The Business Show 2014 - Subscribing to the Future
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Transcript of The Business Show 2014 - Subscribing to the Future
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Dominic Smith Marketing Director
Cerillion Technologies
Subscribing to the future
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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
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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
27-Nov-14 www.cerillionskyline.com Slide 3
PRODUCTS SERVICES
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Subscription Examples
27-Nov-14 www.cerillionskyline.com Slide 4
Consumer
Digital Services Goods as a Service
Enterprise Education
Automotive
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Increased revenue at The Met cinema (California) from $700k / year to $1.5 million
$20/month subscription for unlimited cinema viewings
Movie Subscriptions?
27-Nov-14 www.cerillionskyline.com Slide 5
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Industry Adoption of Subscriptions
27-Nov-14 www.cerillionskyline.com Slide 6
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
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Competitive Pressures
27-Nov-14 www.cerillionskyline.com Slide 7
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
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Competitive Pressures
27-Nov-14 www.cerillionskyline.com Slide 8
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
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Subscriptions – what customers think
27-Nov-14 www.cerillionskyline.com Slide 9
Over-paying?
All I Can Eat
Simplicity
Predictable Cost
Lower Quality
Locked-in
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Gym Membership Statistics (USA)
$55/month average subscription
$39/month average wasted from under utilisation
67% of members never go to the gym!
27-Nov-14 www.cerillionskyline.com Slide 10
Subscriptions – one-size-fits-all?
Source: http://www.statisticbrain.com/
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Other Pricing Strategies
27-Nov-14 www.cerillionskyline.com Slide 11
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
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Subscriptions – Pricing Flexibility
27-Nov-14 www.cerillionskyline.com Slide 12
Freemium Bundling
Pay Per Use
Prepay
Rewards
Discounts
Promotions
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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)
27-Nov-14 www.cerillionskyline.com Slide 13
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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 ?!
27-Nov-14 www.cerillionskyline.com Slide 14
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The Rise of Cloud Technology
Increased Business Agility
Software-as-a-Service (SaaS)
Platform-as-a-Service (PaaS)
Infrastructure-as-a-Service (IaaS)
27-Nov-14 www.cerillionskyline.com Slide 15
So how can this be achieved?
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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
27-Nov-14 www.cerillionskyline.com Slide 16
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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
27-Nov-14 www.cerillionskyline.com Slide 17
What to avoid!
“Cloud-based” Systems
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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
27-Nov-14 www.cerillionskyline.com Slide 18
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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
27-Nov-14 www.cerillionskyline.com Slide 19
Customers
Products
Billing
Payments
Financials
Collections
Usage
Security
Reports
Integration