Why the 'subscription economy' could change the way you do business
Tien Tzuo predicts that in five to ten years’ time every product and service in the world will be available by subscription.
And Zuora, the company he founded in 2008, will be there to service this growth industry, providing subscription pricing, quoting, orders, billing payments and renewals.
Zuora turns over around $50 million a year and has 250 employees across the world. Tzuo talked to SmartCompany about how he came up with the idea of Zuora and the rise and rise of a subscription-based economy.
There’s a really big shift towards a new class of enterprise right now, software solutions. It’s a once- in-a-century transformation in business models and it all stems from the internet.
The old-style back office won’t work in this age of the subscription economy as companies make the transition from dealing in products to becoming content and service providers.
You are hearing a lot of noise these days about the customer and how you have to focus on the customer, you have to build relationships with them. But more importantly, the business models are starting to change.
All of a sudden you wake up and realise, ‘I’m not really a product company anymore, I’m really a service company. I provide services that my customers use.’
The name of the game then is not really how many units you can shift but how many customers are required and what is my average revenue per customer and how do I hang onto those customers.
In the product world there is only so much cost variation you can have. This is about packing different price points: when you sell digital you have the opportunity to bundle and rebundle in different ways.
There are start-ups that try to do pieces of what we do. There is no one company doing the breadth of what we are doing.
It’s a relatively new thing. This space did not exist six or seven years ago.
A bet on us is a bet on the whole sector. If you believe the whole sector of SaaS [Software as a Service] and cloud is going to grow then we should grow with it.
A subscription economy income statement is very different, the first thing you look at is recurring revenue.
We are fortunate that we have a big market and the trends are such that it grows all the time. It is growing towards a subscription economy.
Our challenges fall into the category of people. After doubling the company every single year it is hard to be sitting there with half the employees that are new and making sure the culture and know-how is transmitted.
We’ve raised $82 million from investors. We are fortunate because the market we are trying to capitalise on is one that people believe in.
We have been fortunate to be able to choose our own investors, so we have a lot of great investors who understand what it is like to build a start-up. They understand there are ups and downs, so they are in it for the long haul.
The [funding] round that was the hardest tended to be the B round. The A round was all hopes and dreams and all big vision and there are no statistics you can point to. The D round you have a whole lot of history but the B round is a Tweener thing, you don’t have a business model that has formed yet but you are looking for a price that is bigger than A.
We are getting to the point of an initial public offering; having said that, it is sure nice being private. If you can put that off for another year and raise another round of capital it might be worth it.
Is your website contact form optimized for conversion? Thanks to your strong SEO campaigns and social media activities (maybe even your popular industry blog), you've observed that your business website is receiving more traffic. Your PPC advertising is also providing a nice boost in traffic. Things appear to be looking good, but is all this extra traffic providing a return on investment? Simply stated, is all this extra traffic actually generating leads? Traffic means very little if you are unable to convert those visitors into high quality leads, and the online portal to strong conversion begins with the always important yet often poorly-planned part of your website: the contact form.
I'm sure you've seen your fair share of bad contact forms out there. There are a myriad of factors that can render a contact form ineffective. While a strong contact form will provide you with more qualified leads, a poor contact form will cost you leads.
Your Website Contact Form Should Be Short
We know: it's tempting to ask your visitors and potential leads for a wide array of information. Of course you want to know everything about them, how they heard about you, where they're from, demographic information and various ways to contact them. It's tempting to ask all these questions but rest assured it will work against you. No one likes long contact forms and even fewer will actually take the time to fill it all out. Forms with fewer, more pertinent questions get more submissions and better leads.
Remember, in order to expedite the lead nurturing process you need to make it easy to receive a lead in the first place. Again, there is a real temptation to capture as much information as possible upfront, but even asking for a mailing address on a contact form can turn away a potential lead.
Your Contact Form Should Be Simple
On another blog post, we talked about the concept of "Don't make me think." At its most fundamental level, your website visitors should never have to think too hard about what exactly you're asking them to provide. Keep your questions as simple and as concise as possible. In the same way, make your contact form easily accessible throughout your site, such as a bold link in your header and footer, and maybe even a link in blog posts (where appropriate). Strong calls to action also become key here and can be used to effortlessly guide a potential customer to land right on that contact form.
Build Your Contact Form with Responsive in Mind
Mobile has taken over and will eventually take over desktop views in terms of Internet access. That means more of your visitors will be accessing your website on their smartphones and tablets and less on the wide displays you've probably built your website for. If your website as a whole is currently not responsive, make sure redesigning it to be responsive is in your marketing budget within a year, as you are undoubtedly losing leads daily without a responsive website.
Your contact page must also be built with responsive web design in mind. If visitors are looking to contact you and your contact form is glitchy, hard to click through, the wrong size, or simply does not work from a mobile device, you are losing leads regularly-- count on it! Users will not take the time to switch to a desktop computer in order to access your contact form later. You can consider these leads lost for good if you can't reach these leads on mobile.
For starters, your responsive design should include larger icons that are easy to click, functional country and state dropdown menus (which are often overlooked), and an easy to locate submit button. Designing with mobile in mind will also help you eliminate unnecessary fields, as mobile users should see an even shorter and simpler contact form.
Anticipate Their Moves
What happens on your contact form when a visitor forgets to complete a field or purposely leaves it blank? Or worse, does the form get submitted with only partial or incomplete information?
User errors are inevitable. But they can be made a lot less frustrating if you prepare ahead of time. Building a contact form that doesn't clear previously entered information is important. Clearly defining the format and expectation for each and every field in your contact form is also important. Phone numbers, for example, come in many different formats, and some contact form plug ins require a certain format, such as xxx-xxx-xxxx. Adding a note such as Note: Phone number should be in xxx-xxx-xxxx format will cut down on user errors and speed up the completion process. When they fill out a data field incorrectly, a red error message with the issue clearly defined should also appear for a visitor.
Trust & Credibility
This concept is important throughout your business website, but is especially important when asking visitors for personal information. And your website and contact form play a crucial role in delivering such credibility.
Your website's contact form should be a powerful and vital extension of your website. Asking for too much information on a website contact form can be a turn off.
Traffic means very little if you are unable to convert those visitors into high quality leads, and the online portal to strong conversion begins with the always important yet often poorly-planned part of your website: the contact form.
While a strong contact form will provide you with more qualified leads, a poor contact form will cost you leads. Again, there is a real temptation to capture as much information as possible upfront, but even asking for a mailing address on a contact form can turn away a potential lead.
If visitors are looking to contact you and your contact form is glitchy, hard to click through, the wrong size, or simply does not work from a mobile device, you are losing leads regularly-- count on it! Your website's contact form should be a vital and powerful extension of your website.