Webinar: 5 Best Practices for Better Customer Retention

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Housekeeping Rules

1. All lines are on mute

2. Use the Questions Box on the right – feel free to type questions or concerns in at any

time during the webinar-->

3. Questions will be answered throughout the webinar (so keep ‘em coming!)

4. Unanswered questions and parking lot items will be followed up on after the Webinar

5. This presentation is being recorded for later playback and sharing

6. Feedback forms will be provided at the end of the session

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Adriana Iordan Senior Director, Product Management Avangate

Speakers

Radu Ionescu Senior Product Manager Avangate

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5 Best Practices for Customer Retention

1. Revenue Recovery Strategies

2. Updated Cards Handling

3. Self-Service Customer Portals

4. Retention Optimization

5. Reporting & Analytics

Proactive Retention

Active Retention

Key to Success

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Hard Declines

Soft Declines

Proactive Retention

Recommendations:

Alternative payment methods

Call center & email marketing

Recommendations

Recycling strategies - payment routing

Expired cards optimizations

Hard declines are permanent authorization failures that cannot be recovered and should not be retried. Range from 10- 20% of total declines. Reasons include: Stolen or lost cards Invalid credit card data Account closed

Soft declines are temporary authorization failures which may be successful after a subsequent attempt. Reasons include: Insufficient funds Card activity limit exceeded Processing failures - timeouts Expired cards

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Proactive Retention Revenue Recovery Strategies – Must have for soft declines

•Route payments to the appropriate gateway

•Recover lost subscription renewals (soft decline)

Intelligent Payment Routing (Gateway Failover)

•Minimize failures

•Up to 20% recover rate

Configurable Retry Logic

•Ensure recurring billing continuity for active subscriptions

•Seamless updating of credit/debit card accounts (handling stale expirations)

•10-40% increase in retention

Account Updater Service

•Communicate the payment failure clearly to your customers.

Dunning Management

Handling Expired Cards

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Proactive Retention Intelligent Payment Routing - Always have a backup plan…

Purchase First Auth Attempt

Payment Failure

Soft

Decline

Failover

Retry

Use an alternate processor to retry failed payments.

Route transactions according to: transaction type, localization – payment methods, customer billing country, average order value or authorization responses

Results range depending on rules, up to 60% when using local credit cards – e.g for Brazilian cards

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Proactive Retention Intelligent Payment Routing - Results

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

May

June

July

Au

tho

riza

tio

n r

ate

May June July

Single payment gateway 73.23% 85.63% 84.65%

Intelligent Payment Routing 91.23% 90.76% 89.61%

Single Payment Gateway vs. Intelligent Payment Routing

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Proactive Retention Account Updater – Customer Account Changes

Available Services

Visa Account Updater

MasterCard Automatic billing service

Discover and American Express have similar programs

Coverage:

United States, Canada, Australia, New Zealand and even some European markets

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Proactive Retention Account Updater - Benefits

For Businesses

For Cardholders

Increased retention rates, sales and collection of funds.

Decreased credit / debit card declines and customer service costs.

Improved operating efficiencies. Reduced processing costs by cutting

down the number of declines and chargebacks.

Avoid potential usage interruptions for services / subscriptions.

Support seamless, automated account updates.

Boost customer satisfaction through uninterrupted usage.

Simplify the account updating process by not requiring cardholder action.

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Proactive Retention Account Updater Results

March AprilMay

June

Number of Authorized Cards via Account Updater

Updated cards Authorized cards

3-10% matches – updates of total submitted cards

Authorization rate of over 70% recovery for the updated cards

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Basic approach – first try adding 3 years to the date on file, then 2 years, then 1 or 4 years – test, measure and optimize

Example: For a card scheduled to expire on 01/14, the first authorization attempt would be made using 01/17.

Other options dependent on processors you work with – sending the expiration date field blank, adding 4 years, etc

Proactive Retention: Expired Cards Handling Recover up to 90% of Declines Related to Expired Cards

1st Try: Add 3 Years

2nd Retry: Add 2 Years

3rd Retry: Add 1 Year

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Credit Cards sent for Authorization

Credit Card Account Updater (~11% get updated out of total number of cards on file)

New Number/Fraud Expiry Dates Optimizing

External Stale Expiration Updates On-going

Credit Card Retry Logic

-1 day Renewal Date 1 day 2.9 days 5 days 7.5 days 10 days 12.5 days

-24 hrs. 0 hrs. 22 hrs. 70 hrs. 120 hrs. 180 hrs. 240 hrs. 300 hrs.

Proactive Retention Configurable Retry Logic

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Proactive Approach

• Identify subscriptions at risk due to card expiration deadlines and reach out to customers

• Enable subscribers to update their card data in your customer portal

Post Mortem Approach

• Communicate failed recurring payments to your customers using automatic notifications

• Invite to change / update payment information if hard declines

What to Track?

• Open, click, conversion rates and revenue recovered

• Bounce rate (log soft and hard bounces to optimize your campaigns)

Proactive Retention Dunning Management

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Simply put, retention is a measure of:

• Product engagement – utility, onboarding experience, user experience, adoption and usage, upselling

• Customer experience – self service support, quality, proactive segmented outreach according to CLTV, email marketing

• Value perceived– price and packaging, trial experience

Applies to Customers and Trial Users

Active Retention

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65% of users expect self-service access to their subscriptions to:

Manage renewals and upgrades

Update personal or billing info

Access support

Active Retention

Tip: Introduce self-service cancellation – within the app or in the customer portal - to put customers in control.

Self-Service Customer Portals

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Analysts suggest that up to 5% of your monthly subscribers could click “cancel” at some point. When that happens:

A/B test various strategies to retain them

Remind them of the value they will lose

Offer them discounts to continue

Forward to support to address product/service issues

Tip: If a subscriber moves forward with cancellation, implement exit surveys and follow-ups immediately (ideally within a day) either online or via call centers.

Active Retention Self-Service Customer Portals

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On average ~10% of users log in and update their credit cards to avoid loss of service

~1% of customers turned on recurring billing for their subscriptions

Active Retention Self-Service Customer Portals

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Distribution of Initiated Chargebacks

0

2

4

6

8

10

12

14

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100 Initiated Chargebacks Timeline

Chargebacks

Network Statistics A Gartner study revealed 86% of cardholders did not contact the Merchant/Vendor prior to launching a dispute with their issuing bank. The Study identified that on average:

14%

28%

58% 86%

Cardholder contacted Merchant

Cardholder contacted Merchant after dispute was filed

Cardholder did not contact the Merchant

Active Retention: Chargebacks Industry Averages

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Clear Email communication is a must,

including notifications sent before

processing renewals

Card descriptor customization

Implement chargeback resolution service

Make sure that a subscription cancelation

flow is available to your customers (via

customer portal or by phone)

Track chargeback reasons and trends

Active Retention: Chargeback Management Stop Chargebacks Before They Happen

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Reporting – Key to Success Overall Authorization Rates

Account Updater

Retry Logic

• 96.76% of retries are successful on the first retry attempt • 1.45% of retries are successful on the second retry attempt • 0.17% of retries are successful on the eighth retry attempt

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Reporting – Key to Success Managing Your Subscription Business

Must-Have Reports for the New Services Economy

Monthly Recurring Revenue (MRR)

Cohort Reporting and Analytics

Renewals and Expirations Report

Renewal Forecast Report

Trial Conversion Rates Report

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Reporting – Key to Success Cohort Analysis

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Conclusions

Revenue Recovery Strategies

Updates of Cards Handling

Self-Service Customer Portals

Retention Optimization

Reporting & Analytics

Proactive Retention

Active Retention

Key to Success

Retention Revenue Impact Breakdown

Account Updater

Expired Cards Optimization

Intelligent Payment Routing

20% Hard Declines (Non-Recoverable)

Retry Logic

Dunning

31%

30%

12%

10%

27%

Thank You! For more information on how you can increase your retention rate please visit www.avangate.com or write us at info@avangate.com

Download Whitepaper on “Best Practices for Better Customer

Retention ”

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