don’t break the cycle! maximize the lifetime value of your recurring payments

Don’t Break the Cycle! Maximize the Lifetime Value of Your Recurring Payments

Melissa RabascoCustomer Success ManagerLitle & Co.

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AGENDA• Best practices for recurring payments • Why declined authorizations happen• What payment solutions are available to you• How to extend customer lifetime value through payments

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BEST PRACTICE #1

The initial billing event is ALWAYS the most critical• Process authorization transactions real-time• Provide consumers with a toll-free number for customer service issues • Terms and Conditions should be clearly disclosed and address all

applicable fees • Utilize $0 authorization (when applicable) to validate consumer and credit

card information provided • Initiate an email to consumers prior to the initial charge

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Use soft billing descriptors• Help cardholders identify charges on their billing statements• Eliminates confusion and prompts recognition• Merchant name is typically truncated to three letters plus an asterisk,

followed by a detailed description of product/service – Example: ACM* Great TV Hits DVD

• Installment transactions can reflect the current stage in the billing cycle– Example: ACM* Great TV Hits 1 of 9

BEST PRACTICE #2

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Avoid interruptions in your recurring billing series• Ensure transactions are properly marked as recurring • Recycle authorizations based on BIN analytics

– Prepaid and gift cards– Issuer trends

• Test recycle parameters and adjust accordingly• Stale expiration date handling• Avoid termination of customer accounts on first failed billing event• Use account updater

BEST PRACTICE #3

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A: DECLINED AUTHORIZATIONS

Declines happen for a number of reasons:

✖ Account number replacement or expiration

✖ Insufficient funds or credit limit

✖ Bank system maintenance

✖ Temporary network problems

Declines impact your business:

✖ Loss of product

✖ Increased service costs

✖ Involuntary churn

✖ Decreased customer lifetime revenue

Q: WHAT’S THE PRIMARY INTERRUPTION IN A RECURRING PAYMENT STREAM?

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Involuntary Churn

WHAT INTERRUPTS A PAYMENT STREAM?CustomerLifetime

Value

$ $ $$

$

$

Time

Payment 1

Payment 2

Payment 3

Payment 4

Payment 5

Payment 6

Today

$

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ACCOUNT UPDATER: WHAT ARE MY RECOVERY OPTIONS?

You must assemble all account update requests and ensure all relevant cards are included in the file

You must submit account update requests separately, outside of the transaction path

You must apply all updated data to your internal systems

You must ensure that updated information is applied to all subsequent transactions

All account update requests are managed automatically

All updated cardholder information is stored on your behalf

Optimum value of Account Updater is realized

Requires minimal (in many cases, no) IT investment to adopt solution

Reports are always available to monitor performance

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Retry patterns are based on limited pool of historic transactions data

Typically single retry pattern for all declines

Constant testing is required to maintain the best strategy

Result: Potentially sub-optimal decline recovery

The recycling process is managed for you, removing the recycling burden and cost of maintaining optimal patterns

The solution is built on analytics from an extensive transaction data set and constantly tweaked for optimal results

Customized retry patterns

Requires minimal IT investment to adopt solution

Reports are always available to monitor performance

RECYCLING: WHAT ARE MY RECOVERY OPTIONS?

RecoveryRevenue Solutions

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CustomerLifetime

Value

$ $ $ $ $ $$

$

$

$

$

$

Time

Payment 1

Payment 2

Payment 3

Payment 4

Payment 5

Payment 6

Today

$ $

EXTENDING CUSTOMER LIFETIME VALUE

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Melissa RabascoCustomer Success Manager

Litle & Co.mrabasco@litle.com

THANK YOU!

Questions?

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