Best of Both Worlds: Bundling Hard Goods and Subscriptions

Jason Egnal Director, Internet Marketing

The Nine Keys to Subscription Success

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PRICE   ACQUIRE   BILL   COLLECT  

NURTURE   ACCOUNT   MEASURE   ITERATE   SCALE  

Agenda  

1.   Introduc=on  2.   Billing?  3.   4  Subscrip=on  Essen=als  4.   Lessons  Learned  5.   Wrap  Up  &  QA    

About  The  Presenter  

Background  

@Netgear  

Exper=se  

J a s o n   E g n a l  

Manage  Ecommerce  and  Internet  Marke3ng  for  NETGEAR's  global  web  proper3es.  

Establishing  and  managing  corporate  web  presence.    Driving  sales  through  direct  marke3ng  strategies  and  programs.  

Over  15  years  of  experience  in  Ecommerce  billing  systems.  Founded,  raised  capital  and  sold  business  with  subscrip3on-­‐based  revenue  models.  

NETGEAR  W e   c h a m p i o n   c o n n e c 3 v i t y   s o   y o u   c a n   d o   m o r e .  

•  1.2  BN  Revenue    •  Market  Cap  1.1  BN  •  Retail  •  Commercial  •  Service  Providers    

•  July  2012  Netgear  acquires  VueZone  •  Founded  2003,  raised  $19m  •  Home  Video  Monitoring      

Why  a  Billing  System?  

Background  

Business  Model  

The  Challenge  

Hardware  product  operated  in  the  Cloud.  Long-­‐term  rela3onship  with  customer.  Rich,  interac3ve  service,  costly  to  provide  

B2B  +  B2C  Direct:  VueZone.com  Channels:  Costco,  Amazon,  Service  Providers.  

Implement  service  payment  plans  before  end  of  first  free  year.  Establish  if  our  customers  would  pay  a  recurring  service  fee.  Limited  budget.    

Implementa=on  

Analysis  

Integra=on  

Provisioning  

Product  Catalogue  •  Hardware  •  Service  Plans      Tradi3onal  ecommerce  shopping  cart.  Inventory  Management.  Cloud  Services.    Registra3on.  Features  by  Service  Plan.  Expira3on.    

4  Subscrip=on  Essen=als  

Test  the  market  with  different  offers  at  different  touch  points  in  the  customer  lifecycle.    

Price  by  customer  segment.    

1 2 P R I C E ,   A C Q U I R E ,   R E P O R T ,   S C A L E  

Add  mul<ple  channels,  addi<onal  languages,  mul<ple  partners,  more  customers  .  

4 Manage  a  global  rollout  with  country-­‐specific  pricing,  mul<ple  en<<es  and  complex  taxa<on.    

3

Subscrip=on  Essen=al  :  Price  V u e Z o n e   P r i c i n g   &   P a c k i n g   J o u r n e y  

We  ini3ally  launched  with  the  first  month  free    

First    Year  Month  

Free  

Bundles  Tested  System/Service  Plan  bundles,  addi3onal  free  months,  accessory  bundles.    

VueZone  Basic/Premier/Elite  

Next  we  offered  upgrades    

Restructured  Plan  Features    

App  adack!  Adach  rate  explosion.    

Subscrip=on  Essen=al  :  Iterate  P R I C I N G   B Y   C U S T O M E R   S E G M E N T   S I G N I F I C A N T L Y  

I N C R E A S E D   A T T A C H   R A T E  

Offered  all  customers  the  

same  incen=ves  at  all  touch  points  

Provided  different  offers  to  different  customers  at  different  =mes  

Op=mized  subscrip=on  offer  based  on  channel,  past  promo=ons,  product  ownership  

Subscrip=on  Essen=al  :  Report  G L O B A L   R O L L O U T  

Account  for  mul=ple  plans  with  frequent  upgrades,  downgrades  

and  refunds.    Do  it  globally.  

Subscrip=on  Essen=al  :  Scale  G R O W   G L O B A L L Y   T O   D R I V E   $   G R O W T H  

ACME  Inc.    

Began  with  the  US    market  only,  

 1  currency,  two  channels  and  a  small  team.  

Acquisi=on  brought  mul=ple  channels,  addi=onal  markets,  a  large  accoun=ng  department  and  a  global  customer  support  infrastructure.      

Lessons  Learned  

Flexible  

B E S T   P R A C T I C E S  

Experiment  

Simplify  

Understand  your  billing  systems  capabili3es  and  make  it  conform  to  your  business  

An  un3dy  product  catalogue  is  not  an  un3dy  room      

Keep  your  billing  prac3ces  simple      

Wrap  Up  

Test  the  market  at  different  price  points  and  touch  points.        Bundle!  

Know  your  customer.      Where  they  purchase.  How  they  use  your  product.      

Think  big  -­‐  it  happens  sooner  than  you’d  expect.    

Your  company  is  global.    Subscribers  cross  borders  and  currencies  with  no  regard  for  regula<ons.    

PRICE   ACQUIRE   REPORT   SCALE  

Q&A  

Thank  You!  

From Hardware to Solutions Introducing Subscription business at Topcon

Dave Vopnford Solutions Architect

Martijn Hoppenbrouwers Director IT Business Solutions

&

The Nine Keys to Subscription Success

$

PRICE   ACQUIRE   BILL   COLLECT  

NURTURE   ACCOUNT   MEASURE   ITERATE   SCALE  

Founded  in  1932:  Tokyo  Op3cal  Instrument    Company  World  leader  in  Precision  Measurement  and  Posi3oning  Solu3ons    Major  Shareholder:  Toshiba  Corpora3on    3  Major  Companies  

Posi3oning  Smart  Infrastructure  Eye  Care  

About  Topcon  

2009  

Road  to  Saas  

Emergence  as  soiware  as  key  component  of  business  model.  Tradi3onal  ERP  no  longer  suffices    

2010   2011   2012   2013  

Online  self  service  tools  introduced.    

Stabiliza3on  &  healthcheck  period.    

Saas  as  standard.  Upgrades,  renewals,  direct  delivery.  

Most,  but  not  all,  subscrip3ons  are  sold  as  part  of  kits  including  hardware.    Most,  but  not  all,  kits  have  an  ini3al  free  or  pre-­‐paid  period.      Soiware  sold  to  a  distributor  with  subscrip3ons  need  to  be  ac3vated  by  customers.    Subscrip3ons  need  to  be  tracked  by  ac3vated  device,  distributor,  end  user  and  ac3vated  modules.    The  hardware  needs  to  be  able  to  check  in  with  SaaS  plakorm    for  available  and  ac3ve  modules.  

       Our  Subscrip=on  Susiness  

Today  

At  Implementa=on  

Our  Challenges  •  We  were  building  our  first  SaaS  plakorm.  This  is  a  learning  

process,  with  many  unknowns.  It  took  some  itera3ons  to  get  right.    

•  Risk  of  losing  focus  –  we  are  a  small  team  that  was  simultaneously  implemen3ng  SAP  for  our  company.  

•  Based  on  our  implementa3on  experiences  we  have  been  able  to  steadily  increase  our  offerings;  upgrades,  maintenance  packages,  online  ac3va3ons.  

•  SaaS  is  being  supported  by  all  the  regular  business  func3ons  through  Zuora,  SalesForce  and  SAP.  

To  use  available  technology  and  tools  as  much  as  possible,  in  order  to  leverage  exis3ng  best  prac3ces  to  the  fullest.    Maximize  our  flexibility  by  minimizing  our  reliance  on  on-­‐premise  and  pre-­‐SaaS  control-­‐centric  tools.  

Our Approach

Model  

Distributors  Distributor  Orders  Distributor  Invoices  

Products/Part  Numbers    

Order  Triggers  Product  Triggers  Product  Modules  

Sobware  Serial  Numbers  Ac=va=on  Codes  

End  User  Companies  and  users  Cer=ficates  

Communica=ons    

Product  Catalog  Subscrip=ons  

End  User  Invoices  Credit  Card  Data  

   

All  integra3ons  created  internally  with  Zuora  order  builder  func3ons:    •  Create  accounts  •  Create  payments  func3ons  •  Create  subscrip3ons  •  Modify  subscrip3ons  •  Process  direct  and  distributor  sales  •  Manage  reminders,  renewals  and  upgrades  

Development  

Topcon  created,  owned,  cloud  based  SaaS  plakorm.  Single  set  of  func3ons  rolled  out  to  mul3ple  product  development  groups.    No  implementa3on  or  consul3ng  cost.  No  added  headcount  un3l  business  model  had  proven  revenue!  

Mission  Accomplished  

Interna=onal  Rollout  

Q&A  

Thank  You!