Case study

How a subscription marketplace gained $30M by improving payment authorizations.

$30M
Incremental revenue annually
+3M
Recurring subscriptions
250k
More authorizations/mo

The situation

The company is a monthly subscription platform with over 1 million subscribers offering unlimited access to a corpus of books, audiobooks, and user-generated documents. Because of their user retention struggle, the company began investigating projects focused on augmenting user stickiness, cutting churn, and improving its overall payment collection operation.

Despite a healthy user acquisition funnel, the company struggled mightily with user retention on its platform with rates hovering below 85% monthly.

The Challenge

The company’s overall payment authorization rate stood at 48%. For every 100 users entering payment information, more than 50 failed.

Following a company offsite, the leadership team sought help to cut customer churn among paying subscribers. A slight majority of the company’s paying customer base was outside of the United States, and its top ten markets by volume included multiple developing countries. The company had trouble processing cross border transactions, where payment authorization rates lagged below 40%. Without local entities in place in key markets, and without a payments engineering team in house, the company struggled to address its core user needs.

The Solution

A variety of targeted solutions were implemented to help the company dramatically improve its payments business overall, with a particular emphasis on serving international markets. A personalized Dunning scheduler was built into the company’s payments back-end, improving the rate of failed payment collection from 25% to 45%.

Finally, the company’s ability to transact with cross-border users was enhanced significantly. The company was set up to tap into local acquiring networks, enabling new localized payment methods and higher payment success rates.

A machine learning-based approach to pre-authorization collection upon trial sign-up helped the company re-coup 30% of all initial payment failures—a segment that was previously nonconvertible.

The Results

The company’s global payment authorization rate catapulted ~2,000 basis points as a cumulative result of these targeted solutions. On a monthly transaction basis of 1.5M transactions, this incremental improvement in payments success accounted for 250K additional successful user transactions a month, 3 million more successful recurring payments collected per year, and $30M in incremental top-line business revenue generated from payment improvements—on existing customers alone. This accounted for 25% of the company’s overall annualized recurring revenue.

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    3M addt'l recurring payments/yr
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    250K more payment auths/month
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    $30M in incremental earnings

The company is now well equipped to amplify revenue streams while also welcoming a more diverse user base onto its global platform.