Stop involuntary churn: 3 proven fixes for pet brands

Why retention is your most powerful growth lever

Retention-focused strategies are more cost-effective, efficient, and profitable than acquisition for 3 reasons.

Subscriber churn is a massive (but solvable) issue

Customer churn among pet-focused merchants is out of control. Approximately 39% of pet product subscribers churn within the first 3 months. This number jumps to 54% after 6 months.

These stats are eye-popping, but so is the next one. It’s estimated that failed payments cause 50% of customer churn, resulting in a 10% decrease in top-line revenue.

To put this in perspective, a merchant generating $30 million in annual recurring revenue could be losing $3 million each year to failed payments—an issue with a simple and effective solution.

It’s more efficient to sell to repeat customers

Selling to repeat subscribers is significantly easier than selling to new customers. This is because customers have already tested your product or service and are less risk-averse to trying new offerings.

Just as important, repeat customers purchase more on average than new customers. One study shows that repeat customers spend 67% more on average.

Retention has better ROI

Acquiring new customers requires substantial spending on advertising, promotions, and outreach, while retaining existing customers typically involves lower-cost efforts, such as email campaigns, loyalty programs, and customer service.

The ‘purrfect’ solution for subscriber retention

The most efficient and impactful strategy for boosting retention is to reduce involuntary churn caused by failed payments. Use these strategies to get started.

1. Retry payments at the right time

Timing is everything. Financial institutions closely monitor their customers' banking patterns. Attempting to retry a payment without considering the customer’s local time can appear suspicious and cause the transaction to be flagged for fraud.

For instance, imagine a video game company based in Seattle, Washington, that offers digital subscriptions to users worldwide and processes payments daily at 2 p.m.

While the payment timing makes sense for the video game company, it appears suspicious in regions with significantly different time zones. In this case, 2 p.m. in Seattle is 2:30 a.m. in parts of India.

In our hypothetical example, transactions initiated in India are more likely to fail because they are initiated in the middle of the night from a different country. 

The solution is to run payments during business hours in your subscribers' local time zones. 

2. Track your authorization rate by country

Tracking your authorization rate by country enables you to identify and address payment issues that may not be apparent otherwise. For example, Butter has worked with several businesses that believed they had a transaction issue affecting an entire region (e.g., Europe and South America), when in fact, the problem was with a single bank in one country. 

3. Utilize dynamic retries

When a payment fails, you may be tempted to retry the transaction until it is successful—don’t.

Repeatedly retrying failed transactions is known as “woodpeckering.” This approach has a low likelihood of success and can negatively impact your authorization rate. Worse still, payments recovered through this method are more likely to be disputed.

Athena Club, a personal care brand, used a woodpecker methodology in an attempt to reduce failed payments. The brand retried payments 6 times every 6 days.

“Retrying six times every six days was okay, but not great,” said Alexander Sokolov, Senior Director of Software Engineering at Athena Club. “It was mostly just random luck when a payment went through.”

A more effective approach is to utilize dynamic retries. This involves analyzing transaction data to determine the best approach for resolving each category of failed payments. Armed with this data, you can then retry failed payments in real time.

A successful dynamic retry strategy requires advanced machine-learning techniques to parse millions of individual pieces of data. While it’s possible to build your retry solution, most merchants partner with a dedicated third-party solution like Butter.

Maximize recurring revenue with Butter

Powered by advanced machine learning technology, Butter analyzes payment data to identify recurring payment issues and then resolves them automatically, eliminating the need for subscribers to update their card information or cancel recurring orders. Leading brands like The Athletic, MasterClass, Fabletics, and Athena Club utilize Butter to retain subscribers, extend LTV, and drive profit.