscription economy. The march to the cloud and subscription style consumption is gathering pace as consumers and corporations shy from big one off outlays. Why buy the CD when you can listen to the tunes on Spotify? Why buy a car when you can sign up to GoGet? At least that’s the gospel according to Tien Tzuo, founder and chief executive officer of Zuora which develops systems to support the back office functions of managing commerce, billing and finance for what Mr Tzuo describes as “the subscription economy”.
“Two, five, ten years from now you don’t have to own anything any more. Mr Tzuo, currently visiting Sydney, where the company last month established its Asia Pacific operations, said that the transition to this new model was taking pace at a “fast and furious” rate. He said that the flexibility and agility of the system was important to Servcorp as it allowed the company to quickly “configure new pricing, new bundles, get to market quickly and tweak prices.” Why IT shouldn't buy into the 'subscription economy' | Saas. In case you hadn't heard, ownership is out. Instead, it's all about the "subscription economy" -- if the latest in a long line of extrapolations from a very small number of data points is to be believed. The theory is simple. Whereas before we liked to own things, we don't anymore. What we want instead is to pay less money right now in exchange for the right to pay again next month -- or not, at which point whatever it was we used to need goes away. [ Find out the 10 business skills every IT pro must master. | Get expert advice about planning and implementing your BYOD strategy with InfoWorld's 29-page "Mobile and BYOD Deep Dive" PDF special report. | For more of Bob Lewis' continuing IT management wisdom, check out his Advice Line blog and newsletter. ] How do we know this massive change in how businesses and consumers view ownership is a megatrend?
The subscription economy in a nutshellThe subscription economy isn't entirely new. What's that? Please. 3 Key Metrics That Matter in the New Subscription Economy. Zuora, a dominant player in cloud-based payments systems, presented at last week’s All About the Cloud Conference, hosted by the Software and Information Industry Association (SIIA). The company's founder and CEO, Tien Tzuo, spoke about the dramatic shift in the way both consumers and companies are doing business. "Today," Tien explained, "People would rather subscribe to products and services than buy them outright.
" products. It's happening everywhere and is having a dramatic affect on your business. Zuora calls this "The Subscription Economy. " Instead of single large purchases, the model is built on sustained customer relationships. For companies, the longer and stronger you can build these relationships, the more opportunities you get to first maintain, then increase recurring revenue. Salesforce.com is a terrific example of this type of consumption. According to Zuora, however, these subscriptions introduce a new set of challenges for businesses. Connect: Authored by: Andre Bourque. Making the Web's Subscription Economy Hum. As Web businesses embrace subscription business models to sell consumer goods, the benefits are clear: reduced customer acquisition costs, predictable inventory requirements, and steady cash flow.
Last year research firm Gartner (IT) calculated that by 2015, more than 40 percent of media and digital-products companies around the world would use subscription services for their fulfillment, billing, and renewals. The challenges in relying on subscription models include controlling customer churn, managing credit-card charge-backs and delinquent payments, and ensuring the security of customers’ financial data. That’s why small businesses that are pioneering membership models or adding subscription options to their existing sales efforts often outsource billing and other chores to service providers.
Common subscription models may be fixed-term, which establish an end date with optional renewal, or evergreen, which keep the subscription in place until the customer cancels. 10-Questions-To-Ask-About-Billing-Subscription-Services.pdf. The subscription economy is here. Are you ready? Editor’s note: This story is part of our Microsoft-sponsored series on cutting-edge innovation. Tien Tzuo is founder and CEO of Zuora, an online subscription billing and payment company. Just as the Web rocked the bricks and mortar world of business 15 years ago, the burgeoning subscription economy is forcing today’s enterprises to change how they do business.
Subscriptions used to be just for newspapers and magazines, but not anymore. The last 10 years have seen a dramatic increase in companies using the subscription model to offer everything from music, movies and textbooks to even cars for a monthly fee. But what will it take to succeed in this new world? Consider BMW versus Zipcar. Forget fire sales, seasonal specials, and other brute-force price promotions. Developing this kind of operationalized pricing capability should be a major focus in the years ahead. One industry ripe for flexible pricing options is media – the original home of the subscription model. The community responds: 10 Reasons for Entering the Subscription Economy | The Voice of E-Commerce. By: James Gagliardi, Vice President, Product and Innovation A recent Gartner Inc. research report issued a strong recommendation for businesses selling online: If you don’t offer subscription plans already, you need to make this popular offering a top priority.
The report, “Building a Strategy for the Subscription Economy,” makes a compelling case for why every digital and media content business – and even some high tech and life sciences companies – should add subscriptions to their online strategies. On-Demand Demand Consumers can’t seem to get enough of on-demand content. Higher Revenue Moving from a one-time sales model to recurring subscriptions can increase revenue. Footnote: *Building a Strategy for the Subscription Economy, Gartner, Inc., April 11, 2011 Like this: Like Loading... Subscription business model. The subscription business model is a business model where a customer must pay a subscription price to have access to the product/service. The model was pioneered by magazines and newspapers, but is now used by many businesses and websites. Membership fees to some types of organizations, such as trade unions, are also known as subscriptions. Industries that use this model include mail order book sales clubs and music sales clubs, cable television, satellite television providers with pay-TV channels, satellite radio, telephone companies, cell phone companies, internet providers, software providers, business solutions providers, financial services firms, fitness clubs, and pharmaceuticals, as well as the traditional newspapers, magazines and academic journals.
Renewal of a subscription may be periodic and activated automatically, so that the cost of a new period is automatically paid for by a pre-authorized charge to a credit card or a checking account. Types of subscriptions[edit] Not only media - the ‘Subscription Economy’ is growing. Cloud Computing Drives New 'Subscription Economy' Deploying Applications in the Cloud While there's more talk than actual use of cloud computing in the enterprise, a Zeus Technology survey looks at the beginnings of a major shift under way.
Clear expectations and planning can improve your experience and near-term success. Once upon a time, the whole application integration concept was nothing short of daunting. But as application integration increasingly becomes a service in the cloud, it's becoming a lot easier to quickly cobble multiple applications together to dynamically drive a new business process. The latest example of this capability is an alliance announced today between MuleSoft, provider of the iON application integration service in the cloud, and Zuora, a provider of a transaction processing engine used widely in subscription and billing applications.