Zuora Inc (NYSE:ZUO) Q3 2018 Earnings Conference Call - Final Transcript
Nov 29, 2018 • 05:00 pm ET
(Operator instructions) John DiFucci, Jefferies.
Richard Davis, Canaccord.
A few quick questions; one, I think you've talked about this in some of the conferences and stuff like that. But how do you feel like -- if I'm using Zuora, what kind of tools am I going to get that are going to give me heads-up that someone is going to churn off? And then related to that, when I think about myself or anyone, when you subscribe to something, there's moment in time when you're kind of like, how should I renew or not? And that can be true for Netflix or Amazon Prime. Talk about a little bit your customer success teams and how you make sure you kind of people right at that moment of transition, because once you're in I think it's pretty sticky, but you've seen this cycle before, so.
So one of the key things about the subscription economy. I was just on the phone on a conference call this morning with a major Fortune 500, Global 500 company launching new subscriptions, really transitioning. They're a product company today, but their customers, both their B2B customers and their B2C customers are all starting to demand for these subscription services. And that was their question is how do know -- what does success look like, right? You've got a chance to work with thousands of companies around the world, and one of the things we talked about is the swing factor, and the business model lines are being the churn relationship with the customers. These are active relationships. And you can tell based on the level of activity how strong they are.
So the key thing to all these things is really to put together a view of history of which customers are churning, which customers have an upsell capability, and marry that with the internal measurements that you have. And I would say, most, if not, all of our customers are using information from our system in order to do that. It's a really, really part of being successful in this new business model.
And Richard, I would just say also that the upsell is as important as the churn, right, and being able to identify through usage patterns and things like that from data that you can get out of Zuora on which customers you should be engaging with, and based on how they assign utility to your product. And you learn over time and then you can change your pricing and packaging to kind of optimize for that.
I'll give you a quick example of that. We talked about this in our Subscribed conference earlier, but our data that we could see across our customer shows, for example, two lessons, and you can go to the website for more information, but companies that do a usage-based model versus a fixed model grow faster. But there's actually a balancing act of how much of your business model is based on fixed and how much of