My name is Geri Duncombe. I am the marketing director here at Subscription Insider. Hello, and welcome to Transformation of the Subscription Life Cycle, Driving Growth and Deeper Customer Engagement Session, presented by JP Morgan and ZORA. Our speakers today are Laurie Goeman, executive director, wholesale payment solutions at JP Morgan. Amy Konary, vice president, chair of Subscribed Institute from ZORA, and Tammy Petro, executive director, wholesale payments innovation at JP Morgan. They'll discuss partnership and strategies to help your business continue to grow.

At the end of the session, we will open up for questions and answers. So please, feel free to put your questions into the chat. I'll now hand over to our moderator, Laurie Goeman.

Thank you, Geri. Hello, everyone. Thank you for joining today. We're excited to talk to you about digital transformation. And with that said, why don't we jump right in, and Amy, let's start with you and your role as head of Subscribed Strategy Group with ZORA. You interact and consult with many established subscription clients, as well as many that are just starting their digital transformation journey. What do you see is driving the rapid growth of subscription-based businesses?

[INAUDIBLE] So we find that a lot of organizations today are really attracted to the subscription business model for a variety of reasons. and this is both suppliers, as well as customers. From the customer perspective, we find that customers want to pay for what it is they're using. And I have to apologize, I'm in charge of the, slides which is unusual. I'm not normally the one that's moving the slides, and so I'm trying to figure out how to-- there we go.

From the customer side, subscriptions allow them to have relationships with providers where they can pay only for what they use. They love the freedom and the flexibility of subscription models, paying how they want. There's a of regional differences and consumer preferences for how they pay.

They want to be able to manage their relationship with their provider, keep their subscriptions up to date over time. There's a lot of both flexibility and freedom that we see modern institutions giving to customers. And they also want to evolve their relationship on their own terms. These services are very personalized.

And we see the reason that a lot of businesses are interested in building subscription models as part of their portfolio, either doubling down on existing strategies or launching new businesses, is because of the classic up and to the right curve that you see on the slide in front of you, which is there's a lot of growth opportunity associated with subscription businesses, particularly today. So if you notice the dates on the bottom of this chart here, this isn't a chart looking at last year or 2018, we did this index in September, last month, including the second quarter of 2020, as well as the first quarter of 2020, even though that's not indicated there because it would have crammed the fonts. But even as the S&P 500 sales index is shrinking by 10%, subscription companies represented in this description economy index, this is ZORA's customers plotted on this curve, are growing. And this is really important for businesses to have resilient approaches, especially in these times.

So turning it back, I guess, to what we see from a-- and sorry from my pause there. It was just to make sure that-- see if anybody had any comments from the panel here. This is actually my first virtual panel, although I've done a lot of monologue type things, so I want to make sure to give people an opportunity to chime in if they have some thought.

So because of this up and to the right situation, we see companies from every industry looking at subscriptions and services as opportunities for their business. So in the technology space, of course, the shift from packaged software to software as a service. We see this also a classic subscription industries. So you know the term subscription or the idea of subscriptions is not invented in the last couple of years or a couple of decades. There are a lot of companies that have been doing subscription sometimes for 100 years.

But what we've seen that really, the transformation is shifting from simply a financial model to one that is flexible, that gives customers the ability to pay for services that they-- the way that they want to, and really, to build relationships with providers around an outcome. So they're not simply subscribing to a newspaper or a news site just because they want to subscribe. It's because they want to be more informed, because they want to interact with content that's relative to them-- relevant to them. And we see this across industries as being the dominating shift.

We also know that consumers have more subscriptions than ever before, and they believe that they'll continue. That trend of subscriptions will continue to grow. So roughly a quarter of adults around the world report that they've got three or more subscriptions, compared to only 14% who had three or more five years ago.

We also believe people think that in the future-- we also see people believe that in the future, they will own or subscribe to more services and own less goods, so subscriptions freeing them from the burden of ownership. So you see a lot of the consumer wallet shifting to these subscription-based services. So Laurie, Tammy, interested in what you're seeing from your perspective and how this sort of plays into the trends that you're experiencing.

Yes, thank you. Thank you, Amy. It's very clear that consumers have demands, and businesses that recognize these demands and adapt to the changes are the ones that are going to be most successful in the long run.

And Tammy, a question for you. In your role at JP Morgan you're seeing legacy customers struggle a bit with digital and subscription economy as it continues to ramp up. What do you think is driving this transformation?

Well, I couldn't agree more with Amy's perspective that the subscription economy is definitely growing. I know myself, and when I think about even just how I consume media, the great unbundling of cable services has really transformed into definitely more than three for me in terms of which channels I'm subscribed to. And I would say that one of the biggest accelerants of this digital transformation in the last year has definitely been the pandemic.

I know in New York City, when we started the lockdown back in March, the subscription to the local gym very quickly transitioned to online consumption. And before too long, my husband was asking if we could order hardware to go with that. And so those are examples of what I would describe as new economy companies, where they're blending the existing hardware or the bicycle, the treadmill, the mirror, like each of those items with digital content and the community engagement that so many people are looking for when they are adding more subscriptions into their life.

No one says, like-- no one wakes up and says like, oh, I want more subscriptions in my life. They're solving a problem. They're looking to engage in a community in new ways. And I think that that's one of the accelerants that's been changing this perspective for those technology and legacy companies when they're thinking about how they make that transition from where they're at today to how and where they're going to serve their consumers in the future.

So when I think back to March, one are the key restaurants suppliers there in New York City was actually coming to us. They had very quickly pivoted their business model and set up an e-commerce site so that they could continue delivering goods to some of the restaurants that were still open throughout the region. But what they found was that increasingly, not just their restaurants were open to ordering from their e-commerce site, but some of the restaurant's customers were as well. And they had set up the e-commerce and the payments button, and within three months after that initial transformation to e-com, they were coming to us to say, well, the implementation wasn't quite what we expected.

How should we be thinking about this? What are some of the ways that you can help us as our bank? And we said, well, actually, as you're setting up this e-commerce business, we've actually partnered with a leading subscription provider, ZORA included, and that thinking about it holistically actually reduces so many of the pain points in both creating the initial e-commerce business or subscription business, but also in the ongoing maintenance and growth of that business.

Amy, I think there might be a slide in the deck if you click forward one more. When they were setting up that initial implementation, they had gotten started, but they very quickly found themselves growing out of some of the ability to manage their subscribers, to engage with them more deeply, and so they went to a subscription provider. And with us as their banking partner, they were able to have a streamlined implementation, and also, richer reporting.

Now, the second thing that we saw them coming up against was people wanting to pay with different methods of payment, and touchless, this gem in my pocket, is one of those things that a lot of people were counting on. And they were even getting engagement that their order was being delivered through text messages. And so that payment optimization always needs to be balanced between the cost on the method of payment, the authorizations that are going through, and, as always, we want to reduce the amount of fraud in that subscription.

Now, the last piece was really critical to them increasingly in the last few months as they're now engaging with more and more customers and many of their restaurants are coming back online. They're looking for additional information about the people who have the subscriptions, and they are trying to engage with them in new ways. They're leveraging the payments data that we can provide in partnership with the subscription providers so that they have a total view of customer so that they can get a better perspective on when and where their clients might be engaging, and how they look to fill in what products and services they might be offering next.

It's really a fundamental shift in how people are buying and what they're buying, as well as a fundamental shift for the businesses in what services they're providing for their customers. And frankly, I can't be more excited. I mean, I know that there's more than three in my transaction report at the end of the month, but I certainly don't mind, because they are things that I'm using.

And there's a little bit of competition in my household on that exercise subscription that's just come through. I can't say enough how many times we're challenging each other, as well as some of our colleagues, even, on the leaderboard. Amy, are you guys seeing more of that in--

Yeah, so-- so one of the things that you mentioned at the very end that I think speaks to the value of subscriptions, again, it's not simply about a different way of buying, it's a whole package. And part of that might be community, sort of what you just described there. We see a lot of the subscription services that are gaining traction today, a lot of them are bringing communities of people together.

So you gave the example of an exercise subscription. One of our customers, Fender, who makes the sort of iconic guitars, has a service called Fender Play, which think of it as sort of an e-learning platform for guitar enthusiasts. And it's a way that you can learn how to play the guitar, which is not an easy instrument to pick up and play from scratch, and they have found an absolute boon in online subscriptions over the last year, part of it situational, similar to your exercise.

You're in the house more, and so I'm in it, I'm at home. I'm not going to the gym. I need to exercise at home.

And similarly, maybe I'm not commuting anymore. I've got some extra time. I'd like to pick up a hobby. Oh, by the way, I've always wanted to play the guitar.

Well, interestingly, although what we're talking about here is their subscription service, the company actually has sold more guitars this year than any year in its history. So it is a combination of both the subscription service being powerful-- and by the way, one of the things they've said is that the subscription service they expected would help teach people to play the guitar, and that's the outcome they were looking for. More than that, it's actually brought their community together, where they've got people sharing what they've learned, connecting with other guitar enthusiasts who maybe want to play the same song and sharing their progress with one another. That community piece is really kind of a nice byproduct of some of these subscription models.