1. Melanie Stout, VP of Client Success, PLC LLC
Avoid a Recurring Nightmare Tools and tactics to optimize recurring payments
Melanie Stout, VP of Client Success, PLC LLC
Jason Hembree, Business Technical Architect, Technology, Jewelry Television

2. Overview Ouch! Passive Churn Hurts
Lessons from Two Recurring Merchants
Comprehensive Recycling
The Prepaid Problem
Case study – Jewelry Television
Initial Point of Sale Declines and Save Strategies
Recurring/Installment Billing Optimization
Key learnings and takeaways – 5 things your business needs to do today

3. Factors contributing to increasing breakage:
Recurring Nightmares
Factors contributing to increasing breakage:
Data breaches
ATO
Prepaid penetration
All is not lost!
Comprehensive recycling
Interspersed with Account Updater
Prepaid strategy

4. Impact on Approval Rates
Approval rates are trending downward
Data represents annual billers, primarily publishers
High level view of approval rates over time. All of these are primarily annual billing, majority publishing clients.

5. Case Study 1 – Comprehensive Recycling
B2C monthly billing merchant providing business services to consumers
High income demographic
Average ticket $45/month

6. Comprehensive Recycling +
Discussion point is that there really are no longer “hard” and “soft” declines. Hard declines are simply accounts in need of an update.
Traditional “soft” declines are recovered primarily through recycling while “hard” declines can be successfully recovered over half the time by recycling with account updater interspersed within each retry attempt

7. Comprehensive Recycling
Aggressive Account Updater Engagement
Stale expiration date optimization
Test tactics
Report results

8. Timing May, as They Say, Be Everything
Discuss testing initial attempts and recycling by day of week, day of month; tracking data

9. Case Study 2 – Comprehensive Recycling + Prepaid Strategy
B2C monthly billing box subscription company
Demographic is millennials + soccer moms, large prepaid and debit card mix
Average ticket $29/month

10. More Success Rates from Comprehensive Recycling
Retry 4 days after initial decline, then every 6 days for 70 days
44% total recovery of declined transactions
Adds 6% revenue back to the bottom line immediately
Percent of total recovery by attempt:
Talking points here can include the pros and cons of extending recovery out this long. Also can address anniversary date – especially for monthly billing.

11. The Prepaid Problem
Prepaid accounted for 19.1% of authorization requests, but…

12. The Prepaid Problem
Only 6.6% of deposits

13. Within Prepaid Gross approval rates: Reloadable 22%
Evaluate the acceptance based on your business metrics; CPA, CPG, etc.
Gross approval rates:
Reloadable 22%
Non-reloadable 2.3%

14. Strategy & Results Blocked all prepaid cards
Initial conversion decreased by about 10%
LTV on successful orders was extended by an average of 3 months
Net revenue was down
Allowed reloadable back into the mix
Conversion increased back to near earlier levels
LTV was reduced and profitability was impacted, but the corporate objective was to grow revenue
Next steps
Target allowed cards by order source/cost of acquisition
Allow all card types for long-term subscriptions (i.e months paid upfront) and single sale items

15. The Prepaid Problem is Pervasive
Twelve Merchants with Prepaid Penetration
Card Type
Auths
Deposits
Auths/ Deposit
Credit
40.4%
44.3%
1.5
Debit
53.8%
1.6
Prepaid
5.8%
1.9%
4.8
One merchant not included above has a prepaid auth to deposit ratio of 32 on over 38MM Authorizations

16. Considerations For recycling: For prepaid: DATA is a MUST!
Flexible anniversary date?
Shipping date/fulfillment logistics and constraints
Profitability – balancing recovery with time to revenue collection and processing fees
For prepaid:
Cost of acquisition
Cost of goods, if applicable
Degradation of initial conversion vs. lifetime value
Reloadable vs. Non-reloadable acceptance
DATA is a MUST!

17. Jewelry Television Case Study

18. Jewelry Television Facts
Broadcasts 24/7 Live Television into 86 Million U.S. Households
Over 400 Contact Center Agents handling 8MM inbound calls annually
Over 20 Million Payment Authorization Requests Annually
Launched Installment Billing Program in 2012

19. Initial Sales Retention Strategies
Opportunities
4 Tactics to Implement
Observed Results

20. Initial Sales Retention Opportunities
Situational Overview
Sales Representatives did not understand the meaning of each of the payment response codes
Disconnect between Sales Representatives and Back Office Payment Support
No automated communications in place
Declined Sales Orders were automatically cancelled after 14 days
Customers were frustrated to later learn that their order had been cancelled
High Sales Order Cancellation Rate due to Payment Decline Failure (~5%)
Sub-Optimal Decline Resolution Rates (31% - 35%)

21. Analysis of POS Payment Responses

23. Payment Response Classifications

24. Targeted Payment Response Examples

27. Recurring/Installment Billing Optimization
Opportunities
3 Tactics to Implement
Observed Results

28. Recurring Card On File Opportunities
Situational Overview
Recycling Not Intelligent and therefore More Costly $$
Over 200K Active Delinquencies at any given time
Delinquencies per Customer Range from 1 to 180
Large Volume of Card Expirations due to Chip in Card and Data Breaches
StretchPay Delinquency Notifications Costly ($500K Annually)

30. Recurring Aged Decline Success Rate
*Declines 3 Weeks or Older

33. Recurring Results of Targeted Actions
Recycling Engine Optimization
Over $20MM in Revenue Recovery Annually
Over 15% Recovery Rate per Recycling Run
Recycling Expense cut by nearly 70%
Auto Account Updater (AAU)
Over $15MM in Revenue Recovery Annually
For every $1 spent on Recovery, JTV captures ~$60 in Revenue
Reduced AAU Expense by 33%
Consolidated Customer Delinquency Notifications
Easier to read for customers
Reduction in Expense by 52%

34. Remaining Opportunities
BIN Intelligence
Partial Authorizations
Support Reloadable PrePaid Cards on Recurring Program
Payments Chaining

35. 5 Key Takeaways
Intersperse account updater with recycling on (almost) all declines
Evaluate the effect of prepaid cards, and determine a strategy for acceptance
Constantly monitor and analyze detailed data – transactional, BIN-level, and more
Don’t set it and forget it
Continuously ask “How Might We Improve Our Revenue Retention Rates through Payments Optimization.” There’s usually always more room for improvement.

36. PLC LLC Jewelry Television
MELANIE STOUT, VP OF CLIENT SUCCESS, PLC LLC
JASON HEMBREE, BUSINESS TECHNICAL ARCHITECT, JEWELRY TELEVISION
If you have any questions about the presentation, go to our LinkedIn Group (the Payments Education Forum) and request an invitation (this is a closed group specifically for the payments industry).