How Australian Subscription Companies Differ from American Ones
This episode might reference ProfitWell and ProfitWell Recur, which following the acquisition by Paddle is now Paddle Studios. Some information may be out of date.
Originally published: July 17th, 2019
One beauty of the subscription and SaaS world is the way companies have been popping up and flourishing all over the world–not just in Silicon Valley. One fascinating place with massive success stories has been Australia and New Zealand, where companies like Atlassian, Canva, SafetyCulture, and even Xero have pushed this region into the forefront of the subscription economy.
While Australian companies may not be the fastest growing, they tend to focus on experience and customer retention much better than their U.S. counterparts.
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From a net promoter score standpoint, which is a measure of customer satisfaction, Australian companies in both B2B and in the consumer spaces are noticeably better than U.S. companies in similar industries. While all NPS scores have fallen over time, Australian NPS scores tend to be 15% to 30% higher.
While we don’t have data that exactly gets to the why this is happening, qualitatively we tend to see that support and design quality are much better with Australian companies, where even the nerdiest enterprise B2B software products get lots of user experience love.
You see this when comparing retention numbers as well. When comparing gross revenue retention across companies selling different levels of products, you’ll notice that Australian companies consistently have 10 to 23% lower churn than their US counterparts in both B2B and B2C.
One theory here is that if you take a step back and think about how the Australian subscription economy developed, there may be a bit of a Goldilocks effect. Atlassian’s rise (Australia’s major anchor company) happened at just the right time and resulted in many other companies popping up or having an ecosystem that supported them. This all happened in the past ten years, which is right when design and great support started to be even more important. U.S. companies got that memo later, because they were able to rest on their laurels of the old guard.
So is everything better for Australian subscription companies?
Well, not exactly. Australian companies actually have much bigger problems when it comes to extracting value from their customers. When looking at the growth – or lack thereof – of the average revenue per user (ARPU) you’ll notice that overall, Australian companies are stagnant or trailing their U.S. counterparts pretty considerably.
This is important to note, because your ARPU is an individualized proxy for growth when it comes to your pricing, target customer subset, and even your upgrade trajectories. If Australian companies aren’t able to grow their ARPU, then they’re running into potential problems when it comes to growth.
All that being said, the Australian ecosystem is strong, particularly because of their focus on activities that procure higher NPS and retention. There’s some work to do on actually getting the revenue that these companies are worth, but I’d rather start from a place of strength of experience than one with unhappy, churning customers.
Want to learn more? Check out our recent episode on Which Tactics Will Increase Willingness to Pay? and subscribe to the show to get new episodes.
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You've got the questions,
and we have the data.
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This is the ProfitWell Report.
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Hey, Neil. This is Sancho,
VP of marketing at Typeform.
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My question is, how do Australian
subscription companies differ from the US?
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Welcome back, everyone.
Neil here from ProfitWell.
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One deep beauty of the
subscription economy is that in
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the wake of place
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with massive success place with
massive success stories has
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been Australia and New Zealand,
where companies like Elysian,
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Canva, SafetyCulture,
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and even Xero have pushed this
region into the forefront of
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the subscription economy.
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Let's explore how companies
on the Australian continent stack
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up to the US by looking at the data
from over five thousand companies.
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While Australian companies may
not be the fastest growing,
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they tend to focus on
experience and customer
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retention much better
than the US counterparts.
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From a net
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promoter score standpoint,
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which is a measure of
customer satisfaction,
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Australian companies in both
b two b and in the consumer
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spaces are noticeably better than
US companies in similar industries.
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While NPS scores have
fallen over time,
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Australian NPS scores tend to be
fifteen to thirty percent higher.
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While we don't have data that
exactly gets to why this is
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happening, qualitatively,
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we tend to see that support and
design quality are much higher
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with Australian companies where
even the nerdiest enterprise b
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to b software products get
lots of user experience love.
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You see this when comparing
retention numbers as well.
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When comparing gross revenue
retention across companies
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selling different
levels of products,
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you'll notice that Australian
companies consistently have ten
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to twenty three percent
lower churn than their US
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counterparts in both
b to b and b to c.
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One theory here is that if
you take a step back and think
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about how the Australian
subscription economy developed,
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00:01:51,065 --> 00:01:53,945
there may be a bit of a
Goldilocks effect where at
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least in rise Australia's
major anchor company happened
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00:01:57,130 --> 00:01:59,432
happened at just the right
time and resulted in many other companies
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popping up or having an
ecosystem that supported
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them in the past ten years,
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which is right when designing
great support started to be even
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more important.
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Companies in the US
got that memo later.
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So
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to be even more important.
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Companies in the US
got that memo later.
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So is everything better for
Australian subscription companies?
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Well, not exactly.
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Australian companies actually
have much bigger problems when
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it comes to extracting
value from their customers.
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When looking at the growth or
lack thereof of the average
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important to note because your
ARPU is an individualized proxy
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for growth when it
comes to your pricing,
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target customer subset, and
even your upgrade trajectories.
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If Australian companies aren't
able to grow their ARPU,
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then they're running into potential
problems when it comes to growth.
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All that being said, the
Australian ecosystem is strong,
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particularly because of their
focus on activities that
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procure higher
NPS and retention.
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There's some work to do on
actually getting the revenue
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that these companies are worth,
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but I'd rather start from a
place of strength of experience
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than one with unhappy
churning customers.
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Well, that's it for now.
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If you have any questions,
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send me an email or video to
neil at profitable dot dot com.
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If you got value today
or any other episode,
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we appreciate any and all
shares on Twitter and LinkedIn
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because that's how we
know to keep going.
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I will see you next week.
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