The Blog

  • March 11, 2015
  • Zoura Pads Its War Chest

    Zuora-Logo-Navy-largeZoura announced a funding round worth $115 million today including investors Wellington Management Co., BlackRock, Premji, and Passport Capital as well as some investors from earlier rounds. Calling it a mini-IPO, CEO Tien Tzuo said the company will behave more like a public company from now on as we await the inevitable reality of an IPO.

    Zuora invented the subscription billing, payments, and finance market about 8 years ago and has been riding a wave it calls the subscription economy. Briefly that means an economy that is rapidly adopting subscriptions as a business model which makes all the sense in the world.

    Subscriptions as we know them started with companies like Salesforce.com which began delivering software as a service and at the time, this was considered an advantage because so many larger software firms were getting hung up on software implementation. You could easily spend two to three times the million-dollar software price tag on getting the software to work which is why Salesforce’s original and still to be topped tagline is “no software.” Tien Tzuo learned a lot at Salesforce as its 11th employee gradually rising to be CMO and chief strategy officer before leaving.

    All that’s well and good, but I firmly believe we’ve already overshot the subscription economy. That’s not to say everyone is on board, there are lots of conventional companies just getting up to speed in subscriptions and Zoura will undoubtedly use its new cash to market and sell to them. But as Sheik Ahmed Zaki Yamani of Saudi Arabia once said about the impending end of the petroleum age, “The Stone Age didn’t end because we ran out of stones.”

    Things have a habit of morphing. The Old Stone Age morphed into the New Stone Age and here we are. Likewise, the subscription economy has morphed into the subscription culture, which is part of the reason Zoura could raise that $115 million (on top of the roughly $100 million it already raised) to begin with.

    The subscription economy delivered a fact to the market; the subscription culture is what happened when customers figured out how to leverage that fact. Sure, they learned that they could pay monthly for things that normally cost millions of dollars all at once enabling small businesses to afford the same things their larger competitors had and this leveled many playing fields. But it also meant that no customer had to feel stuck in a bad fitting relationship any more—it’s too easy to leave one subscription and get another.

    Customers were empowered by this new knowledge and it has led us to a new model for business—not the same as a business model. Relationship Business Management or RBM is what Zoura is calling it and the idea has legs because it encompasses the reality that subscriptions are now central to the relationship and that CRM as we knew it has to account for this.

    RBM starts by assuming subscriptions and leverages data about customers—their use habits, payments history, lifetime value, and many other factors to drive outreach and interaction well beyond simple purchase and sales issues. That’s where I believe the culture part comes in. Even vendors that do not offer subscriptions are beginning to behave like subscription providers for the simple reason that the model is more customer friendly and in a competitive world no vendor can afford not to cater better to customers.

    Zappos is a vendor of shoes and not a subscription company but you’d never know it from the way the company behaves. Their body language suggests a company focused on customer lifetime value and working to get customers to come back for the nth time. They’ve internalized subscription culture from their customers and exude it back. Customers love them for it.

    Lots of companies are looking more like subscription companies today, which is why the future looks bright for Zoura as it begins leveraging its new cash to spread the word about subscriptions and RBM to a larger audience.

     

    Published: 3 years ago


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