Q&A With Zuora Global Brand and Communications VP Mark Heller

Amidst the Subscription Economy, and as more and more businesses focus on offering recurring services rather than selling physical products off shelves, the role of the marketer is changing.

Specifically, there is a seismic shift occurring and marketers need to stay involved with their customers long after the sale is complete.

For Zuora global brand and communications VP Mark Heller, the answer to this shift is businesses adopting a subscription model.

To find out more, B&T sat down with Heller to talk subs, Netflix and customer engagement.

First off, how is the subscription model changing media?

We are now living in a world where everything is shifting to increasing customisation for subscriber preferences and subscribers can tell you what they like and don’t like in real time.

Think about what Netflix has done by flipping the script on Hollywood, how can they invest eight billion dollars in content a year?

When you have 130 million subscribers that are paying a monthly fee to access the content they want, you no longer are betting your annual budget on whether your films or shows will be a hit at the box office or have high ratings.

Your subscribers are in an ongoing relationship with you. They are telling you exactly the content they want by what they consume and so you have a lot of data on what you continue to invest in and what new shows are likely to succeed based on that.

What are the benefits of the subscription model?

First of all, it’s a more predictable business model. Recurring revenue means you don’t have to start from scratch every quarter.

We view a subscription business as not simply a monthly fee, but a broader definition that begins with a subscriber ID.

Apple, Uber, Netflix and Amazon all identify you by your subscriber identity. As long as your subscribers continue to value the service you are providing you can count on a stable, consistent revenue base from them.

We know from our customer base that includes companies in all industries from all over the world that their subscription business models are growing much faster than traditional product-based businesses.

We have a chief data scientist who has looked at revenue growth across these companies over a number of years and when we compare their revenue growth to different indexes, we can see that on average subscription business models are growing eight-nine times faster than say, for example, the S&P 500’s revenues or four times faster than US retail index (Subscription Economy Index).

What benefits does subscription have for consumers?

You only have to look at our everyday lives to see that digital disruption has changed everything for us as consumers.

The essence of this shift is consumer behaviour and has to do with having the freedom to subscribe to the outcomes I want, when I want them, from wherever I happen to be. We call this the Subscription Economy.

How is it changing customer engagement and experience?

Customer expectations have changed forever. I believe there is no going back. Any company, no matter what the industry had better think first and foremost about their customer’s experience.

Jeff Bezos refers to this shift in consumer expectations as the rise of the “divinely discontent customer”.

Today’s customer doesn’t want to wait in long lines if they can get what they want delivered right to them for around the same price, especially if it’s the same day service.

As marketers we need to think very carefully about what it is we are offering to our customers and how much friction there is in their purchasing experience, their service experience and how easy or hard it is to get what they want.

If you are not constantly thinking about that and getting feedback on this constantly improving that experience, there will always be someone else who will and that will unequivocally disrupt your business.

The divinely discontent customer has more choices than ever and they can move on quite easily and it will happen faster and faster over time.

What’s changing customers?

I believe it’s not just our expectations that are changing as customers, but our own personal narratives.

That little voice in our head that writes our collective stories every day, wants to believe that we are spending our time and our money well.

Anything that makes that story better or worse influences the choices we make going forward.

That applies to business to business relationships as well. Any company that makes that story a difficult one to endure, risks becoming a cautionary tale vs a triumph of the new Subscription Economy.