The Recurly Payment Gateway

We are proud to announce that we have built the first payment gateway designed to support recurring billing as the primary use-case. This means that we access rich error messages from the payment processor to optimize many different common credit card decline types. As we have communicated recently, credit card declines lead to painful customer churn, which is one of the most important and sensitive metrics for any subscription business.

During beta testing, our trials demonstrated a range of 10-27% incremental lift in recovered invoices for a variety of different kinds of businesses (Both B2B and B2C).

The new Recurly Payment Gateway is now bundled with the Recurly service. In addition, we are adding critical customer retention reports so that our customers can track the long term trends of their customers by cohort month, and by subscription plan.

New Recurly Pricing

As of today’s announcement, Recurly’s pricing structure has also changed.

We now charge a simple 1.25% and $0.10 per transaction per month, with a $69 monthly minimum (as there has been for some time).

Grandfathered Pricing

Existing Recurly ‘live production’ customers will remain on their original pricing unless they choose to take advantage of the Recurly Payment Gateway, or any of our premium features – such as Retention Reports, Salesforce Integration, PayPal Payments or Multi-Currency support. We will continue to support other payment gateways to offer the broadest choice to our customers, but the cost of other payment gateways are not inclusive with our new pricing.

No Merchant Account, No Problem

All you need to take advantage of the Recurly service is your own merchant bank account. If you don’t have one already, we can help you apply and get set up with an account offering extremely competitive rates.

We’re excited about our role in helping companies to optimize their subscriber renewal rates. Our ambition is to make the Recurly service a distinct competitive advantage for our customers.

If you have any questions about the Recurly service, or the Recurly Payment Gateway, please contact sales@recurly.com.

We can help.

Cheers,
The Recurly Team.

For the purposes here, we’ll avoid the finance theory and focus on the general concepts of subscription economics that matter most to every company offering products, applications or services on a subscription basis.  In order to grow any business, it is of first-order importance to first know what your customers are worth – at all times.

Early customer retention rates decay as lower quality users are acquired

Concept 1 – Understand Customer Lifetime Value

A company offering a service for $19.95 per month with healthy customer retention rates, and an expected Lifetime Value (LTV) of 24 months can expect their customers to deliver $479 in revenue on average. (The green line indicates the slope of retention curves and gives an approximation of a 24 month expected timeline).

At this stage, many companies commit this expected customer LTV to memory, and want to ‘stomp on the gas’ to acquire as many customers as possible.

[For riveting guidance on appropriate ratios of customer acquisition costs to LTV for SaaS companies, see David Skok's post on SaaS metrics here]

Concept II – Understand Customer Retention At ALL Times

Customer retention becomes a very sensitive variable, comprising the “T” in Lifetime Value (LTV). In the chart above, we present anonymized, actual data from a Recurly customer that started with very healthy customer economics. Strong retention rates indicated an expected customer lifetime of 24 months and average customer revenue of $479 over their lifetime. As marketing programs ramped up, channel partnerships were launched, and customers were acquired aggressively to fuel growth. Over this same period, the product did not change substantially, but the average ‘quality’ of customers declined, and so did customer retention.

Frequent Assessment of Customer Economics is Vital For Success

The example company here demonstrates a very common cycle which is experienced when customer economics are not assessed on a frequent basis. Better yet, they should be assessed on a per channel, per partner, per campaign basis in order to prune the ‘losers’ and add more profitable marketing programs in a repeatable fashion.  It is rare for companies to have resources and infrastructure dedicated to understanding customer economics over ongoing periods of time until they have hundreds of employees.

Much of the recent speculation over the likelihood of Groupon’s (NASDAQ: GRPN) success centers singularly around this concept.  Their S-1 Filing indicates that they spent $179MM in Q1 of 2011, acquiring 33 MM customers at approximately $5.42 per customer. They surely have teams of people monitoring the value of their customers over time, and while customer acquisition costs are important, customer retention rates ultimately determine whether your business is growing profitably or not.

If your business offers a product, application or service on a subscription-basis and you’d like to have better visibility into your customer economics, have a conversation with us. Contact sales@recurly.com

Recurly can help.

Multi-Currency Goes Hand-In-Hand with International Language Support

Recurly also supports 12 languages, (Chinese, Danish, Dutch, German, English, English (U.K.), French, Hindi, Japanese, Portuguese, Russian, Turkish) so that your customers’ experience will be defined by their browser settings and location. Recurly will present the appropriate language to your end customer so that they can not only pay in their preferred currency, but you will also speak to them in their native language.

Multi-Gateway Support and Intelligent Payment Routing

In order for companies to support multiple currencies, it is a common to require multiple payment gateways as well. Recurly supports multiple payment gateways per account, and our customers can easily configure routing rules so that transactions can be routed to the appropriate payment gateway according to the currency specified in the transaction.

See, it’s all coming together nicely!

If you have any questions about this enterprise feature, please contact sales@recurly.com.

Cheers,
-The Recurly Team

If you had to pause and ponder the answer, or if you felt that it was everybody’s responsibility…then you’re not alone.

When I was with eBay, it was far easier for marketing teams to focus on acquiring new customers than to identify an effective means to address customer churn. Customer churn is a ‘wet bar of soap’ problem, and therefore always seems to be ‘somebody else’s responsibility’, because it is a difficult problem to attack.

Consider these factoids:

Most Executives Have No Idea What Drives Their Churn

Identifying the drivers of customer churn can be extremely difficult. Additionally, customer acquisition is infinitely more fun for marketers than retention marketing. [It is much more interesting and profitable for Ad Agencies to focus on driving brand awareness, positioning and expanding appeal than driving retention metrics.]

In our business of providing subscription billing, we frequently discuss the topic of customer retention and churn with our customers. Through this, we’ve learned that executives generally have a clear sense for their own customer retention and churn metrics, but they have very little idea what is driving it. Most will cite Net Promoter Scores (NPS), or customer satisfaction rates as the broad and diffuse driver of customer churn, but they have difficulty pinning down any single reason why their customers leave them.

Subscription Businesses – Plug That Leaky Bucket!

For subscription businesses, customer retention is driven by renewal rates. Improving renewal rates extends the ‘T’ in Lifetime Value (LTV), and this is an extremely sensitive variable in the overall calculation. The enemy of the renewal rate is your churn rate.

Q: What drives customer churn in subscription-based businesses?

A: [Assuming your product/service delivers good value] If you are a subscription-based business, the most immediately addressable, passive culprit is: Credit card errors and declines.

What Can You Do?

Examine Your Credit Card Decline Logs!

Many commonly experienced credit card errors can be successfully remediated. Results will vary depending on your payment gateway/payment processor combination, but by beginning with your credit card error logs, and working backwards towards the solve, you will find that you can dramatically reduce your customer churn with proper error and decline remediation. However, if your customer credit cards are stored within a payment gateway, you will be limited in your ability to remediate many common errors.

If you have questions about Recurly’s standard error handling practices, and how we might help your business reduce customer churn, please contact us.

Email sales ‘at’ recurly.com or call 415-800-2042.

Every year, the Under The Radar conference showcases a ‘curated’ group of young companies providing meaningful innovation in the Software as a Service market (SaaS).  This year, Recurly was honored to have been one of the companies chosen to present at the conference. The audience largely consists of Software industry leaders, SaaS experts, CIOs of fortune 500 companies, Industry analysts, investors and journalists.

We enjoyed presenting at the conference, and were flattered to have been chosen as the ‘Judges Choice’ in the SMB Tools category.

Judges on the panel included:

• Charlie J. Di Bona – Microsoft GM of Strategy, Server & Tools Business
• Daniel Levine – Accel Partners
• Guy Phillips – Visa – Head of Small Business, North America
• John Dillon – Alcatel Lucent – VP, Emerging Technology and Media

We were quite flattered by the positive response from the esteemed panel of judges. We made some good friends, caught up with some Recurly customers and gathered a few more Recurly converts at the event. All in all, it was a great experience, and we’re looking forward to keeping in touch with all of the other presenting companies through the coming year.

Cheers,

The Recurly Team

Based on the feedback we gather from each and every support ticket and customer conversation, we had a great picture of what information on the old design was valuable, hard to find, confusing, or just plain ugly. Our new design focuses on calling attention to important information like subscription details and subscriber balances:

We’ll continue making tweaks and changes to the Recurly design as we hear from our merchants. As always, we welcome feedback at support.recurly.com!

The first person to setup a Recurly account for any company is given the default role of an Admin. As you might expect, Admins have the ability to invite other users within their organization to their Recurly account, and assign an appropriate set of privileges for that person as they create the invite.

Additional Users that have been invited to join your Recurly account will only see the sections that they have permission to see.

For example, customer support agents or account managers can view the customer’s account details page, but be prevented from seeing aggregate revenue reports, which may contain sensitive information. Additionally, a person working in a Finance role might be given access to Reports, but not the Developer settings.

This is a significant feature for those that brought the need for User Roles to our attention. Hopefully it serves the needs of your growing organizations well.

As always, we’d like to hear your feedback, so please let us know if this has been useful for your business.

-Cheers

The Recurly Team

‘Subscription Billing – Primer and Pitfalls’.

Cambridge, Boston: Wednesday, 2/16 at 7p.m. RSVP HERE
New York City: Thursday, 2/17 7p.m. RSVP HERE

Polaris Venture Partners + DogPatch Labs (in both NYC and BOS) will be hosting Recurly for an informational presentation about the most common mistakes made by companies when building ‘homegrown’ billing infrastructure. Not only is it very rare for any technical team to get billing infrastructure right the first time, it also requires constant attention to improve upon a system that delivers basic functionality.

Isaac Hall, CEO of Recurly will be speaking on topics that will be of interest to both existing companies – with current subscriptions in need of optimization for errors/declines/renewals – as well as early stage companies in planning mode. Much of the information covered will be the result of Isaac’s many years of building e-commerce and telecom billing systems. You cannot readily find this kind of information in books or manuals because recurring billing requires a coordinated understanding of the many participants in the lifecycle of a payment.

Our event at DogPatch Labs in San Francisco was attended at full capacity, and the feedback and reviews of the content covered were very positive:

“Very useful content…for anyone who has to deal with payments and subscriptions at their startup.” -Paul Kim, VP – Automattic (WordPress)

We hope that you’ll be able to join us (in Cambridge, Boston, or NYC). We’re looking forward to meeting with everyone and sharing some good billing knowledge.

-Cheers

The Recurly Team

NYC EVENT

CAMBRIDGE, BOSTON EVENT

After speaking with our customers, we also included other features into our Coupon and Discount implementation:

• Specify coupon codes and expiration dates – Recurly manages validations and expiration on your behalf.
• Define the duration of your offer.  (i.e. First three months, Once, or Forever)
• Specify the maximum number of redemptions or date of expiration.  (i.e. “First 100 sign-ups”, “June 10th, 2012″)
• Line item coupon discount on invoices
• Coupon code field on hosted payments pages
• Selectively apply coupons to individual subscription plans

The Recurly coupon creation interface makes things easy to manage.

The new Recurly coupons code feature makes it easy to test price points and reward your customers with special deals and promotions. For more detailed documentation, visit docs.recurly.com/advanced/coupons and docs.recurly.com/api/coupons. We look forward to your feedback about this release!

Recurly’s new MailChimp integration automatically updates your marketing lists in MailChimp. We also pass key customer attributes to MailChimp such as subscription status, account tenure, plan type and a number of other useful account attributes, enabling easy segmentation and filtering of your customer communication lists.

Watch this video tutorial to see how easy it is to connect your Recurly account with MailChimp.

In addition, we have posted documentation to help guide you through the specifics of your Recurly MailChimp integration.

Now you’re all set to automatically integrate your marketing communications with your subscription business.

If you like this feature, please let us know by tweeting to @recurly.

- The Recurly Team