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Healing Failed Payment Transactions For companies selling digital goods or services on a subscription or recurring payment basis, the secret to a 5% revenue uplift may be hidden in plain sight.

The breadth of digital goods and services available today is staggering. You can subscribe to everything from identify theft protection and personalized radio to streaming movies and sports networks. Many of these digital offerings are sold on a subscription or recurring payment basis. If your organization has already jumped onto the digital subscription bandwagon, then you’ve undoubtedly invested substantial company resources to acquire your existing subscribers. So it goes without saying that customer retention is key to the long-term success of your business strategy. As a CFO, you understand that the cost to retain a current customer—even one that appears to be falling through the cracks due to payment failure— is far less than your company’s sales and marketing organization having to go out and find a replacement customer.

Avoiding the Dreaded Involuntary Churn

Your company deserves to keep the customers you’ve worked so hard to attract. And from your subscriber’s point of view, they are entitled to the ongoing digital services that they’re paying for, even when a payment glitch occurs that they might not even be aware of.

However, at the first sign of a payment issue, many billing systems automatically interrupt the subscription service, leading to the dreaded “involuntary churn.” Sure, the subscriber may have momentarily exceeded his or her credit or debit card limit, or perhaps the bank issued a new card and the subscriber forgot to update his billing information on your site. In many cases, failed payment rates—and involuntary churn—can exceed 15% of your subscribers each and every billing cycle. That’s huge. But what can you do?

Even if your billing team is doing all the right things, involuntary churn is still a fact of life. As a conscientious CFO, you’ve probably already set up procedures for conducting multiple billing retries over a 15-day timeframe. Yet, you’re still losing subscribers each month—customers who want to continue receiving your digital offerings and have no intention of cancelling.

Finding Lost Money

What if you could avoid a substantial portion of your involuntary churn? It would be like finding lost change stuffed under your couch cushions. Or discovering that $20 bill that you left in the pants pocket of your suit that you hadn’t worn since last year. Wouldn’t that be terrific?

Involuntary churn not only affects your immediate income and cash flow. What’s even more troubling is the long-term effect of subscriber churn. Even the smallest decrease in customer retention can result in huge long-term revenue drops due to the metric known as Average Customer Lifetime Value (ACLV), the average amount of revenue you can expect to receive over the lifetime of your relationship with a particular customer. ACLV is defined as follows:

But from a simplified, practical standpoint, it looks something like this:

ACLV = (average monthly revenue – average monthly costs) * average customer lifetime

ACLV is a critical success metric for any company providing digital goods or services on a subscription or recurring payment basis. So what can you do that you’re not already doing to maximize your ACLV?

What if you could avoid a substantial portion of your involuntary churn? It would be like finding lost change stuffed under your couch cushions.

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CFO Perspective

5% Uplift

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When Simple Communications Are Not Enough

Of course, communicating with your subscribers at the right time in the right manner can greatly influence whether a customer stays with your subscription service—and hence the customer’s ACLV. By following best practices, your billing staff no doubt sends appropriate messages to your subscribers triggered by specific billing events. By carefully crafting and timing such messages, you can reduce subscription cancellations and increase customer retention.

But a payment failure is a payment failure, regardless of your good intentions in communicating with your customers—or your subscriber’s good intentions in assuming his payment has gone through. Payment failures can happen for a wide variety of reasons. And let’s face it, that’s just a function of doing business online and accepting payment cards.

However, it’s important to ensure that a customer never leaves your subscription service due to payment failures that could easily be fixed. That’s where Vindicia comes in.

The ART™ of Vindicia

At Vindicia, our cloud-base offerings help businesses like yours thrive in the subscription economy by keeping recurring billed services and digital goods flowing, profitable, and available. Our global clients include TransUnion Interactive, Intuit, Bloomberg, Vimeo, Activision Blizzard, MLG, Next Issue Media, and countless other major brands.

Our services help our clients minimize involuntary customer losses due to payment failures through our patent-pending Advanced Retention Technology (ART™). This advanced software technology—coupled with our “big data” network effect—can have a dramatic impact on your subscriber churn. Our intelligent business logic can help ensure that the highest possible percentage of transactions is successful for your subscribers.

Healing Failed Transactions Can Increase Your ACLV by as Much as 40%

While we’re recognized as a global leader in complete subscription billing and retention solutions, we also offer SaaS-based retention solutions that work hand-in-hand with virtually any existing billing system. So if your current billing system meets your basic needs but lacks sophisticated retention capabilities, our ART technology can help you retain customers by dramatically reducing passive churn due to failed transactions. Our solutions actually heal failed payment transactions and result in top line revenue increases of approximately 5% by successfully capturing 30% or more of previously declined transactions.

Vindicia ART technology evaluates the reasons for failed payment transactions. Using information in the Vindicia transaction network, ART heals failed transactions without any involvement from your subscribers. Our solutions can increase your customer retention rates well beyond any optimized home-grown retry logic that you may already have implemented. In a subscription and recurring billing model, that additional monthly percentage can translate into an annualized compound increase as much as 40% for your ACLV.

Customer Retention Benefits

With Vindicia as your customer retention partner, your subscribers will automatically keep the digital goods or services they’ve chosen without interruption, improving overall customer satisfaction. You’ll see measureable revenue uplift and increased lifetime value of customer relationships. Completely noninvasive, our solution will work cooperatively with your existing billing system. Vindicia customer retention benefits include:

Our solutions actually heal failed payment transactions and result in top line revenue increases of approximately 5% by successfully capturing 30% or more of previously declined transactions.

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CFO Perspective

ART Technology Captures More Subscription Revenueu Evaluates transaction data

u Understands error codes

u Utilizes partial authorizations/ full deposits

u Leverages Vindicia transaction network effect

u Refined via on-going Client Business Reviews (CBRs)

u 25% to 40% success rates on previously declined transactions

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Passive customer churn reduction by as much as 30%:u Heal failed payment transactions

u Take advantage of patent-pending technology to resolve the issues that cause failed transactions

u Leverage the information in the Vindicia transaction network to keep customers connected to your services

Measureable revenue uplift along with an increased ACLV:u Realize as much as 5% revenue uplift

u Retain customers and revenue that you would have otherwise lost

u Increase returns on your investment in customer acquisition by extending the life of subscriptions

u Prevent the need to invest in re-acquiring customers lost due to failed payment transactions

Noninvasive service compatible with any billing system:u Get started within days, not months

u Simple to initiate and noninvasive to existing billing systems

u Complements—does not disrupt—existing billing workflows

u Requires little IT involvement to deploy

u Set preferences to support your chargeback prevention goals

Improved customer service: u Prevent frustrating service interruptions

u Resolve transaction issues without inconveniencing customers

u Reduce calls to customer service about service interruptions

u Empower customers by letting them choose when to cancel their subscriptions

Your Subscription Partner

At Vindicia, we keep consumers connected to the subscription services they love, and companies like yours connected to the subscription revenues you need. It’s a win-win solution. We’ve processed more than $6 billion in subscription and recurring payments, and have handled more than 147 million customer accounts.

Whether your company needs a complete subscription and recurring billing solution or simply wants to increase the effectiveness and efficiency of you existing billing system by improving customer retention and reducing subscriber churn, we’ll make it easy and frictionless for your customers to subscribe and pay for your digital offerings.

Our software-as-a-service (SaaS) solutions will help your company realize more value from your offerings. The network effect of our rich database of subscription transaction information gives us insights into transactional trends. Analysis that leverages big data lets us baseline important metrics and identify ways to improve revenue. Vindicia advantages include:

Scale and reliability:u 147 million users

u 143 million credit cards

u 99.9946% uptime

CFO Perspective

At Vindicia, we keep consumers connected to the subscription services they love, and companies like yours connected to the subscription revenues you need. It’s a win-win solution.

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Vindicia Solution Financial Benefitsu Increase top-line revenue fast

u Improve customer retention

u Extend customer lifetime value

u Reduce involuntary churn

US HeadquartersVindicia, Inc.303 Twin Dolphin Drive, Ste. 200Redwood City, CA 94065-1424 P +1 650 264 4700F +1 650 264 4701vindicia.com/contact

UK / European Headquarters26-28 Hammersmith GroveLondon W6 7BAP +44 (0) 208 834 1050F +44 (0) 208 834 1100vindicia.com/contact

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About VindiciaVindicia keeps consumers connected to the subscription service they love, and companies connected to the subscription revenues they need. The company helps others thrive in an increasingly subscription-based economy by keeping recurring billed services and digital goods flowing, profitable and available. Vindicia combines cutting edge customer acquisition methods with advanced customer retention technologies, while maintaining unmatched scalability and 99.99% up-time. Vindicia clients include TransUnion Interactive, Intuit, Activision Blizzard, IAC, Bloomberg, Vimeo and Next Issue Media. For more information visit www.vindicia.com. Follow us on Twitter @vindicia, “Like” us on facebook/vindicia, and read our blog at www.vindicia.com/blog.

Copyright © 2014 Vindicia, Inc. All rights reserved. Vindicia, the Vindicia logo, Vindicia CashBox and the designated trademarks herein are trademarks of Vindicia, Inc. in the U.S. and/or other countries. All other brands or product names are the trademarks or registered trademarks of their respective holders. 1014

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Go-to-market flexibility:u Campaigns, coupons, and promotions

u Business models include subscriptions, micro transactions, metered usage, and channel management

International support:u Payment methods include credit and debit cards, PayPal and Amazon Payments,

bank transfers, electronic checks, and region-specific payment methods

u Supports all international currencies offered from payment processors

u Supports any language compliant with ISO-639.2 or W3C IANA Language Subtag Registry standards

Finance, tax, and fraud prevention:u Merchant-defined revenue recognition

u Continuously updated tax engine reflects latest tax codes across the globe

u Merchant configurable tax status and rules

u Compliance, military-grade security, and integrated fraud management

Business optimization:u Business Intelligence, including dashboards, and summary reports

u Business reviews, including subscriber growth, revenue analysis, cohort analysis, churn management, and peer rankings

u Best practice use case deployment methodology

Take the Vindicia Customer Retention Challenge for an Immediate Revenue Uptick

Why not take the Vindicia Customer Retention Challenge and see for yourself how Vindicia can help you build added subscription revenue overnight? Completely noninvasive and requiring little or no time from your IT staff, the Vindicia Challenge makes it easy for you to experience advantages of a Vindicia solution. We use a secure and fully PCI Level 1 compliant process to transfer 3 to 5 days’ worth of your specific transaction data to our secure data center. We’ll then show you exactly how much revenue uplift our advanced ART technology will deliver compared to your current billing processes.

To take the Vindicia Customer Retention Challenge contact Vindicia today.

CFO Perspective

Take the Vindicia Customer Retention Challenge and see for yourself how Vindicia can help you build added subscription revenue overnight.

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