DISRUPTING THE TRADITIONAL BUSINESS MODEL

Kim BenitoVP, Global Services APAC, Zuora

Kevin Noonan

Lead Analyst, OvumDavid TanPartner, Deloitte

Digital

DISRUPTING THE TRADITIONAL

BUSINESS MODEL

• Transition from traditional to personalized access and purchase of goods & services

• Overview: 6 enablers of transformational change

• Observations, Challenges and Suggestions

Digital Transformation journeyTransition from traditional offerings towards personalized goods & services

page05

Competitive, and comparative pricing points to improve value for money

Increased use of internet enabled connected devices

Exponential rise in media consumption of multi-screen video services worldwide

Decreased costs of Digital goods & services catalogue

Personalisation is becoming essential

Digital revenue models i.e. subscription or one time payment offer a strong audience engagement that can improve repeat sales.

TRANSFORMATIONAL CHANGE

6 Enablers of transformational changewithin any organisation

01

A Strong Compelling ReasonA strong, compelling reason to motivate transformational change

02

A Clear Vision and StrategyA clear vision and strategy, but with room for agility and iteration

03

A Multi-year JourneyThe patience to know that transformation is a multi-year journey

04

Put the Customer at the CenterThe need to put the customer at the centre of the transformation equation.

05

Proving Success with SkepticsThe importance of demonstrating to skeptics that different actions can lead to different results

06

Over-communicationThe need to over-communicate to employees, customers, stakeholders, shareholders

01External market factors,

industry shifts and changes in buyer

preferences that create a compelling reason for

change.

A STRONG COMPELLING REASON

Unlimited access Core driver towards digital enabled goods & services access and purchase journey

page09

Unlimited access to product & services in real-time

Access to first look products and premium services

Regular renewal, upgrades and maintence of products and services

Highly personalised product and services at disposalDelivery of highest quality of product and services on-time

The ability to always be at the forfront of technology, fashion and trends

None of the above

0

100

200

ANZ: Adoption drivers (2016)ANZ Australia (A) New Zealand (NZ)

Source: Ovum’s B2C Subscription survey (August 2016); N=300

ANZ consumers are embracing both subscription and one time payment modes in the digital transformation era

page010Source: Ovum’s B2C Subscription survey (August 2016);

N=300

1% 2-9% 10-20% 21-30% 31-40% 41-50% 51% and

above

0%5%

10%15%20%25%30%35%40%45% 40%

32%

21%

6%1% 0% 0%

ANZ: Percent of monthly household disposable income for subscription

services (2016)

2-9% 10-20% 0-1% 21-30% 51% and

above

41-50% 31-40%0%5%

10%15%20%25%30%35%40%45%

39%

22%19%

12%

4% 2% 1%

ANZ: Percent of monthly household disposable income for one time

payment (2016)

Almost a third (32-39%) are spending aggressively on subscription and one time payment in the transformation era. So will a hybrid model i.e. transaction and subscription video on demand suit this market?

Subscription based revenue models Fast penetrating every business segment; media sector leading adopter

page011Source: Ovum’s B2C Subscription survey (August 2016);

N=300

83 81

5446 43 40 36 36 34 30 30 27 23 22 21 21 21 19 18 18 17 17 17 16 14

8 5 2

ANZ: Subscription Services by Segments (2016)

02Embracing agile iteration within an established enterprise

A BOLD VISION…BUT WITH ROOM FOR ITERATION

Myth Gen Z (14-25 age) are core customers for digital goods & services

page013

Some of pivotal survey highlights are:

• Almost one-third (36%) of Gen Y (26-35 age) and silent generation (71+ age) have been using any form of subscription service from less than an year.

• Population aged between 26-50 years, control more than half (56%) of total subscription services across ANZ market in 2016. 26-35 36-50 14-25 51-70 71+

34 2813 11 11

36

24

34

9 7

14

108

94

9

13

2

16

8

ANZ: Subscription Services Longev-ity (2016)

Less than 1 year2-5 years6-10 years

More than 10 years

Source: Ovum’s B2C Subscription survey (August 2016); N=300

03Managing

expectations during a multi-year

transformation

TRANSFORMATION: A MULTI-YEAR JOURNEY

04

PUTTING THE CUSTOMER AT THE CENTRE

Designing and delivering an engaging experience for a new set of customers and buyers

Transformation continuous process integration of new goods & services to

improve engagement is pivotal

page016

Connected life paradigm is fast becoming reality. This paves way for service providers to enhance their goods & services offering into multiple segment such as connected healthcare, education, and wealth management.

22%

37%

29%

9%

3%

ANZ: Connected Life ser-vices

likely spend by age (2016)14-25 26-35 36-50 51-70 71+

52

175 5 5

17 8 5 8 4 6

19

21

11 14 1410

10 14 7 8 4

12

4

24 20 15 510 9 11 14

8

ANZ: Value add connected life services

priorities (2017-2019)Top 1 Top 2 Top 3

Source: Ovum’s B2C Subscription survey (August 2016); N=300

Building a life-time trust and loyalty is essential for sustainability

page017

30 21 13 14 10 7 12

39

2522 28

15 13 14

26

18 28 20

6 8 3

18

15 11 5

6 4 3

15

1 6 10

1 2 0

ANZ: Consumers Future Preference

14-25 26-35 36-50 51-70 71+

As consumers move to the next wave of personalization, they will demand for highly trusted global and regional service provider (boundary-less goods & services) offering unique value proposition to enable connected life.

Source: Ovum’s B2C Subscription survey (August 2016); N=300

05the importance of demonstrating to

skeptics that different actions can lead to

different results

PROVING SUCCESS WITH SKEPTICS

06The need to over-communicate to employees, stakeholders, customers during times of change

OVER-COMMUNICATION

CHECK OUT ZUORA ACADEMYAll the info you need to build and run an amazing subscription business.

https://www.zuora.com/academy/