Billing Lessons Learned at eBay

by Elizabeth Tse

In my career, I have always held roles where - in one way or another - the complete focus is on the customer.

When I was at eBay, I oversaw worldwide billing, payments and collections operations, and gained an intimate understanding of what it takes to develop, implement and maintain a successful, large-scale billing and payments system. After many years in this industry, I have a deep and unique understanding of the intricacies of billing and payments. Even then, I bet you can all guess the most important element of a successful billing system….customer satisfaction.

Too often, people consider billing a back-office function and I think that’s so wrong. Billing is fundamentally a customer-facing process. In which other process in your entire business do you have an opportunity to touch your customer’s bank account?

As we embark on 2010, I wanted to share some billing advice and insight, relevant to companies of any size and at every point in their lifecycle.

Bring billing to the front office.
It’s your most important and your most regular direct customer touchpoint. Think of billing as an ongoing relationship with your customers, not just a transaction.

Pricing and packaging experimentation leads to competitive advantage
A good billing system is not a cost management issue, it helps a company focus on revenue growth and provides the flexibility to change, test and optimize pricing. Companies that experiment with pricing and packaging have a competitive advantage in that they quickly learn what their customers want and how much they are willing to pay. Testing various billing options makes it possible for companies to leverage their service to capture as much market share as possible. Get the most out of your services – bill strategically and learn from it.

Billing is hard.
Sure it starts out easy for some with a simple monthly package but then quickly a business grows and wants to package and promote different offerings. As you expand domestically and/or internationally, you need to address the complexities that accompany different taxation rates and laws, multi-currency conversions, and more. Billing is not just about an invoice, but also pricing, payments, collections and ultimately impacts financial reporting. It has multiple downstream implications.

Anything less than 100% accuracy is not acceptable to customers.
No customer ever shares a good billing story with you since 100% accuracy is the minimal acceptable performance level. However, they sure as heck will let you know if it's wrong. At eBay, during peak hours, customers were listing literally thousands of items per second. Simply being 99.95% accurate for an hour would have left me with thousands of unhappy customers, hence my keen focus on getting it right all the time.

Billing is fundamental to your business process, but it’s not a core competency (unless you’re Zuora).
Billing is mission critical and has to be done right, but you also need to have the confidence and freedom to focus on product development and customer satisfaction in other areas. Spend valuable time building what you sell and buying what you don’t. We’ve addressed this before on the Z-Blog.

I do have a few more billing tips and tricks up my sleeve and will continue to share my thoughts. In 2010, we will maintain our fierce focus on customer success and will showcase the real results and benefits realized by Zuora’s customers. You can already read about many of our customer success stories on Zuora’s customer page. We will expand this series to include regular blog posts as well, so you’ll be hearing from me a bit more this year.

Happy New Year!

Paid content – Accenture bets on subscriptions, and so do we.

by K. V. Rao

Will consumers pay for online content? Of course they will and they already do. Look at the Wall Street Journal, Financial Times, even Netflix. At Zuora, we’re a bit weary of the over-reaction that occurs when companies announce planned paywalls. Business models are good things.

Paying for something that was once free might not be our first choice, but the free rides are over. Internet advertising spend continues to go down – the industry lost another 5.3% or $10.9B in the first half of 2009 – and online publishers continue to struggle with audience numbers. Content companies finally realize that they need business models and we, as consumers, need to accept that there really is content that we are interested in and will pay for. The sad truth is, if we don’t pay for what we want (like local news), it may very possibly cease to exist.

Rupert Murdoch made big waves when he said News Corp would start charging for all content. When I look back at other announcements made throughout 2009, I’m not so sure why everyone was so shocked at Murdoch’s plans. More and more companies like Hulu and the recently announced magazine consortium, including publishers News Corp, Hearst, Time, CondeNast and Meredith are putting wheels in motion to charge for content in the coming months.

As well, throughout the year, there’s been growing evidence that supports the fact that consumers will pay. Two surveys that stand out to me are Accenture’s Global Broadcast Consumer Survey from earlier in the year and the recently released survey by Boston Consulting Group.

Accenture’s findings highlighted the fact that subscriptions will likely reign supreme (we like that!). Accenture says “despite the downturn in the global economy, consumers revealed an increased willingness to pay for different types of programming.” Folks in every age group preferred subscriptions over pay-to-play. Accenture concluded “subscription service content appears the most resilient to the economy, as its consumption shows no signs of being hit by a drop-off in consumer spending.”

BCG’s survey found that consumers were more likely to pay for certain types of content, specifically news that is:

• Unique, such as local news (67 percent overall are interested; 72 percent of U.S. respondents) or specialized coverage (63 percent overall are interested; 73 percent of U.S. respondents)
• Timely, such as a continual news alert service (54 percent overall are interested; 61 percent of U.S. respondents)

In conjunction with what kinds of content people would pay for, they also told BCG they’d be willing to pay $3/month in the United States and Australia and even $7/month in Italy.

For example, based on BCG’s findings, an American online publisher with a relatively small monthly readership of 30,000 readers could bring in close to $100K in revenue via paid content. That’s money that wasn’t there before…not bad.

What this says to me is there are content delivery and subscription models that will work for everyone – content providers and consumers. Freemium, pay-as-you-go, usage-based pricing, recurring subscriptions, ad revenue. There is something for everyone and at Zuora, we’re confident there is a solution. We just need some time to work it out on the business side.

Tenet 2 for Managing the Customer Experience in a Subscription Economy

by Katrina Wong, Director of Customer Experience

In my last post, I discussed why a focus on the customer experience is essential to growing your subscription business and outlined the three tenets of operating a thriving subscription business with a customer experience focus:

• Anchor your business around the customer’s experience
• Embrace the voice of the customer
• Build a company culture that internalizes the customer experience

In this post, I’ll elaborate on Tenet #2 – Embrace the voice of the customer.

The good, the bad, and the in between.

Whether you do formal focus groups and surveys or gather customer feedback through informal lunches or face-to-face meetings, your goal is to understand a day-in-the-life of a customer and how your service makes his day easier or better.

Feedback will generally be a mixture of the good, the bad (and we all hope that there is more good than bad), and the in between. The key is to embrace all feedback and understand what your customers are saying about your product.

Take the good and understand why. Take the bad and internalize what it means to your service and take action. The in between is valuable and is usually due to your customers not understanding how best to use your product. Strive to tip the scale on the in between toward the good. The good serves as a benchmark for the bad and the in between. Turn around negative or neutral sentiment by employing learning tools such as better training or knowledge share.

The bad is where you get the most value. Embrace it and understand that it is usually at the core of what your customers want and need from your product. Take Syncplicity, a Zuora customer since March ’09, who self-implemented only to run into challenges, as reported in Cloud Ave’s blog:

In frustration, Syncplicity CEO Leonard Chung posted a scathing comment on LinkedIn. Zuora CEO Tien Tzuo saw the comment and, after a reportedly sleepless night, contacted Leonard wanting to repair a very public falling out. He assigned his top engineering exec to the problem. In turn, Chung assigned his key person to work with Zuora on the issues.

The process to fix Syncplicity's issues took 3 months but at the end of it all there was a successful roll out of the new Syncplicity product in November and, in a happy ending to a sad story, Chung is now a reference customer for Zuora and is pretty positive given the history, as he says, "we had a rocky start, but they really pulled through for us”.

Share customer insight across your company on a regular basis.

Once you have your findings, it is important to share them with the rest of your company. Build a feedback loop to the relevant departments (e.g., feature requests to product management, service issues to customer care, etc.) or publish them across the company. Just make sure it happens consistently and regularly. Make customer feedback a standing topic at company-wide, executive, departmental and/or operations meetings and off-sites.

Talk about customer needs and not personal or organizational preferences.

The goal is to act on your customer feedback. Maybe a cross-functional initiative gets created as a result or simply a project for one department. Whatever plan you put in place, what is key is that your actions are based on what your customers need. It’s easy to lose sight of that when we know we should be doing (listening to our customers) and actually doing it (getting the feedback). Building a culture that truly embraces the voice of the customer will keep you focused on the right actions to take.

Stay tuned for my next post on Tenet #3: Build a company culture that internalizes the customer experience and customer feedback.

The Secrets of Salesforce - Dreamforce’09 Recap and Twitter Contest Winners

by Tricia Reilly

This year’s Dreamforce was a force indeed. 16,000 attendees from all over the world gathered for three and a half days of networking, education, and inspiration. Dreamforce’09 marked Zuora’s second year as an exhibitor, and this time around we sponsored the AppExchange Appreciation Party at Temple.

A few of the highlights included:

• Tien’s session: Maximize Your Revenues: Market and Deliver Your Solutions on the AppExchange
• Gen. Colin Powell’s keynote speech
• Seeing so many successful Zuora customers exhibiting on the show floor – Marketo, InsideView, Xactly, Boomi, Cloud9 Analytics, Landslide, box.net, Genius, Ricoh and ThomsonReuters!
• Marc’s best-selling book Behind the Cloud and the 111 plays that propelled salesforce.com to a $1B business

Zuora has incorporated some of the same plays that salesforce.com used, and is launching a short video series featuring the secrets that catapulted their success. Delivered weekly to your inbox over the next 6 weeks, these two-minute vignettes will show you how to be just like the $1B success story.

Sign up today to receive these and other educational emails from Zuora.

Finally, congratulations to our Dreamforce Twitter Contest Winners:

Jarrod - Perspective Software
Justin - Fused Solutions
Bill - Aprimo

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.

Managing the Customer Experience in a Subscription Economy

by Katrina Wong, Director of Customer Experience

As the world moves to more and more subscription-based businesses – the customer experience becomes ever more important. Why?

In the traditional product-oriented world, selling may be a one-time transaction. How a customer thinks, feels, and interacts with your product is important up-front, but your business might not depend heavily upon repeat business (e.g., a customer buying a car from a dealership may not come back for several years).

However, in the subscription economy, not only is your revenue based upon a recurring model, so is your customer relationship. In a world characterized by subscription businesses, we are constantly reminded of this recurring customer relationship, as customers ask themselves “Do I really need this?” every time they are billed.

Because we want our customers to not only renew - but to pay for what they have committed to when they subscribed – regularly taking the pulse of the customer and building a feedback mechanism to your organization is key.

Below, I’ve outlined three tenets of operating a thriving subscription business with a customer experience focus, which we’ll cover in more detail over the next few weeks:

• Focus on the customer and anchor your business around the customer’s experience
  • Understand the perspective of the customer.
  • Shift from an internal/company focus to a customer-centric one.
• Embrace the voice of the customer
  • The good, the bad, and the in between.
  • Share customer insight across your company on a regular basis.
  • Talk about customer needs and not personal or organizational preferences.
• Build a company culture that internalizes the customer experience and customer feedback
  • Create employee metrics around customer satisfaction.
  • Celebrate specific actions employees take to ensure customer satisfaction and success.

The bottom line is that at Zuora, we take this very seriously and we are working on some exciting initiatives focused on Customer Experience.

Stay tuned for future posts where we’ll dig deep into each of these tenets and provide some tactical suggestions as to how your organization can maximize customer satisfaction and loyalty.

Seattle Web 2.0 Community is Brewing

by Megan Golden

Yesterday, Zuora packed our bags and headed north to Seattle for our fourth Z-tour event this year.

Our luncheon was held at The Dahlia Lounge--fit for foodies and known as the epicenter of Northwest Cuisine featuring flakey crab cakes and steaming doughnuts.

Once the room was packed with a very engaging Seattle crowd, our CEO, Tien Tzuo spoke on how the world is moving to subscriptions. Everything from Netflix to Salesforce.com to ZipCar. The interesting point here is that while the subscription model enables greater flexibility for consumers, the need for a robust packaging and pricing model is key to subscription success.

We were thrilled to welcome local customer TalentSpring, who gave a testimonial on how they came to choose Zuora as their subscription billing platform and their results to date.

TalentSpring is a SaaS solution for candidate sourcing utilizing semantic search technology. Rather than focusing their time on company infrastructure, it was key for TalentSpring to direct all their resources to product development and candidate sourcing. It was also critical that they build their business processes quickly and seamlessly through salesforce.com. That's where Zuora came in!

The solution for TalentSpring was Zuora's suite of Subscription Management tools. With Z-Billing & Z-Payments, they have been able to build, test, quote, close, invoice, and collect cash through Zuora's integration with salesforce.com with no additional IT resources required; all implementation and testing was completed by the VP of Sales!

In fact Mike Hayes, VP of Sales at TaletSpring said, "Every part of Zuora we’ve touched from the sales cycle to the post sales team to support has been fantastic!"

In the early planning stages for this event, we had expected this to be an intimate event with a handful of SaaS companies. However, despite the massive and unforeseen road construction blocking the entrance to the restaurant (thank you Seattle Department of Transportation. not.) we had an amazing turnout. Standing. Room. Only.

After getting to know some of our attendees and visiting with our customers, we realized that the Saas community in Seattle is more than just brewing; it's here to stay. Coming from the mecca of the Web 2.0 community here in Silicon Valley, it's so exciting to see other subscription communities evolve and create their own story in other cities.

Seattle, we will definitely be back!

Z-Billing 2.0 Launch: Subscription and SaaS-Powered Business Community Gets Together

by Tricia Reilly

Tuesday night, Zuora hosted a cocktail party at La Mar, celebrating the launch of our Z-Billing 2.0 subscription billing service and the fact that we’ve signed over 100 SaaS billing customers in less than a year.

For those of you who may not know, San Francisco experienced a bit of a heat wave last week, so the unseasonably warm weather made for an ideal dockside get together for the who’s who of the SaaS world.

At one point I was speaking with a group of Zuora customers and I realized that we were all already using or switching to subscription services in virtually every aspect of our businesses; from marketing automation to webmail to business intelligence.

It suddenly dawned on me that not only is Zuora enabling SaaS and subscription companies to grow revenue and increase operational efficiency, but we’ve created a community of subscription savvy companies who are relying more and more on cloud computing services to enable focus and growth.

In addition to sipping Pisco Sours, I proceeded to spend a good part of the evening introducing customers to partners, prospects to customers, and so on. It reminded me of the early days of the Internet when I worked for one of the largest web hosting companies. Not only were customers side by side in the data center with the hottest Internet properties, but they derived real business value from industry events which were a hotbed of business development activity.

With the launch (and the heat wave) firmly behind us, I’m looking forward to seeing the next wave of charge models for existing and new subscription products to drive growth for our customers and partners. Can you think of a way you’d like to price that we haven’t thought of yet? Did you find a new prospect at the launch event? Drop us a note and let us know!

Zuora Announces Z-Billing 2.0—Subscription Billing Now Comes with Sales Tax Software

by Tien Tzuo

There’s been a lot of talk about taxes in the news recently – from last week’s ‘tea party protests’ in reaction to government bank bailouts and mortgage relief to proposed legislation regarding taxation of online shopping.

Not to be left out, this morning we announced Z-Billing 2.0 with Taxation. Now the most powerful and customizable subscription billing service available comes with a taxation module to handle different types of tax such as GST, VAT, or sales tax- from any location, in any jurisdiction. We also announced support for the leading taxation software companies- Sabrix, Avalara, and Vertex.

But Z-Billing 2.0 isn’t just about taxes. We’ve added 100 new features to give customers more power, more automation, and increased ease-of-use. It’s all about growing revenues and scaling your subscription business without adding additional headcount. To read the press release, click here.

When we launched Z-Billing 1.0 nearly a year ago, we cited industry disruptors like Netflix, ZipCar, and Salesforce.com. Now we’re seeing traditional companies like Starbucks and United Airlines launching subscription offerings. Not to mention the recent wave of Cloud Computing services with subscriptions as the de facto charge model.

In addition to today’s product announcement, we’ve reached another key milestone in our company’s evolution by passing the 100 customer mark. We’re proud that industry leaders like box.net, Marketo, InsideView, and Cloud9 Analytics have all chosen Zuora to manage their online subscription and payment operations. We’re also excited to add Sun Microsystems to the growing roster of cloud computing customers who have selected us as their cloud commerce platform.

I’m looking forward to what the next 12 months will bring for Zuora, our customers, and the subscription industry as a whole.

Zuora Launches Subscription Billing Offering and Closes 70 Customers in 2008

by Z-Team

Z-Friends -

It's hard to believe that 2008 will soon come to a close. It's been quite a year here at Zuora.

In late 2007, a bunch of friends from WebEx and salesforce.com got together and shared a common experience -- that building successful subscription businesses were hard -- and a common vision: that they shouldn't be. Our vision with Zuora was to create a world with thousands of Salesforce.com's and WebEx's, all subscription services, and all operating in the cloud.

In March 2008, we launched our vision onto the world, and found that it really resonated in the marketplace. We launched our flagship product, Z-Billing, in May, and then quickly followed up with Z-Payments and a partnership with PayPal. In November, at Salesforce.com's Dreamforce conference, we announced Z-Force, 100% built on the Force.com platform and fully integrated into Z-Billing and Z-Payments.

By the end of the year, our vision of the subscription economy and the power of on-demand billing and payments had resonated with more than 60 customers.

2008 was good to us.

This year ends on a high note – It is an honor to be included in Paul Greenberg's list of 'Companies to Watch in 2009'. As well, Elise Ackerman of the San Jose Mercury News did a nice write up of the reach and power of cloud computing, including a profile of Zuora.

We face 2009 with enthusiasm and encouragement. Even though the economy is struggling and there is much uncertainty in the business world – we strongly believe that innovation remains strong, that subscriptions are the business model of the future, and that now, more than ever, companies are looking for easier ways to build and monetize their subscription businesses.

The best to you and yours. See you in 2009.

The Z-Team