If there’s one thing that Adobe’s VP of Global Payments & Risk Matt Wegner knows about, it’s payments. With over 25 years of experience in the payments space — from Uber to eBay and now Adobe — Wegner has seen strategies and practices come and go.

With an eye for change and an understanding that updates needed to be made, Wegner implemented several new strategies when he joined Adobe in 2020. In 2019, Adobe’s Account Updater broke and stayed broken for about 60 days. This resulted in a lot of lost revenue and an opportunity to pivot in the payments space.

Adobe’s new approach to payments

Discover & Use

In order for Adobe to acquire more customers, Wegner understood they needed to reach more customers. The discover and use strategies in partnership with a payment provider was something he brought over from Uber.

“I think [we had] $50 million a year in money from payment providers to go promote their product in the checkout flow of Uber,” says Wegner. 

This puts organizations in front of people who likely share traits with their ideal customers. This type of partnership can be extremely beneficial for the customer, but even more so for the partnering organization, especially if they partner with payment providers. 

“One of the really powerful things to think about — no matter what the size of your company — is all of the payment providers have war chests of marketing dollars that they use to drive adoption,” points out Wegner.

This isn’t “free money,” per se, but funds businesses should absolutely consider as available to them. For years, Adobe had to incentivize channel partners to distribute their products. This new approach flips that model upside down. Instead of convincing partners to share, Adobe now brings in channel partners who pay to distribute Adobe products.

“They win, we win, and we take all of that value and give it to the customer. We give them a deeper discount than we would normally offer, and it’s funded by partners,” says Wegner.

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Try

When it comes to the try category, many think of payments, why payments fail, how to get higher approval rates, and strategies for long-term success. Wegner shares his top 10 payment success strategies here and here.

In addition to those strategies, Wegner suggests developing a closer relationship with issuers.

“There’s a way to get information to issuers to maximize your approval rate,” says Wegner.

CapitalOne has tested this, and Adobe is currently partnering with them. American Express has a similar program as well. The goal is to get more information to the issuer at the time of authorization. This allows the issuer to make a more informed and better decision on whether or not they want to decline the transaction as fraud.

“There are also opportunities to use the 3DS rails…to pass data that gets out to the issuer without a 3DS step up in friction. It’s an emerging part of the payment space that I think can help all merchants, not just subscription merchants,” Wegner shares.

Whatever businesses can do to reduce issuer declines will help them see an increase in successful payments and therefore revenue.

Buy

Not all acquiring relationships are equal, as Wegner and his team discovered.

“We have multiple acquiring relationships and it’s been a really powerful tool for us to maximize success rates,” says Wegner.

Working with local issuing banks ended up being a boon for Adobe. Every country has different requirements for approving purchases. Determining the best time of day to charge is just one way to increase the likelihood of being approved by the customer’s bank. Working directly with the local banks is also a solution, one that Wegner talks about in-depth here.

But working directly with a payment solutions provider can reduce the amount of work a subscription business has to do itself to increase its payment success rate. Automation is one of the primary keys to success for Adobe. Another is creating a multi-processor strategy, something a payment solutions provider can provide.

Knowing and owning what they’re not good at is something Adobe has come to embrace during Wegner’s tenure. Finding other organizations that can help them succeed in their weak spots is how they continue to see growth in their bottom line.

Renew

Wegner and his team spend a lot of their time in the renew category.

“If that payment fails after someone has signed up for your subscription, how in the heck do you get a successful payment and keep them on board if they haven’t communicated to you that they want to cancel,” asks Wegner.

This is where teaming up with a retry provider can be incredibly beneficial. In addition to focusing all of their energy purely on retries, many offer specific data into what times and days are the best to retry based on the pool of customers.

Subscription businesses can take this strategy a step further by working directly with bank card processors to minimize declines. Developing that relationship will decrease the likelihood of continued failed payments.

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Expanding payment functions

Part of the reason Adobe has remained successful in the recurring revenue space is that they continue to expand and pivot their strategies.

“Three years ago, there was just a product and engineering org, focused on payment optimization. Today we’ve got a partnerships team that works directly with the acquirers,” says Wegner.

In addition to the partnership team, a strategy team was developed to thoroughly analyze all of the data collected through DDOM. This team helps Adobe understand not only that they have payment failures but why.

“We’ll look at it at the country level, the bin level, we’ve got raw decline codes, summarized decline codes, so we’ll go very deep to figure out where the problems are and then we’ll A/B test solutions to those problems,” says Wegner.

This kind of intentional approach allows Adobe to eliminate all of the possible areas where declines can occur and increase the successful payments rate.

The development of the operations team proved vital in solving the Account Updater issue.

“In my experience, not just at Adobe but the other companies I’ve been at, it’s not enough to have a monitor that figures out if something is broken, if a technical process ran or not,” says Wegner. “It’s absolutely necessary to understand the business metrics.”

This is where the operations team shines. Instead of only noticing a problem and trying to fix it, they look at all the areas where degradation starts. Getting into these issues and creating a fix or an entirely new process before the loss of basis points helps Adobe prevent larger issues in the future.

Lastly, the risk organization came into existence to finetune the types of risk Adobe would take.

“For a long time, Adobe outsourced all of our risk decisioning,” says Wegner. “In the subscription space, I think there’s an opportunity to take more risk than a third-party decisioning platform would necessarily put out there for all of their merchants.”

Third-party risk decisioning platforms work well in general; they often have high bars to make sure there aren’t any losses. But these organizations build out solutions that work for all of their merchants, which means they don’t always fit the specific needs and desires of each merchant. 

Part of what drove Adobe to take some of their risk decision-making internally was because of the understanding that the marginal cost of a mistake in the digital subscription space is essentially zero.

“If you get a chargeback — which we’re going to want to figure out how to finetune our chargebacks — but if you get a chargeback, you’re really just giving your money back to the customer. Clearly, you don’t want to exceed any of the thresholds that the networks have…but you should take a really good look at your digital goods on what your chargeback rate is. Maybe there’s an opportunity for you to open the funnel a little bit more, and to let more customers into the false positives, and then deal with the mistakes a little further in the flow.”

This kind of strategy may seem risky, but it can drive meaningful change in the organization. The insights provided may point out weak spots, areas to optimize, or help business owners better understand their payment processes. 

Inspiration for subscription businesses

Part of what has made Adobe so successful in the recurring revenue space is their willingness to pivot based on the wealth of data they collect. Their DDOM strategy has led to specific but important changes in their business processes that have increased their basis points and their bottom line.

This kind of attention to detail is something all subscription businesses can emulate. Though their offerings may be different, their total recurring revenue may be smaller, and they may be younger than Adobe, these payment strategies can be finetuned to any operation.

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