Here at ProfitWell, we fully believe in the future is subscription. And we have good reason to believe this, which is why we’re digging intoSubscribedby Tien Tzuo, sharing why the subscription model works so well.
If you’re in SaaS, I’m sure you know Tien. But, in case you don’t, here’s a quick brief.
Tien is the CEO ofZuora—a leading company in the subscription economy (a term coined by them). Tien founded Zuora in 2007 and took it public in 2018.
Prior to Zuora, Tien was an early force at Salesforce. In his nine years there, he built their original billing system and held a number of executive roles. Long story short: Tien is a pioneer in the SaaS and Subscription space and we’re gonna learn a thing or two from his book, Subscribed.
We’re first going to discuss what’s so great about the subscription model, then we’ll dig into how this model impacts other companies, and finally we’ll discuss the PADRE system.
First, let’s start with why the subscription model reigns supreme.
Why the subscription model works
There are two reasons why we love the subscription model: access and service. As noted inSubscribed, people value services more than physical products. The real value lies in what customers actually want and need—and how companies respond to these things. Simply, subscription is a relationship with your customer.
Also made clear inSubscribed, shifting to subscription doesn’t have an immediate payoff. The process can be painful at first—there are instances where costs increase while revenue decreases. This is usually only temporary and leads to a better payoff in the end.
Let’s get into the next point: how the subscription model impacts companies.
The subscription impact
As Tien says, innovation isn’t about creating new products anymore. Instead, innovation involves continuous growth and tinkering to make the product properly suit the needs of people.
One area that the subscription model has completely changed is marketing. Traditional marketing is all about product, price, promotion, and place. Instead, subscriptions take an approach by building steady relationships with their customers, tailoring the product to a specific customer need instead of building something and relying on traditional advertising to pull the weight.
The PADRE system
PADRE is a way of visualizing the business with the customer experience.
It stands for pipeline, acquire, deploy, run, and expand.
Pipeline:raise awareness for your company
Acquire:it’s all about the customer’s journey
Deploy:get your customer set up as efficiently as possible
Run:the day-to-day usage of your product, ensuring it runs smoothly
Expand:retain subscribers for innovation and growth
Subscribedwas the first book I read when I joined the ProfitWell crew. It’s a quick and engaging read, important for anyone in SaaS. To my CEOs and founders, I strongly recommend addingSubscribedto your onboarding reading materials for new employees. It’ll give them an in-depth look at subscriptions, from the best of the best, Tien Tzuo.
Finally, here are the main points we discussed today:
1. The subscription model works well because it focuses on access and service.
2. It’s changed the way companies have done marketing
3. It takes on the PADRE system—a way to visualize your business with the customer experience.
Subscribed is a 10/10 read. To order it today → click here
How is the B2B SaaS market trending?
How are churn and new revenue trending over time?
MRR GAIN +16.62%
MRR LOSS -22.03%
Your B2B SaaS Index is valued at 1,717 points today, with overall growth increasing 1.12% over the last week.
The MRR Gain Index (which represents upgrades & new revenue) is up quite a bit today, increasing 16.62% over the last 24 hours. Churn in the market isn’t so looking so hot..MRR loss is down 22.03%.
It’s the beginning of the month, subscriptions are renewing hence the MRR gain being high, but people are also canceling, explaining the stark contrast.
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