Denis Pombriant, Beagle Research Today you can buy almost anything through a subscription from food and wine to clothing and accessories to cars and, yes, software. While most audience members may be familiar with subscriptions from the consumption perspective, subscriptions are changing much of what we know about all aspects of business. Managing a subscription company can be challenging in part because customers are invisible across the Internet. Frequently managers have to rely on insufficient information for decision making. This session explores how subscription companies’ information needs are different and discusses some of the top metrics that subscription managers can obtain from customer data to manage their businesses better.

1. Denis Pombriant
Managing Principal
Beagle Research Group, LLC
Driving Success
with Subscriptions
Making a Win/Win

2. The New Paradigm
BUY NOW SUBSCRIBE
Then Now

3. Lots of Tech Examples

4. Beyond Tech…
“By2015, 35%of Global 2000 companies will generate revenuethrough
subscription-based servicesand revenuemodels.”

5. Driving the Subscription Economy
Technology
Trends
Economy
Business
Model
Capitalism
at its Best

6. Vendor Side Less Pretty

7.  Lower cost of entry
 Ability to modify agreement almost at will
 Lower ongoing costs
 Greater reliability
Business Model Advantages

8.  More customers can
suddenly afford your
product
 Greater flexibility
 Configuring products
 Taking them to market
 Rapidly scale your business
 Eventually more predictable
revenue streams, if you
manage the business right
Vendors Like It Too

9.  More invoices to
process (and get right!)
 The possibility of
customer change at
any moment requires
great flexibility from
your systems
 Rapid product
prototyping SKUs!!!
 You can’t reach out and
touch your customers
Can Your Systems Keep Up?

10. Four Key Attributes
Subscription Reality
Capture
Big Data
Social
Media
Financial
Systems
Analytics
and
Predictive
Modeling
Develop
Metrics

11.  Customer data –
social media
 Use data – primary
system
 Financial data –
financial system
Big Data

12.  They do different
things and you
need both
 Analytics
 Retrospective, How
did we do?
 Predictive modeling
 What if?
Analytics and Modeling

13. No Perfect Metrics

14.  Recurring Revenue — ARR, MRR
 Deferred revenue (booked, unbilled, etc.)
 Customer Churn Rate – Avoidable?
 Renewals
 Customer Lifetime Value
 Value Remaining
 Gross/Net Attrition — avoidable,
unavoidable
Metrics

15.  Customer Churn Rate
 The historical average of the percentage of
customers who leave a service on a monthly
basis.
 Growth
 [ARR * Retention Rate] + [Unbilled Deferred
Revenue for forward 12 months] – [Projected
Churn] + Planned Growth Rate * Last 12
months ARR
Some Basics

16. Many Interpretations

17.  Retention rate: What % of ARR comes
back? How hard is it to keep?
 Recurring Profit Margin: ARR – Churn –
Non-growth Spend
 Growth Efficiency: Cost of getting $1 of
new ACV (affected by marketing costs +
onboarding costs + upgrades, renewals,
churn etc.)
Core Ideas

18. In Short…
“The metrics for Cloud computing is
fairly different from traditional
enterprise software.”
Bessemer Venture Partners – Top 10 Laws for Cloud Computing

19. Metrics Matter

20.  Conventional ERP
 ERP + spreadsheets
 Roll your own
 Only captures data
 Still need good analytics
You Really Need a System

21. Your Business Processes
CRM ERP GL

22. Lots of Vendors
Achdirect, Aria Systems, Ascenduregroup,
Batchbill, Bill.com, Billing Circle, Blusynergy,
Cannibill, Chargebee, Chargify,
Cheddargetter, ChickPea, Cloudability,
,Evapt, Fusebill, Magnaquest, Metanga,
Monexa, NetSuite, Paysimple, Recurly,
Saasy, Zuora

23.  Subscription business model is here to
stay
 Your customers see you as an expert
 You are going to need it as markets
continue to shift
 Embracing it will help you grow your
business
 Use case for analytics and metrics
Conclusions

24. Beagle Research Group, LLC
www.BeagleResearch.com
781-297-0066
Thanks!