FlexPay on the evolution of subscriptions and reducing customer churn
Reducing customer churn in worsening economic times is one of the biggest challenges facing publishers today. We sat down with Steve Arentzoff, Senior Vice President of Marketing of FIPP member FlexPay, to talk about the changing face of subscriptions and how the company helps businesses improve customer retention.
Could you tell us a bit about FlexPay – how it got started, and what problems it aims to solve?
FlexPay started after CEO Darryl Hicks realized that clients in his previous eCommerce business were struggling with failed payments. He noticed a gap in the payment systems that was causing merchants to lose excessive revenue each month. A successful serial entrepreneur, he took up the challenge to build a payment authorization management solution that would help businesses improve customer retention and reduce the involuntary churn caused by failed payments. Failed payments can occur many reasons, but FlexPay’s solutions uses AI-powered algorithms trained on billions of data points to help solve this problem.
Who do you work with and what have been their experiences with FlexPay so far?
FlexPay works with any business that uses a recurring billing model and uses credit cards for billing, such as publishers, subscription businesses, SaaS companies. We work hand in hand with our clients to monitor their recovery results and the health of their merchant account. Customers love working with us because we help them significantly reduce customer churn, increasing company revenue by recovering failed payments, subsequent successful billings from their customers that would have otherwise been lost.
We see a lot of media businesses implementing paywalls now, but churn is still an issue. How do you think they can improve customer retention?
The first thing the business needs to do is realise there is an urgency to understanding where the churn is coming from. Is it voluntary churn or involuntary? Meaning are customer choosing to leave or are they being forced to leave by a failed payment?
Once a company knows where their churn is coming from, they can upgrade their tech stack to help reduce involuntary churn caused by failed payments. With FlexPay, the system typically works behind the scenes and the customer is not notified of the problem at all. As a result, the customer does not develop any negative feelings towards the brand and doesn’t question the subscription. A failed payment isn’t giving them the opportunity to decide whether to continue with the subscription or not. By recovering failed payments, companies can see the natural progression of revenue growth month over month because recovering a customer you already have is much less expensive than acquiring new ones.
How do you envision subscription strategies evolving in the future? Is this a positive trend for media and other industries?
With the current economic state, subscription strategies have no choice but to continue to evolve and offer enticing offers to gain new customers and retain them as long as possible. Subscriptions give customers the choice to select publishers that provide the content that they desire, at the service levels that make sense for them.
“With the current economic state, subscription strategies have no choice but to continue to evolve and offer enticing offers to gain new customers and retain them as long as possible.”
Subscription businesses often incur customer acquisition costs that equal 4-6 months of billing, so reducing churn and increasing retention is vital to a increasing overall profitability. Publishers cannot achieve their full customer retention potential until they recognize the significant portion of customers who churn because of payment issues, and implement solutions to solve this problem. The clear benefit to publishers is that those businesses that solve this problem create the ability to increase the value of their products, improving customer satisfaction, loyalty, and retention.
What are you at FlexPay most excited about at the moment?
The FlexPay team is incredibly passionate about helping publishers and subscription businesses solve the payment issues that are creating up to 48% of customer churn. Solving this problem creates the opportunity for publishers to transform the performance of all their core KPIs (revenue growth, customer retention, customer LTV, and profitability). Those publishers who recognize this problem and deploy a solution to solve the churn caused by failed payments will gain a competitive advantage, allowing them to outpace category performance.
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