LETTER FROM THE EDITOR By Aarthi Rayapura
We travel east with our Fall 2017 issue to New York, London, and Paris where our annual Subscribed conferences are being held this September. And we bring you an issue packed with compelling business success stories from both sides of the Atlantic. We begin by looking at the fascinating journey of legendary brands such as Fender (71 years old) and Husqvarna (132 years old) as they transition into the Subscription Economy. The role that digital transformation and changing customer expectations are playing in this global shift cannot be ignored. Fender Play, the company’s new subscription-based online video teaching service, is the core of Fender’s strategy for keeping beginners engaged. It’s also the hub of Fender’s digital ecosystem, which includes Fender Tune, a free mobile app for guitar tuning; Riffstation, a learning tool for more advanced players; Fender.com; and the world’s first Bluetooth and WiFi-equipped guitar amplifiers. Sweden based Husqvarna is a multi-billion dollar outdoor power tools manufacturer which just launched a first-of-its-kind Toolshed-as-a-Service pilot program to promote the Husqvarna Battery Box. The program allows homeowners to access payper-use power tools for the garden, eliminating the need to maintain and store gardening tools that are not frequently used. All these initiatives underline the fact that customers no longer care just about the products, but are more keen on the outcomes. These changing consumer expectations require businesses to adopt a whole new way of thinking and operating. While many are struggling to make the
switch, there are a few that are already delivering on the Subscription Economy promise of exceptional customer experiences — Hive with its smart home technology, Bringg with seamless deliveries to your doorstep, and CLEAR with easy access at airports and stadiums, to name a few. We also take a close look at two direct-to-consumer industries in transition — media and retail. While this sector has in many ways been the leading face of the Subscription Economy with memberships and e-commerce, there are still no blueprints to follow. And fortunately (or not!), this means lots of experimentation and evolution. No business publication can be complete without acknowledging the impending changes (and havoc!) caused by the new accounting standards. We consider the ramifications of the new ASC 606 and IRFS 15 revenue recognition standards — what it means for business and what you can do about it. And then, we go to the back office and explain why it’s critical for Pricing and Finance teams to play together. Subscriptions don’t just build relationships between businesses and customers; they also build relationships inside companies and rely heavily on the cohesiveness of an organization for success. And finally, we hope you’re inspired by the latest numbers from Zuora’s proprietary Subscription Economy Index™ — from January 1, 2012, to March 30, 2017, subscription businesses grew 8 times faster than S&P 500 company revenues and about 5 times faster than U.S retail sales. Let’s continue to transform, experiment, and grow.