webinar: 5 best practices for better customer retention best practices for customer retention 1....
TRANSCRIPT
2
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
3
Adriana Iordan Senior Director, Product Management Avangate
Speakers
Radu Ionescu Senior Product Manager Avangate
4
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
5
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
6
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
7
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
8
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
9
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
10
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.
11
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
12
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
13
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
14
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
15
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
16
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
17
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
18
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
19
Distribution of Initiated Chargebacks
0
2
4
6
8
10
12
14
16
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
20
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
21
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
22
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
25
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 [email protected]
Download Whitepaper on “Best Practices for Better Customer
Retention ”