SIIA recently welcomed Recurly to the membership. I spoke to their CEO, Dan Burkhart, to find out a little more about the company and the subscription billing marketplace.

Rhianna: Tell me about Recurly. What makes your billing management solution unique?

Dan: Recurly was designed from day one to provide a subscription billing management as a ‘self-serve’ offering. Every single design decision since the first day had this approach in mind – from our application architecture, to our APIs, our interface design and even our pricing and overall transparency of our service. This has afforded us a tremendous competitive advantage, because our application itself is our greatest sales tool. In our business, establishing trust with our customers is a very large part of customer acquisition, and there is no better way to quickly accomplish that than by NOT hiding anything, and by delighting our customers within the first 60 seconds after signup.

Rhianna: You have been particularly successful aligning yourself with strong channel partners. What makes a strong channel partner for Recurly and why are these partnerships core to your business?

Dan: Recurring billing is a painful thing for companies to get set up and operating smoothly. We do everything we can to eliminate payments-related jargon, and to reduce the amount of time and effort required to deliver value to our customers. Our customers are able to go live in days, rather than months required from other enterprise solutions. For channel partners, this means that our service can also be resold very easily because it is designed to be a ‘light-touch, high velocity’ sale.

We have found two distinct kinds of channel partners to date:

1.  Marketplaces – [Ex. Recurly powers billing for Salesforce's AppExchange Checkout] https://vimeo.com/40358739
2. Merchant Services Providers – [Ex. Recurly is partnered with TSYS, which has hundreds of salespeople seeking to solve problems for merchants on a daily basis]

The best channel partners are those that share a common passion for helping our mutual customers succeed. In addition, the best partnerships tend to emerge out of a ‘value-sharing’ disposition, rather than a ‘value-capture’ mindset. We always seek to align ourselves with companies that value relationships and show a willingness to invest in growing them over time.

Rhianna: You refer to your solution as “bought not sold”, a formula many other companies would love to have. Did you ever think it would take this direction when you founded the company?

Dan: As a ‘Pay-As-You-Go’ service, we don’t require our customers to enter into long-term, unpleasant contracts. This creates a very different construct from the very early stages of the conversation. For example, if a customer has a set of requirements that we cannot support, we are the first to acknowledge that. We’d rather lose the business than sign up a customer that will be disappointed 60 days later.
By offering Recurly on a month-to-month, pay-as-you-go model, we know that if we disappoint our customers on any level, they are free to leave us at any time. (In fact, one of our core promises to our customers is that we will make it easy to migrate should they ever decide to leave us. We never hold their data hostage – and this only accelerates our goodwill with our customers). This immediately engenders trust because it shows that we have confidence in our offering, and we have nothing to hide. There is a bit of an implied guarantee to our customers with this approach.

Many of our original customers are now getting acquired by larger companies, or individuals are moving to senior posts within new companies, and their positive opinions of Recurly are being carried with them. This is very pleasing to see customer goodwill working as our most effective marketing tool.

Rhianna: Is it true that you can get subscriptions up and running on a website in just days? Even with custom integrations?

Dan: Our customers move from sign-up to production on average in less than a week. Highly customized integrations require several weeks at most. We provide tools to easily integrate PCI compliant checkout forms into our customers’ websites. When publicly traded companies come to us, their legal teams require more time to review documents than it takes developers and product people to get ready for launch.

Rhianna: There is a lot of competition in the subscription billing space today. Where do you think this market is headed in the next 12-18 months?

Dan: The market is growing incredibly quickly. With the costs of storage, bandwidth and computing power all declining together, the distribution model for applications and services has naturally followed suit. With this change in the distribution model, pricing models have naturally evolved towards ‘pay-as-you-go’, (subscription or recurring) billing models. In this new world, you pay for what you consume, or ‘pay to play’.

Cloud and SaaS services are by definition offered on a ‘pay-as-you-go’ basis. Digital content, media, and entertainment are also increasingly offered on either a ‘pay per download’ or subscription basis.

Purchasing psychology of consumers has also evolved. As recently as 5-10 years ago, companies felt that they had to own every last aspect of their own operations in house. During this same era, we were also still buying music CDs in music stores and storing them on our shelves.

Today, companies are increasingly comfortable with ‘renting’ capacity via cloud services, along with renting ‘expertise’ that simply isn’t cost-effective to own internally. Subscription billing fits into this latter category. When you consider the total cost of ownership for enduring PCI audits, as well as the enterprise risk of storing customer credit cards, this category becomes one of the first areas to be considered for outsourcing to experts.

We couldn’t be more excited about this market opportunity and the overall future for Recurly.

Rhianna Collier is VP for the Software Division at SIIA.