Top Ten Ways to Improve Cash Flow

by Tricia Reilly

It seems like we’re starting sentences with "In these economic times..." quite frequently these days. But as every CFO knows, cash is king in any economy. It enables growth, investment and expansion; without it, you’re basically dead in the water. So how can you improve your company’s cash position?

We tackled this very issue in our second installment of the Secrets to Successful Subscription Businesses Webinar series. Featuring our CFO, Gary Hagmueller, the live event covered innovative ways to condense the length of time from when a prospect requests or is given a quote to when the money is actually received in your bank account.

Here’s a quick rundown of what was covered:

• Cash flow in a subscription business is different – While a subscription business offers a great recurring revenue stream, more transactions and billing complexity mean more opportunities to impress or confuse your customers.
• There are three distinct processes in the subscription quote to cash cycle, delays to any of which can mean a lag in cash flow:
  • Quote to close – How fast can your reps put together a quote, get it to the prospect, and get it back with the appropriate signatures and approvals?
  • Close to invoice – Can your organization generate an invoice the same day that the order is signed? Reducing delays in this phase increases the likelihood that the customer will pay.
  • Invoice to remittance – How easy do you make it for your customers to pay? Do you have multiple payment options – check, ACH, credit card, PayPal? Are you taking advantage of automated payment options?
• The Top Ten List – Gary provides his list of the best ways to Streamline, Automate and Scale your subscription business to improve your cash flow.
• Jeff Yoshimura jumps into a demo of the Zuora Subscription Management suite to show how we enable you to execute on many of the top ten recommendations.

Want to learn more? Watch a recording of the Webinar at your convenience.

Zuora Named to SaaS and Enterprise Category of AlwaysOn 250

by Tricia Reilly

We’re thrilled to announce that Zuora was named to the SaaS and Enterprise category of the 2009 AlwaysOn Global 250 Top Private Companies List. The designation is given to emerging innovators in technology, successful in creating new business opportunities in high-growth markets.

Selected from among hundreds of other technology companies nominated by investors, bankers, journalists and industry insiders, we’re proud to be named by the AlwaysOn editorial team based on demonstration of growth, market opportunity, quality of innovation and customer traction. Previous overall winners include Google, Twitter, and salesforce.com.

We’d like to congratulate Aaron Patzer and his team at Mint.com – another Benchmark Capital/Shasta Ventures backed organization for being named Category Winner in the Consumer Internet space. And a big shout out to Zuora customers Boomi, box.net, and cvsdude who were all included on the list as well.

More textbooks-as-a-service: Lessons from a successful subscription start-up

by Tricia Reilly

Back in August 2008, we blogged about Cengage Learning, an innovative subscription business that offers digital textbooks as a service to college students. Now, another company is making headlines with a new spin on an old problem – the high cost of college textbooks and the difficulty with which they are resold at the end of a given semester or term. I personally recall the hassle trying to sell my massive Economics textbooks while the entire Cal campus was busy celebrating at the Bear's Lair. But I digress...

In a recent NYTimes article, Miguel Helft describes how Chegg.com, named for a “chicken-egg” question, has built a multi-million dollar company by renting textbooks to college students. Inspired by Netflix, the founders have essentially exploited inefficiencies in the college textbook marketplace.

I see a few key lessons in this bootstrapped startup success story:

• Test, measure, refine. The chegg.com team initially launched with a ‘college campus craigslist-like offering’ but a review of their website traffic revealed that the bulk of their visitors went to used textbook listings. These insights sent them back to the drawing board. I recently heard about a company that creates fake landing pages to test the market's appetite for products and features at various price points. The orders fail at the point of credit card authorization and consumers are none the wiser, however the vendor is gathering valuable data about what the market will actually pay for. I don't necessarily endorse this approach but the concept of testing and monitoring trends holds true.
• The ability to experiment and iterate pricing and packaging options in a timely manner is critical to survival. Chegg.com's initial idea didn't really take off as expected, and their ability to transform their business based upon data and metrics enabled them to grow dramatically. We at Zuora believe that the same holds true with pricing and packaging. What this means is that if you’re going to be successful, you’ll need a subscription management service that enables you to launch new products quickly, and change pricing and packaging on the fly.
• Subscriptions are challenging the status quo in traditional markets. We’ve seen a ton of traditional companies – from Hallmark cards to United Airlines and Starbucks – embracing the subscription revenue model. Expect to see a lot more bricks and mortar industries embrace the subscription model to drive new and improved ways of doing business - for the consumer and the vendor.

Noticed any traditional markets where subscription businesses are exploiting inefficiencies in an old model? Drop us a line and let us know.

Cost Containment is Not a Growth Strategy

by Jeff Yoshimura

Seems like an obvious one doesn’t it? But you’d be surprised how many people we run across in the subscription and SaaS business who still think cutting a few dollars here or there is going to get them through the economic downturn. Those who survive (scratch that) THRIVE, profit, and beat their competition this summer will be those who find new ways to build, manage, and grow their subscription businesses by launching new products, reaching new markets, and finding new ways to package existing product lines. That’s why over 100+ subscription leaders dialed in to learn the secrets to subscription success last week.

Care to learn these secrets for yourself? Check out the recording at http://info.zuora.com/WebinarSeriesJuneRecordingLP.html or check out the next in the series “Top 10 Ways to Improve Cash Flow” on July 16th featuring Zuora’s Chief Financial Officer Gary Hagmueller.

Baby Boomers are Changing the World... and this Time it’s Subscription Style

by Annette Giambroni

Remember the days when everyone was worried the Baby Boomers were all going to retire at the same time and crash the social security system? Well, they are at it again… and this time they are trying to take down one of my favorite pastimes. The Television. It appears that while their retirement may have been delayed due to a down economy this same phenomenon has kept them at the office, and more importantly, on the computer.

I was reading Paul Carton’s Instablog today where he cites some interesting stats on how Baby Boomers are turning away from TV and towards online services and entertainment. I remember hearing the same thing just a few weeks ago at a Shasta Ventures (a Zuora investor) event where Mike Vorhaus, President of research and consulting firm Magid Advisors, provided insights on his last year of research. The gist of it being; the world is moving to online subscription services and if you want to thrive, you’ll need to target consumers where they’re currently spending their time, e.g. social media outlets like Facebook, gaming sites, and online video sites like YouTube.

Most of us think of teenagers as the biggest group to be jumping on the subscription and social media bandwagons but not so according to Carton…in his article "48% of (Baby Boomer) respondents say they’d be willing to pay a monthly fee for a Video-over-the-Internet subscription if it provided the same programming currently available on their TV service."

And while I am far from the Baby Boomer generation (a spry 36) I just may be willing to give up my TV for a Hulu subscription.