Businessmodel of Zuora

Customer Segments

Zuora has a niche market business model, with a specialized customer segment. The company targets its offerings at firms that want to create subscription-based models or manage their existing ones. While it serves all industries, its customers are mostly in healthcare, education, and communications.

Value Proposition

Zuora offers three primary value propositions: convenience, performance, and brand/status.

The company offers convenience by providing an end-to-end solution. Its software handles all aspects of subscription management, from commerce to billing to finance.

The company has demonstrated strong performance through positive outcomes for clients. Specific examples include the following:

• Dell used Zuora’s solution to design an award-winning subscription experience and reduce new acquisition deployment time from over a year to six months
• Reed Business Information used Zuora’s solution to to increase subscription revenues by more than 10% by optimizing pricing and upsells, as well as reducing churn
• Mindvalley used Zuora’s solution to enhance the efficiency of billing processes and increase recurring revenes by approximately 25%
• Informatica used Zuora’s solution to increase its customer renewal rate to 95%
• Marketo used Zuora’s solution to increase its revenues by 5,000 percent The company has established a strong brand as a result of its performance. It has amassed over 700 customers. Also, it has received positive coverage in high-profile publications, including Fortune, Forbes, *the *Wall Street Journal, and TechCrunch. Lastly, it has won many honors, including placement on the CNBC Disruptor List (2014), recognition as an OnDemand Top 100 Company (2013) and “Company of the Year“ from AlwaysOn (2012), and listing on the FASTech 50 by VentureWire (2011).

Channels

Zuora’s main channel is its direct sales team; it also acquires customers through its website. The company promotes its offering through its social media pages and attendance of conferences and other networking events.

Customer Relationships

Zuora’s customer relationship is primarily of a self-service nature. Customers utilize the service through the main platform while having limited interaction with employees. The company’s website features a ”Content Library” that includes several self-help resources, including white papers, reports, eBooks, videos, demos, webinars, and keynotes. The website also offers platform status updates, access to a monthly newsletter, and answers to frequently asked questions. Furthermore, it provides 80 hours of self-paced and virtual instructor-led classes through “Zuora University“.

Despite this orientation, there is a personal assistance component in the form of phone support and a community element in the form of a forum where customers can obtain assistance from peers.

Key Activities

Zuora’s business model entails designing software solutions and maintaining and updating its software platform for its customers.

Key Partners

Zuora has the following types of partners:

• Global System Integrators – Partners include Accenture, PwC, and Capgemini
• Accounting Partners – Partners include NetSuite, QuickBooks, SAGE, Workday, and Intaact
• Payment Providers – Partners include Chase Paymentech, FirstData, BlueSnap, and Cielo
• CRM and Sales Solutions – Partners include Salesforce.com, Sertifi, and Xactly
• Integration Providers – Partners include Dell Boomi, Flexera, Informatica, and MuleSoft ### Key Resources

Zuora’s main resource is its proprietary software platform, which serves over 700 customers. It also depends on its human resources in the form of instructors and service personnel to provide training and customer support. Lastly, as a relatively new startup it has relied heavily on funding from outside parties, raising $242.5 million from 17 investors as of March 2015.

Cost Structure

Zuora has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is likely marketing and sales expenses, a fixed cost. Other major drivers are in the areas of customer support/operations, also fixed costs.

Revenue Streams

Zuora has three revenue streams. It charges a one-time set-up fee for first time customers. Once they have signed up, it utilizes a revenue-share model in which it charges 2-3% of the total amount clients invoice each month. Lastly, it charges an overage fee usage outside of set parameters.