Metrics that Matter: An Operational Framework for Running Your

Subscription Business

More Bookings. More Profitably.

Attract, reach and convert guests with

the leading cloud platform for hotels.

The world’s leading subscription management

platform

Iain HasselVP Finance, Zuora

John BurkeCFO, Siteminder

are demanding new consumption models

6.8 BILLION 80% OF CUSTOMERS

Potential subscribers on mobile, social, web

- The Economist 2014

WE NOW LIVE IN A SUBSCRIPTION ECONOMY

Every Industry is Shifting

Consumer Goods

Communication

Healthcare Internet Of Things Technology

Education Entertainment

Music

From a focus on products…

…to a focus on relationships

customer

product

channels

service

channels

experience

subscriber

US 13%28%

AU 24%43%UK 25%23%

51%

“Over half of companies are in the process of changing or have changed the way they price and deliver their goods & services.”

BUSINESSES ARE RESPONDING TO NEW CONSUMPTION

MODELS

To succeed, leaders must adjust their business models to focus on Annual Recurring Revenue (ARR)

ARRn + ACV - Churn = ARRn+1

THE BASIC BUILDING BLOCKS

THE THREE MAIN DRIVERS:

• Efficient ARR growth• Churn measurement

and management• Balancing a strong

recurring profit margin with a need to continually enhance your product

Annual Recurring Reven

Measured by Growth Efficiency Index (GEI)

No single number is correct. Adapt to your business

Can no longer apply growth at any cost

Pricing and packaging and sales compensation plans must adapt

Efficient ARR growth

ChurnChurn

Measure in a way that provides the best insight into your business:

- Raw dollar churn - Net retention - Cohort analysis If you spend a lot to

acquire customers, your churn needs to be very low

Recurring Profit Margin

Measured as Recurring Costs (R&D, G&A, COS) against entering ARR

Align the business around growing spend in proportion to ARR growth