Zuora, an early entrant in the subscription-based platform space, is a David among Goliaths, competing against the likes of Oracle and SAP. Forbes reports the company, founded in 2007, has annual revenue of $100 million with more than 800 customers worldwide. Its fees range from $25,000 a year for startups to more than $500,000 for a large corporation.
Zuora says there are nine principles to building a successful subscription business. Here are three. For the other six, visit zuora.com or find a link to Zuora’s nine keys in the Additional Web Resources box at SalesandMarketing.com.
Price in support of your business goals. Pricing is your most valuable strategic weapon as a subscription business, because it is directly tied to three fundamental growth strategies: acquiring new customers, increasing the value of existing customers, and reducing your customer churn. The one-price-fits-all days are over, as this approach turns off downsell opportunities and leaves money on the table from active users. Zuora recommends starting simply with two or three basic pricing tiers, and adjusting them over time as you learn from your customers. If you have an ideal price point, be sure to set another price above it to make it look more attractive.
Acquire customers across any channel. Signing up for a subscription should be a seamless user experience that can be done across multiple channels: online, mobile or via an assisted sale. Subscription businesses need to establish fast, simple and automated customer acquisition workflows across multiple channels. Make sure you have multi-channel support (the amount of commercial activity on mobile phones continues to explode), and fine tune your user flow to Amazon-like levels of ease and simplicity.
Nurture and develop deeper customer relationships. Strong customer relationships are at the core of the subscription business model. Without them, there can be no sustainable recurring revenue growth. Acquiring new subscribers is critical, but in the subscription economy, the vast majority of customer transactions consist of changes to existing subscriptions: renewals, suspensions, add-ons, upgrades, terminations, etc. You need to provide customers with intuitive and comprehensive tools to manage their accounts over the entire subscription life cycle. Ideally, you should have a 24/7 support service, as well as a customer success outreach program. Closely monitor customer usage and adoption to mitigate churn risk. A stable, happy customer base is essential to compound growth.
