Pricing, Packaging, and Payments Flexibility

by Tricia Reilly

So I mistakenly answered my home phone last night, and it was the Cal Alumni Association. Now I’ve been a member of the Alumni Association on and off since graduation, but I’ve never become a lifetime member. It’s not that I don’t intend to renew every year, but somehow I’ve never been able to commit to ‘forever’. Possibly because it makes me contemplate my own mortality, but I digress.

So, here’s how they got me:

Telemarketer: Did you know that Cal was ranked #1 public university in the country?

Me: Yes, I did.

Telemarketer: Did you also know that the football team is now ranked #6 in the country?

Me: Yes, I did.

Telemarketer: We can now offer you $75 off the lifetime membership, for just $650.

Me: Um, I can't afford $650 right now.

Telemarketer: Well, we can split it out across an extended period. You'd only have to pay $75 (which isn't due until Oct 1) and then just $150 per year for the next four years. And you can access all the lifetime benefits starting immediately.

Me: OK. I guess it's about time I became a lifetime member.

Telemarketer: I'll just need a credit card.

And just like that, they had me.

It just goes to show you that a little pricing and payment s flexibility can go a long way. A thriving subscription business needs a flexible subscription commerce suite in order to enable all the various permutations of pricing, packaging and payments that it takes to capture as much marketshare as possible.

Are you giving your customers and prospects different ways to consume your service? Do you accept credit cards, checks, PayPal, or ACH? Do you allow your customers to pay monthly, quarterly, semi-annually, or annually? Have you been converted by pricing or payment flexibility offered to you by a subscription business? Drop us a line, we’d love to hear about it.

Go Bears. :-)

Fall DEMO’09: Social Media, B2B, and Chris Shipley’s Victory Dance

by Annette Giambroni

Earlier this week, we launched Z-Commerce for Media at Fall DEMO’09 in San Diego. We were really excited to see this event growing in size despite the economy. As always, there was a real palpable energy and buzz about the place and we were honored to be asked back, following our launch at DEMO in the Spring.

We’re busy following up on connections made, press coverage, and internal de-briefs – but before we move on to the next big thing, we’d like to share our observations and thoughts with you.

First of all, we were thrilled to see such a strong focus on business models and whether or not the presenters could turn a great idea into a viable business. I guess it’s a sign of the times, but following the tweets, it was obvious that people were more interested in how presenters would monetize their offering than in seeing cool technology.

Some of our favorite presenters included Webroot, Liaise (a super friendly bunch of Aussies who won the Enterprise People’s Choice Award and $500k in IDG advertising), LeapFILE (great group of people who offer a secure file transfer service), Rumbafish, Pinyadda, and TwirlTV just to name a few. Not surprisingly, there was a heavy focus on social media and crowdsourcing, but we were a little shocked that Zuora was one of few enterprise, B2B apps.

Despite the heavy focus on consumer technologies, quite a few of the Lifetime Achievement Awards went to B2B vendors such as Marc Benioff, Founder and Chairman of salesforce.com and an early Zuora investor; as well WebEx, Adobe Systems, and Google. With our own founders coming from salesforce.com and WebEx, we certainly hope to follow in their footsteps!

Finally, we were sad to see Chris Shipley hand over the reins to Matt Marshall, but getting to watch her victory dance was well worth the hefty show price tag.

Tenet 1 for Managing the Customer Experience in a Subscription Economy

by Katrina Wong, Director of Customer Experience

In my first post, I discussed why a focus on the customer experience is essential to growing your subscription business.

I outlined the three tenets of operating a thriving subscription business with a customer experience focus.

In this post, I’ll elaborate on Tenet #1:

• Focus on the customer and anchor your business around the customer’s experience
  • Understand the perspective of the customer

Understanding the perspective of the customer is about more than just doing surveys. It’s about getting out there in front of customers and talking to them directly. You can either do this formally via focus groups and surveys; or informally by taking a few customers to lunch, or setting up a quick face to face meeting. The point is to understand a day in the life of your customer and what it is about your product that makes his or her day easier and better. And it’s about understanding the larger business process that your solution fits into.

• Shift from a self/company/organization focus to a customer-centric focus

When prioritizing top level organizational goals and objectives, consider your customer’s perspective. A good example of this is designing business processes and creating business goals that align to your customer life cycle; from signing up for your product to using your product and renewing the subscription. An example of creating business goals that align to the customer life cycle is investing more in account management or building a specific team that is held accountable for customer success.

Here at Zuora, we take this tenet to heart. We recently launched a monthly “First Fridays” customer luncheon. It is a casual meet and greet where we speak with our customers about their use of our product over lunch. We get insights into our customer base, and they get a free lunch – it’s a win-win all around. At our first luncheon, our customers especially loved the ability to provide direct feedback to us and to make contact with other Zuora customers in their area. If you are a Zuora customer and are interested in attending our next First Friday customer luncheon, please contact us here.

Stay tuned for my next post on Tenet #2, Embrace the Voice of the Customer.

Zuora Launches First Online Commerce Platform for Publishers at DEMO09

by K. V. Rao

Today, we’re in San Diego at DEMO09, where established vendors and start-ups alike come to launch their wares to a panel of journalists, VCs, technologists, and thought leaders. We’re here to launch our latest offering, Z-Commerce for Media. Why Media, why now, you ask?

The publishing industry has struggled with the transition to the online world. While technology vendors successfully made the transition to SaaS and subscriptions, publishers opted for ad-supported and classified revenue models, giving away their content for free. As print circulation numbers continue to fall, and advertising and classified revenues drop, the media industry is struggling to stay afloat. We’ve recently seen household names like Readers’ Digest file for bankruptcy and the San Jose Mercury News print a ‘frank talk’ with readers about their financial woes, which begs the question, could the San Francisco Chronicle or the Boston Globe be next?

We at Zuora can’t imagine a world without a thriving free press. We believe that professional journalism is the cornerstone of democracy, so it’s time to do something to save this critical industry.

In order to survive, publishers must find new and better ways to monetize their online content. Rupert Murdoch and Barry Diller have already challenged their organizations to move away from free content. But what is the right business model? Is it monthly all-or-nothing access like the Wall Street Journal or a metered approach like the Financial Times? Is it pre-paid accounts and micropayments? Or something more nuanced like targeted premium packages for specific interests? The truth is, no one knows what pricing model will work best, so publishers need to start experimenting with bundles and packages quickly.

But media companies are going to need a flexible platform to create the right bundles for the right subscribers. As other subscription businesses have learned, a one-size-fits-all approach won’t maximize revenue, and over time they’ll need to package content to attract different market segments. But where is the platform to enable them to launch and test new products, manage invoicing, and collect recurring revenue? A lot of vendors, including Google, are talking about plans to offer products to help the media industry, but it will take time for them to actually build something. In an interesting side note, just last week Google’s CEO criticized News Corp’s plan to charge for content on all of their sites, saying that “there are enough free sources” of general news.

That’s where Z-Commerce for Media comes in. Zuora built the de-facto subscription platform for the SaaS and cloud computing industry that’s already being used by over 100 companies; and we think that this same technology can be applied to media. Z-Commerce for MediaTM is the first online commerce platform for publishers to (a) price, package, and publish content bundles online, (b) to register and manage new and repeat subscribers and their entitlements, (c) and to streamline the entire billing and payment operations processes.

What’s more – we’re already working with online publisher GigaOM and Reed Business Information, Europe’s biggest online and offline publisher – to manage their subscription billing and payment operations.

I’m excited that Zuora has chosen the media industry for our first industry solution, and look forward to helping publishers successfully make the transition to the subscription economy.

Want more information? Read the full Z-Commerce for Media press release and watch Zuora’s live presentation at DEMO09 at 11:30am PT tomorrow.

We’ll be blogging and tweeting from the show floor, so stay tuned!

The Economist.com, the Internet Manifesto and the Fate of Online Publishing

by K. V. Rao

It’s been quite a week for the world of online publishing.

First, MediaWeek reported that the Economist was moving to a paid model for its news content. The publisher, who until now charged only for online content that was more than a year old, refuted the assertion stating, “It’s something that we are considering but nothing has been decided yet.” However, with advertising revenues growing 29% year over year, the Economist.com is certainly bucking the trend of fellow publishers.

Then Wednesday, a group of German bloggers stirred up quite a frenzy when they launched their Internet Manifesto – a list of seventeen declarations of how journalism works today. The manifesto, which TechCrunch’s Markus Goebel describes as “an onslaught on old-school media and a reaction to German publishing heavyweights who feel ‘sneakingly expropriated’ by the Internet”, certainly makes interesting claims.

At Zuora, we’re not short on opinions, especially when it comes to new and interesting revenue models, and the monetization of online assets. Here’s a brief recap of our reaction to just a few of the declarations:

#1: The Internet is different.

The media must adapt their work methods to today’s technological reality instead of ignoring or challenging it.

We at Zuora couldn’t agree more. The Internet is making it faster and easier to publish content, and publishers who embrace technology will thrive in the long run, engaging readers in a dialogue rather than shouting at them. However, old world media companies should retain what was good about print journalism (ethics, fact checking, impartiality, etc.) and embrace what’s good about the new – collaboration, user-generated content and forums, speed to market, etc.

#2: The Internet is a pocket-sized media empire.

The web rearranges existing media structures by transcending their former boundaries and oligopolies. The publication and dissemination of media contents are no longer tied to heavy investments…All that remains is the journalistic quality through which journalism distinguishes itself from mere publication.

The good news for the consumer is that barriers to entry, which made it extremely difficult for individuals and start-ups to get into the news business, no longer exist. However, existing publishers shouldn’t be excluded from the party simply because of their historical dominance. The “internet elite” don’t get to decide who wins this competition. In the end, the consumer will determine whose content is worthy of their attention and therefore their dollars/eyeballs.

#4: The freedom of the Internet is inviolable.

The Internet’s open architecture …may not be modified for the sake of protecting the special commercial or political interests often hidden behind the pretense of public interest. Regardless of how it is done, blocking access to the Internet endangers the free flow of information and corrupts our fundamental right to a self-determined level of information.

We agree with this with the qualification that this freedom includes the right to charge a fair price for value delivered. Call me a capitalist, but it seems to me that if people are willing to pay for something – whether that be a physical product or an online service – then the ‘producer’ should be entitled to sell it to them, assuming that said product or service doesn’t pose a danger to society as a whole. This should hold true for both traditional media companies and upstart bloggers.

#8: Links reward, citations adorn.

Search engines and aggregators … boost the findability of outstanding content over a long-term basis.... References through links and citations—especially including those made without any consent or even remuneration of the originator—make the very culture of networked social discourse possible in the first place. They are by all means worthy of protection.

I have no issue with search engines indexing content (whether that be merely an abstract of an article or content in its entirety), according to the wishes of the publisher. If I follow their logic, wouldn’t all digital music be available online and without restriction? At what point does the public interest give way to the artist’s right to earn a living?

#12: Tradition is not a business model

Money can be made on the Internet with journalistic content….business models have to be adapted to the structure of the new.

We definitely agree that there is money to be made in the online publishing industry, and that a number of new business models will emerge, chief among them, subscriptions. Last month we blogged about how Journalism Online has signed up publishers representing more than 500 newspapers and magazines to their affiliate program with the aim of charging for online content. The question is, with bloggers insisting that content be free, how will large publishers compete? Will they successfully make the transition to paid content or will this be the death knell of the media industry? Only time will tell.