FOSTER CITY, Calif. -- (BUSINESS WIRE) -- A societal shift in global consumption preferences is changing the way businesses are pricing and delivering their goods and services, new research from the Economist Intelligence Unit and sponsored by Zuora - the subscription commerce, billing and finance leader - has found. Four out of every five (80%) businesses are currently seeing changes in how their customers prefer to access their services. As a result, over half (51%) are integrating new pricing and delivery models such as subscriptions, sharing and rental goods and services, rather than selling products outright. Of those, subscription-based models have emerged as the primary means to do so, with 40% of these companies implementing subscription services as part of their core business.
MONETIZING NEW DELIVERY MODELS
As consumers and businesses look for more flexible and convenient ways to access the services they want, new models of ownership have risen through the emergence of subscription, rental and sharing businesses, causing a major transformation in a wide range of sectors, including financial services, healthcare, media, retail, technology and telecommunications.
The survey of 293 business executives in the US, UK and Australia reveals that while the move to new consumption and delivery models is being driven by consumers’ desire for more flexible pricing and greater convenience, the trend is being recognized by businesses as a powerful new revenue opportunity:
A GLOBAL DISRUPTION IN COMMERCE
While confirming that a major global shift in how businesses engage with their customers is underway, and that the majority of businesses understand the implications of this shift, the study also reveals concern amongst businesses about their ability to navigate the disruption:
Zuora co-founder and CEO Tien Tzuo comments: “Driven first and foremost by changing consumer behavior, the development of the Subscription Economy is fundamentally changing the way successful businesses operate and opening up a worldwide market opportunity conservatively estimated at $500 billion. It is clear that businesses in many industries have recognized this transformation in customer expectations, as well as the benefits it is bringing, which include longer, stronger customer relationships and increased opportunities for recurring revenues.
However, the shift to the Subscription Economy is not easy. How you price, sell, bill, collect payment and account becomes much more complex, and every line of the business must be prepared and aligned to meet the demands of this disruptive transformation in global commerce.”
Zoé Tabary, Deputy Editor at the Economist Intelligence Unit, says: “The shift to new consumption and delivery models is taking place against the backdrop of more empowered consumers, who increasingly seek convenience and better value for money in goods and services. This is creating technical and organisational challenges in implementing new models, but businesses are starting to take advantage of the opportunities that they represent.”
Saar Gillai, senior vice-president and general manager at Converged Cloud at Hewlett Packard, a multinational IT company, comments: “Consumers are becoming increasingly accustomed to the flexibility of pay-as-you-go models. They are instantly able to access capabilities without paying upfront for the cap-ex, and they have better control over their spend.”
Aleyn Smith-Gillespie, associate director at Carbon Trust Advisory Services, a consultancy offering expertise on sustainable business strategy and models, comments: “Not having capital tied up in assets, having the ability to purchase on a per-user basis or over a period of time, and the ability to outsource the expertise required to maintain these goods and services are the benefits that are driving this trend.”
Giles Andrews, CEO and co-founder of Zopa, a UK-based peer-to-peer lending service, says: “Before you start, do the math to be sure you can achieve economic efficiencies and are able to offer value to consumers that is better than the alternative. Technology allowed us to scale, and to provide checks and balances at all stages of the transaction. The winners are the ones who can figure out how to build a platform that protects customers while adding value in the market.”
A WORLD SUBSCRIBED
The survey results were released today at Zuora’s Subscribed Europe 2013 event in London, the only conference dedicated to success in the Subscription Economy. At the event, Zuora has also unveiled its Subscription Manifesto for the first time in Europe. The Manifesto, signed by leaders of 75 companies committed to the establishment of a modern operating model, includes a set of core values and nine guiding principles for subscription businesses to adopt. Through the collective learning and experiences of the signatories, the Manifesto provides the world’s first framework for global success in the $500 billion Subscription Economy.
Executive summary survey results, along with insights from leading business executives and independent experts, will form the basis of an Economist Intelligence Unit briefing paper, sponsored by Zuora, and can be found here: http://bit.ly/18kLerA.
About Zuora, Inc.
Zuora is the global leader in subscription commerce and billing, helping companies in every industry transition to the Subscription Economy. Enterprise leaders and high-growth companies alike use Zuora's multi-tenant cloud platform to launch, scale, and monetize their subscription services. Zuora's applications work where traditional ERP applications fail: Subscription pricing, quoting, orders, billing, payments, and renewals. Built from the ground up by SaaS industry veterans from salesforce.com, PayPal, and Netsuite, Zuora services innovative customers like Informatica, Tata Communications, Box, Xplornet, Ustream and Reed Business Information. To learn more about Zuora, please visit www.zuora.com.
About Economist Intelligence Unit
The Economist Intelligence Unit (EIU) is the world's leading resource for economic and business research, forecasting and analysis. It provides accurate and impartial intelligence for companies, government agencies, financial institutions and academic organisations around the globe, inspiring business leaders to act with confidence since 1946. EIU products include its flagship Country Reports service, providing political and economic analysis for 195 countries, and a portfolio of subscription-based data and forecasting services. The company also undertakes bespoke research and analysis projects on individual markets and business sectors. More information is available at www.eiu.com, or follow us on www.twitter.com/theeiu.
The EIU is headquartered in London, UK, with offices in more than 40 cities and a network of some 650 country experts and analysts worldwide. It operates independently as the business-to-business arm of The Economist Group, the leading source of analysis on international business and world affairs.