Revenue Acceleration for Subscription Businesses

The Most Effective Way for Companies with Recurring Revenue to Increase Growth

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SOLVING THE LARGEST SOURCE OF CUSTOMER CHURN IS THE FASTEST, MOST EFFECTIVE WAY FOR SUBSCRIPTION COMPANIES TO ACCELERATE GROWTH

Thinking of payment recovery as a way to recover customers instead of simply recovering transactions is a profoundly different mindset for subscription businesses. This way of thinking leads to the conclusion that the value of recovered failed payments should be measured by calculating the full value of the recovered customer, which is the value of all future payments the customer will make on their subscription.
Simply put, increasing customer tenure directly drives revenue growth and higher profitability for subscription companies. The importance of this relationship means subscription businesses must understand and manage all drivers of customer churn because reducing churn significantly improves the KPIs of subscription-based businesses.
SUBSCRIPTION BUSINESSES MUST THINK OF RECOVERED PAYMENTS AS RECOVERED CUSTOMERS

Here is the equation that subscription businesses should use to measure the full value of a recovered customer following a failed payment.

Full Recovered Customer Value =
Monthly Billing Amount
X
Number of Recovered Billing Cycles
–
Cost of
Recovery
Recovered customers deliver ongoing revenue for your subscription business because they bring in additional periods of successful billing which accelerates overall growth in active customer counts and total company revenue.

These benefits can be realized without spending any additional money on customer acquisition, which is typically the largest expense for subscription businesses. In fact, almost no other investment will accelerate subscription revenue growth more than a high-performing failed payment recovery solution.

Real-World Example

Let’s use an example of a subscription business with the following metrics:

  • 50,000 active customer accounts
  • $50 average customer monthly billing
  • 15% monthly growth rate
  • 13% failed payment rate
  • An in-house customer service program recovers 20% of the failed payments
  • The average customer lifecycle is 8 months

We can calculate the acceleration of overall company growth rate when a best-in-class failed payment recovery solution, such as FlexPay’s AI-Powered Invisible Recovery™, is deployed.

Here is the estimated impact on active customer counts and company revenue growth in the first year after deploying Invisible Recovery™, compared to a typical in-house recovery solution using either a dunning approach or rules-based solution.
In-House Customer
Service Recovery		 FlexPay’s
Invisible Recovery™
12-month cumulative Revenue Forecast $39.9M $47.5M
Active Customer counts after 12 months 80,631 108,405

This example shows that Invisible Recovery™ will increase this company’s annual revenue by 19% and increase their active customer count in 12 months by 34%. As you can see, revenue growth quickly accelerates when the number of active customers increases through failed payment recovery.

CONCLUSION: Calculating the total economic value of customers recovered from failed payments transforms failed payment recovery from a one-time transaction to the recovery of a customer who generates months of additional billing for the duration of their natural lifecycle. When you recognize this impact, it is clear that subscription businesses must make failed payment recovery a priority using a solution that optimizes failed payment recovery rates with methods that maximize the length of the customer lifecycle after recovery.

Introducing

INVISIBLE RECOVERYTM

The FlexPay Invisible Recovery™ platform is an AI-powered solution that optimizes customer recovery from failed payments and delivers proven long-term customer retention following recovery.

Invisible Recovery™ produces the highest rate of customer recovery by creating an individual strategy for each failed payment, resulting in optimal customer and revenue recovery.

Invisible Recovery™ works quickly while completely avoiding customer visibility to the failed payment, which eliminates the customer churn created when subscription customers are made aware of the payment issue.

Calculate what FlexPay can deliver for your business:
Revenue Recovery Calculator

FLEXPAY RESEARCH SHOWS INVISIBLE RECOVERY™ DELIVERS THE HIGHEST RECOVERY, AND SUSTAINED RETENTION:

  • Up to 70% improvement in failed payment recovery rates compared to other recovery solutions
  • Up to 45% longer customer retention following recovery compared to other failed payment recovery solutions
You can use FlexPay’s calculator tool to estimate the additional revenue and the number of active customers Invisible Recovery™ can deliver for your subscription business. Measure the results for your company now and contact us to schedule a consultation with one of our declined payment experts.