Let’s say you have this really sweet business model where you have accumulated 500 customers that spend $100 a month on a subscription or auto-ship package of goods or services. Not all of those transactions get approved, so perhaps you get $35,000 a month. That’s $35,000 a month that you count on to run your business. You probably use that money for operating expenses like payroll, inventory, maintenance, office expenses, and more.
But what if you were able to gain up to 30% of that missing revenue caused by soft declines? According to MasterCard, decline rates for recurring card billings average 25-30%. And 30% of credit cards are reissued each year due to fraud, lost cards, etc. And 1.9 billion purchases, representing $145.9 billion in sales, are declined every year. You’ve worked hard to get those 500 subscription customers now you have a way to get more of that revenue and increase your bottom line.
Why would your credit card transactions be declined in the first place? Well, here’s the most common reasons:
- Insufficient funds: You may be running your auto-ship transactions on the same day each month, but your customers may be paid every other week, and the funds may not be in their account. 44% of declines are due to insufficient funds.
- Change in card data: This may be because they were issued a new card and your system is storing their previous card data.
- Sensitive fraud prevention: Customers may have enrolled in a credit card protection tool that flags your transaction.
- Other various reasons: activity limit reached, inaccurate CVV, etc.
As your subscriptions grow so do your needs for a retention department. What if you could reduce the need for a retention department? Here is how Nexio can help eliminate these needs or reduce retention workload.
Nexio’s Decline Recovery uses AI-Driven machine learning to figure out the best time, transit, and testing process to handle your transactions and recover between 30% – 50% of your declined transactions. Decline Recovery or decline salvage captures and reruns the transactions up to ten times to gain an approved transaction. Nexio will recover your credit card declines. For your business, this means gaining that revenue that would be lost.
How it works: Our integrated software acts as a middleman to payment gateways and CRMs. We use statistical algorithms to collect and analyze every transaction. Using this information, we predict the risk of every transaction so more of your transactions are approved. We use over 100 data points to determine the best when, where, and how to process each transaction. Plus, this algorithm makes decisions that give your declined transactions the best chance of being approved or “recovered”.
Some things to consider when adding a recovery service:
- What is the pricing model? Is it based on the amount of money recovered?
- How much additional revenue will you get after the recovery?
- What will be the impact on the bottom line?
- What is your current recovery strategy? Are you alienating customers with extra penalties or overdraft fees?
Overall, the best approach is to avoid declines in the first place by having accurate data and using Nexio’s account updater feature. (This feature enables you to update expiration dates on Visa and Mastercard purchases.) Next, add in the Decline Recovery service to go after the rest. Your customers have already signed up for your monthly product or service. They want to be your customer. Take the necessary steps to keep those customers, which will help you reduce involuntary churn. Let Nexio manage the chaos of payments so you can focus on offering great products, adding new subscribers, and increasing your revenue.