Alongside the digital marketing revolution of the last 20 years has been a corresponding transformation of revenue models. The internet is both a channel for reaching customers directly and a generator of data from those transactions which can be used to improve targeting and the relevance of marketing messages.
We are now entering an era of hyper-personalised marketing where highly granular data can be used to tailor both the messages as well as the products and services delivered to individual consumers. At the same, firms are driving customer acquisition with new marketing and revenue techniques based around freemium and subscription models.
Industry leader Zephr is helping clients harness these techniques by using data to reduce customer churn, drive acquisition and increase ARPU with dynamically personalised marketing. In this interview, Zephr’s CEO, James Henderson, talks us through what his company does, why the subscription economy is changing business models and how personalised marketing is evolving in the twenty first century.
Martin: Can you give a brief overview of what Zephr does and its origins?
James: We founded Zephr three years ago to empower businesses with personalised and tailored experiences for their customers.
Too often, we see companies disregarding the individual needs of their audience and using a cookie-cutter approach. That’s where Zephr comes into play. Our solution is a high-speed user-friendly interface designed for non-technical teams.
Now three years in, we have tripled our revenue growth year on year, all the while growing to a fifty strong team from seven different countries. We operate across three continents and have offices in NYC and London.
Martin: On your website you talk about helping companies and brands gear-up for the subscription economy. Could you elaborate a little on what you mean by the “subscription economy”?
James: Sure, the subscription economy in simple terms is a business model based on the monetisation of a recurrent service or, shall we say of the experience the customer has with your brand.
We are all familiar with the likes of Netflix, Prime, Spotify etc. – these companies are the response to changing customer needs, such as increased personalisation and the expectation of improvements to the experience over time. Customers are buying outcomes rather than products per se, so the focus is shifting from transactions to building long-lasting and recurring relationships with your customers.
What does that mean from a business perspective? The subscription revenue model is far more valuable than its transactional counterpart because the purchase of a long term outcome will inevitably result in longer customer lifetime value and enhanced revenue.
Subscriptions are gaining traction as a top revenue stream in media. I think that opens up a brilliant opportunity for media companies to not only offer unique content experiences to their customers but also to set up recurring revenue streams in the long term.
Martin: Could you talk about some of your clients and what you do for them?
James: In the past year, Zephr has been helping companies such as McClatchy, News Corp Australia, Dennis Publishing and PEI Media, drive their digital subscription revenue through personalised customer journeys. These foster stronger engagement and translate into tailored content experiences for their audiences.
We use data such as location, device and interests to unlock new personalisation opportunities for our clients. The results speak for themselves, Zephr has helped clients see a 150% increase in conversions and well over 25% increase in subscription revenues in less than six months.
Martin: How does Zephr differ from other analytics and subscription management platforms?
James: Zephr is best-in-breed in the subscription experience space. We use the latest technology and have a modern ecosystem that our customers use to implement solutions with unprecedented speed.
Speed is certainly the cornerstone of Zephr – the ease of use of our platform means our customers enjoy fast and easy operational success and can quickly see the value of the solution implemented.
Martin: Data is at the core of your product offerings for customers. How does Zephr itself use data to improve its products?
James: Zephr creates activations for data-driven businesses to allow them to make decisions in real-time. We provide storage and extractions of first-party data to unlock insights on their audience, for example bringing customers from being unknown to known. Data is a vital component of the customer journey.
We deploy similar tactics through our customers’ journey, by listening to their needs and understanding how they address their pain points with our product to shape our product roadmap and define our integrations and partnerships.
Martin: What are some of the key trends in personalised marketing you are seeing?
James: We have all seen customer demands and expectations changing. Many players in the industry have had to adjust their marketing efforts to create valuable content that grabs their audience’s attention.
A clear example of this is the use of dynamic content. Many publishers have turned to dynamic content to tailor their customers’ experience on their website using the power of data.
Also, we have seen an increase in the use of tailored access options, customising the subscription package based on audience interests. Both of them are brilliant examples of the hyper-personalisation phenomenon that we are seeing in the market.
Martin: As more businesses turn to subscription-based models what do you believe will separate the winners from losers?
James: Off the bat, I would have to say addressing churn with a clear and effective reacquisition strategy. As we move more and more towards a subscription-based model, long-lasting customer relationships will be the defining success metric.
Second of all, using the right technology is a must. All-in-one solutions are prohibitive and lack the flexibility a best-of-breed approach provides. It improves agility and allows your tech stack to scale and adapt to your business’ challenges over time.
And finally, understanding and using data to bring value to your audience, drive innovation and personalise your customers’ experience.
Martin: The freemium revenue model has been an important customer acquisition tool for software and media businesses over the last decade. How significant do you think it will be going forward?
James: I think it will be very significant. While the freemium revenue model is a great acquisition tool, the insights it provides are also great for customer retention. Many publishers nowadays use trials to acquire new customers, but then fail to utilise that data to personalise the experience and upsell.
The breadth of trial creates opportunities for businesses to test and optimise their content offering and provide unique editorial experiences. For example trial data can shed light on what feature your customers used most frequently or what content they engaged most with, so you can personalise access options and packages.
It always goes back to data and content. The right content is the content that adds value and brings people back to your platform and by looking at your trial data you can offer just that.
Martin: You recently raised £6m in an investment round. How will you use this funding to grow the business?
James: It’s an exciting time here at Zephr. We have raised £6m in Series A funding and will be investing heavily in people and product.
The funding will go towards product development. We will bring hyper-personalised digital journeys and improved technology to our customers, ensuring our best-of-breed approach. Lastly, we are planning to expand our team, grow into different markets as well as further expansion in the US, Europe and Asia.