Credit Card Declines Crush Your Subscriber Economics

Over the past two years, Recurly has developed a unique approach to solving one of the nastiest challenges confronted by ALL businesses with recurring subscription models. Credit card errors and declines.

Credit card errors drive subscriber churn

All subscription based businesses experience unwanted credit card errors. We typically see between 5% and 15% of recurring credit card transactions fail. (Some companies can be higher, depending on their audience).

Recurly corrects many credit card declines

Unlike other recurring billing services, Recurly has designed our architecture (and our payment gateway) specifically to address this critical issue to help improve the overall economics of our customers' businesses.

Consider this example:

Assume:

  • 1000 Subscribers
  • $45 Avg. Invoice
  • $45,000 Monthly Revenue
  • 6 month expected subscriber lifetime

In this example, we'll assume that this business experiences an AVERAGE amount of credit card errors and declines (10%) on a monthly basis.

Recurly has consistently observed a range in incremental improvement of failed transactions (via PRE/POST analysis) of 10% to 27%. (This varies depending on the audience and related composition of error types experienced by each company) Again, we will assume an AVERAGE mid-range performance in incremental recovery of failed transactions.

Value of Credit Card Error Recovery

Future value of preventing churn today

Future value of preventing customer churn today - recurring billing

This example reflects conservative assumptions and highlights the sensitivity and importance of aggressively addressing credit card errors and declines before it results in unwanted subscriber churn. Every customer that churns today has a negative impact on your annuity revenue stream in future periods. This is how Recurly is able to make the bold claim that our service is self-funding.

Recurly goes to bat on your behalf

It isn't a big stretch to assume that your internal development staff probably isn't very good at this. (Why would they be?). Understanding credit card processing is tough enough, but understanding how to improve transaction errors and declines is both an art and a science. You have to live in the details to get it right, and that is what we do here at Recurly every day.

If you operate a subscription-based business, you should understand how much of your subscriber churn is related to your billing operations. Recurly's service will help you improve this critical area of your business. As the example above demonstrates, our service more than pays for itself. Best of all, you get to focus back on other important areas of your business.

As we like to say...Let Recurly automate your recurring billing. Your business will thank you. Your Board and Investors will too.

Cheers,

The Recurly Team

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