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The Subscription Economy as an Access Economy

Tien Tzuo
CEO , Zuora

Welcome! This week we’re talking with Rachael Claudio, Zuora’s Director of Social Impact. Rachael manages the Zuora Impact Fund, which is committed to ensuring that the Subscription Economy benefits underserved individuals and communities as much as it does businesses. She has previously worked in social impact positions at Citibank and Paypal.

Welcome, Rachael! We know that the Subscription Economy is great for businesses and customers, but what about the community at large? What role can the subscription model play in corporate philanthropy?

When philanthropy embraces the Subscription Economy, then all kinds of opportunities open up. Subscriptions are a great way to make giving more sustainable. Lots of the nonprofit sector still focuses on transactional models, but the whole point is to create ongoing, self-sustaining relationships. How do we change the nature of corporate giving away from yearly fund drives and single donations towards compelling, ongoing services? That’s a big reason why I took this job.

I had a really interesting discussion with Bill Strathmann of Network for Good last year about subscription models and non-profits, and he cited a pretty alarming statistic: while B2C subscription companies generally retain around 70% of their consumers, nonprofits retain only 37% of their recurring donors. N0w, you’ve been working in social impact positions at commercial companies your entire career, but I’m assuming that convincing people to give their time and money to worthwhile causes is still a pretty fundamental challenge.

No question. It’s been an interesting journey and I’ve experienced both sides of the spectrum. There have been times in my career where my work was very separate from the business. It just wasn’t that baked in. And all of the resources in the world weren’t going to help me engage employees in giving or volunteering. I remember a few times when I had to bribe people with donuts to sign up to volunteer. They just weren’t invested. And that’s not a knock on them, because my work was so disassociated from the stuff they were doing on a daily basis.

I’ve also seen the opposite- where employees drive the philanthropic strategy. Our work here at Zuora is a great example. When the second wave of Covid hit India, employees at Zuora started a grassroots effort that quickly took on a life of its own due to their deep passion to support their colleagues in Chennai. In this case, my job was to put the structure in place so they could be successful. With the help of our Chief Product and Engineering Officer, Head of Internal Communications, and employees in Chennai who went above and beyond anything I’ve ever seen, we were able to identify an amazing organization (EdelGive Foundation), launch a matching gifts program, and set-up an internal giving campaign within very short order.

I was absolutely blown away by the employees who stepped up to the plate to launch this massive effort. We ended up raising over $75,000 USD for the EdelGive Foundation to support India’s most vulnerable populations. This is the largest employee giving campaign I’ve seen in my career and it was so inspiring to hear from employees why they decided to contribute. I was also struck when Yudhvir Mor, our Country Manager & Vice-President of Engineering, launched an amazing online platform called Covid Windows to give grief and career counseling to Covid widows. He had learned about the death of an ex-colleague who was the sole earning member in his family and began thinking about what would happen to his family and kids now. He soon realized that thousands of women had lost their husbands to the pandemic and needed help getting back on their feet. Within 48 hours, Covid Windows had secured over 900 volunteers and as of today, they have 8,000 volunteers who are helping thousands of women learn new skills and secure jobs. I am choking up as I’m talking- it’s just so amazing to me. He has a very demanding job here at Zuora and is doing this on his own time. I feel so lucky to get to work with such passionate, empathetic people day in and day out.

So the key is to unlock people’s innate passions.

I think it’s so important for employees to have a voice in a company’s social impact work, and I love seeing their passions come to life. While it can be challenging at times to field the sheer diversity of all the requests and create a cohesive and aligned strategy, it’s really cool to see the enthusiasm and engagement. Just yesterday my manager forwarded me a clip from the book ‘Bring Your Human to Work’ and the first line read ‘when your company helps the wider community, everyone wins.’ In fact a study conducted by Bain & Company revealed that employees who give back and feel inspired through volunteering are three times more productive than employees who don’t feel inspired. That’s a pretty significant statistic if you ask me.

This is an issue that subscription businesses deal with all the time: How do we encourage engagement? How do we create more meaningful interactions, more touchpoints? How do we create a service that gets richer with more usage? It obviously has huge implications for corporate philanthropy.

Because as Bill noted, with nonprofits, the buyer of the service (the donor) is seldom the user (or beneficiary) of the service. Why do people hang onto their Netflix and Spotify accounts? It’s because they’re consistently using those services and finding them worthwhile. If you’re a nonprofit, you don’t really have that. Your buyer is not your user.

Yes. Our recent partnership with Kiva is a really good example. Almost 90% of our employees made low-interest business loans to over 3,000 small business owners (the majority of them women) from around the world. It was Kiva’s second most successful campaign ever. But here’s the real beauty of it — as those loans are repaid, that money will go right back into our fund at Kiva for another round of lending. We’ll be running these campaigns indefinitely! And I have no doubt we’ll continue to engage the majority of our employees. They loved making their loans on Kiva. Kiva gave them the opportunity to play a special part in someone else’s story. The loans weren’t just about money- they were a way to create connection and relationships.

Kiva actually reminds me of your conversation with Bill because they are able to put a lot of what you both talked about into practice. As the borrowers repay their loans, lenders receive updates on their business and loan status. Employees will essentially be receiving a “stream of feel-good stories” that are heartfelt and feature tangible impact, ensuring that they remain invested in their borrower’s success and inspired to make future loans. In fact, employees invested nearly $2,000 of their own funds to make additional loans on Kiva- further proving that their experience on Kiva’s platform was extremely compelling.

This is awesome. So the key is to drive engagement, and subscriptions can turn that into engagement into sustainable philanthropy. That’s great. This is much more than just a business model. Let’s switch gears here and talk about how subscription models are a way of expanding access and opportunity.

Absolutely. We’re also starting to think about ways to bring the Subscription Economy to small business accelerators and/or incubators that work with entrepreneurs in historically underserved communities. These organizations help entrepreneurs and small businesses with a range of support services- think everything from mentorship to office space to funding opportunities. I would love to develop a simple toolkit to help businesses in these programs understand how to run a successful subscription model. Our employees are hungry to use their skills to give back so I would also love to see some of them get involved as mentors for these businesses. I think the combination of some type of toolkit or curriculum and employee mentorship would be hugely empowering to people.

I’ve also been thinking a lot about the concept of access itself. What if more subscription-based businesses offered free or lower-cost access to their services for those who need it? Some offer discounted pricing to students, but what if these businesses did the same for low-income individuals and families? This could really help create a more equitable world. I think about my life and how most of the services I use are subscription-based. These services have quite literally changed my life and given me access to so much. Not to mention how much time subscriptions have saved me. It’s such a privilege. Over the course of my career, I’ve learned that it’s both time consuming and expensive to be poor. And I can’t imagine how many doors might be opened through subscription services should they be more accessible.

Zuora just got named as one of the top 100 Bay Area Corporate Philanthropists, which I’m really excited about. By now, it’s pretty clear that doing good work isn’t just a “nice to have” anymore. It’s not just about being a good corporate citizen. Especially with organizations like “Pledge 1%,” companies are becoming much more organized and structured around this work. What would you recommend to anyone who’s interested in getting involved in this field?

When I was starting out my career, I went and got a master’s degree from NYU in public administration because I realized everybody who I was meeting in this space had some kind of advanced degree. But I think it’s changing now. The number one thing I look for when I’m hiring is someone’s passion and grit, and does their resume reflect this? Have they given back to their communities and what does that look like?

Because at the end of the day, I need to be able to translate that story and that enthusiasm to the organization at large. It’s my job to make sure that our grants actually have a story to tell, and that we’re able to measure the impact they’re having, and that they align as much as possible with the business. And going back to this idea of engagement, it’s really imperative that we meet our employees where they are. That we give them opportunities that take advantage of their skill sets and let them take the reins if they really want to.

So when it comes to employee engagement, or engagement of any kind really, it’s really about meeting people where they are, where they live, what they’re interested in. That’s the only way to create a really engaging service. Thanks, Rachael!

Thanks, Tien!

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