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The end of ownership will transform treasury

“The end of ownership is happening whether Wall Street wakes up or not.” wrote Tien Tzuo, chief executive and founder of Zuora (a leader in cloud-based software for a subscription business) in Monday’s FT. He might well have written, “The end of ownership is happening whether corporate treasury wakes up or not.” The end of ownership, i.e. the move to the subscription/recurring payments business model is probably the single most important business model change happening today.

It really is happening

Tien Tzuo used many important examples in his article to show that “end of ownership is disrupting nearly every industry: from retail and entertainment to heavy equipment and healthcare”:
    •    Apple’s investor should not be worried about the volume of sales of their latest iPhones, but more “about how many Apple IDs its customers create and how it can make money from those IDs.”
    •    Consumers do not have to buy products to use products, e.g. for cars, dresses, jewelery, music, etc.
    •    Businesses are similarly affected, e.g. renting office space, subscribing to telephone, email and business s/w, even employees.
He concludes that that companies need to recognise that the continuing relationship with customers is the only thing that will keep them competitive. Chillingly he sums up the future business model needs to based on understanding and knowing the customers buying habits and how much they are willing to spend.
The key is to operate subscription, recurring payment collection payment systems that consumers and businesses understand and are comfortable with.

Corporate treasury’s role

The corporate treasury department’s role is ensure that their company provides recurring payment collection payment systems that their customers understand and are comfortable with. There are imprtant commonalities between consumer and business requirements, and some important differences.
There are now a number subscription payment companies including:

  •     Recurly who have partnered with Adyen
  •     Zuora
  •     SlimPay

They have all produced guides on how to improve the returns from recurring payments, one of the latest is from Recurly, “Getting on the Fast Track to Subscription Revenue” which comprehensively looks at:

  1. Getting up and running quickly
  2. Infrastructure and security
  3. Cutting through the Complexity of Subscription and Recurring Billing
  4. Powerful results.

Recurly, conclude that, “The subscription model focuses a powerful lens on economic loyalty as organizations build revenue and customer relationships for the long term.” That is where the role of the corporate treasury department is. To help the whole company build ‘economic loyalty’ from their customers. More on this later.

CTMfile take: The end of ownership changes the business model and will change the role of corporate treasury as well.

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