“I can’t believe what I didn’t know!”                  “It was a HUGE help to find out all of this.”

On October 22nd in Boston, Subscription Insider held its inaugural Subscription Accelerator, focused on Mastering Payment Processing for Recurring Revenue. The goal was to discuss issues related to billing, subscriptions and payment processing, including the storm that’s brewing around the transition to EMV “chip” cards. As cards are reissued over the next 18 months, identifying data like card numbers and expiration dates will change. The resulting “involuntary churn” in customers will be a nightmare for any subscription business. The best part of the day for all involved was the discussion and roundtable sessions where attendees worked through specific questions, shared tips and tricks, and discussed lots and lots on all things subscription payment processing! 

View on-demand videos of the Mastering Payment Processing workshop:

Recap

Paul Larsen kicked off the event with a discussion about the state of recurring payment processing in 2015, bringing to light important issues that subscription companies face every day. Paul discussed the pressures on lifetime customer value and what subscription merchants need to do to preserve it as they plan for 2016. He also talked about the pain of failed payments, declining approval rates, insufficient funds declines, increases in invalid Account declines, the case of NetFlix,  EMV compliance,  Account Updater implementation, and much more.  

The Best Practices that Maximize Lifetime Value session featured Cynthia O’Brien of Consumers Union and Christian Evans at Consumer Reports who offered case studies. In addition to discussing the importance of a recycle-recovery strategy, the panelists suggested that attendees look at decline recoveries by reason code and take an overall profit-and-loss perspective.

The Payment Processors: Partnering with Merchants for Payments Success session, moderated by Paul Larsen with payment experts Sunil Dixit of Vantiv, Mike Shatz of Adyen and Frank Lynch of Chase Paymentech, was in agreement that Netflix’s claim that involuntary churn was partially responsible for their growth decline.  In fact, the speakers said they know the Netflix folks, and they are the best in the business.  “If it’s happening to them, you can be sure it’s an early warning sign!”   Our experts offered this advice for start-ups:

• Find the right payment processing partner. They’re experts, have dashboards and data, and can connect you with customers like you.
• Watch out for leaky bucket syndrome! If you have more than 2% churn, you are filling a leaky bucket.
• Have you heard of BIN? Vantiv’s Sunil Dixit said, “I can’t stress the importance of this enough. Nitty gritty details are so critical to success.”
• It’s all about KYC: Know Your Customer. Get the analytics you need to drive your strategy for more than just card information, but for engagement too.
• Are you offering too many payment options? Studies show too many options actually decrease conversion. Instead, KYC and know which payment options to offer.

Melanie Stout of Paul Larsen Consulting moderated a panel on billing management tools: should you buy, build or do something in-between? Our experts were Dan Burkhart of Recurly, Doug Smith of Vindicia, and Robert Brauns and Sean Daniels of MergerNetwork.  The panel’s advice:

• Billing management provides analytics that are needed to make informed decisions.
• Some processors provide a lot of granularity about declines, while others do not. The details are complex, but of tremendous value.
• When it comes to a payment processing partner, everyone will tell you that they will “save you transactions.” Look for a partner that proves it. Check references. 

Paul Larsen then lead a workshop on selecting and managing payment processors.  Paul’s advice for once you have selected your processing partner and how to manage them:

At the end of the day, we hosted round table discussions so our merchants could pose their toughest challenges. Experts and peers shared their experiences. Here are a few nuggets that came out of those discussions.

• Are you benchmarking your online subscription metrics? “Benchmark against yourself, and ask if you’ve done everything possible. It is better to get a 2% lift against yourself than against a peer,” said John Sullivan of Paul Larsen Consulting.
• Do you know your “MCC” (Merchant Category Code)? You might want to find out. Switching can have a huge impact.
• You need to monitor tokenization. You’ll have big issues if you think it’s “set it and forget it.”
• What is your LCV to method of payment? You’ve got to know that.

We want to say a special “thank you” to our subscription and payment processing experts who graciously shared their insight and expertise with us:

• Paul Larsen, Founding and Managing Director, Paul Larsen Consulting (PLC)
• John Sullivan, Partner, Paul Larsen Consulting (PLC)
• Melanie Stout, VP, Client Services, Paul Larsen Consulting (PLC)
• Robert Brauns, CEO, MergerNetwork
• Sean Daniels, Director of Engineering, MergerNetwork
• Christian Evans, Associate Director, eCommerce Engineering at Consumer Reports
• Dan Burkhart, CEO, Recurly
• Sunil Dixit, Senior Product Manager, Vantiv
• Frank Lynch, SVP Strategic National Sales, Chase Paymentech
• Cynthia O’Brien, Director, Consumer Marketing & Operations, Consumers Union
• Mike Shatz, VP, Sales & Business Development, Adyen
• Doug Smith, SVP, Customer Success, Vindicia

We’d also like to thank our sponsors and industry partners, without whom the day would not have been possible:

• Paul Larsen Consulting
• Vantiv
• Adyen
• OpenEdge
• Recurly
• Vindicia
• Mequoda
• Cloud Computing Showplace
• THINKstrategies

We are already planning our next event, so stay tuned for more information! We’ll post them on Subscription Insider as soon as we get the details nailed down.