Growing Your Profits with a Successful Payment Processor Partnership

Payment processors increase subscription box revenue.
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Every subscription box owner’s goal is — or should be — to deliver the best, most desirable items to customers while still generating revenue.   

If you’re just getting started in the subscription space, you should aim for a 30% margin, according to SUBTA. That means that for every $1 you receive as revenue, 30 cents will go in your pocket, while 70 cents will cover your costs. 

What if you could increase your profits by simply improving the processes and the billing solution you have in place? The easiest way to do so is to take advantage of features offered by your payment processor.  

Segpay, a payment processor specializing in subscriptions services, knows it can be hard for a small business owner to navigate all the options out there when it comes to basic system features. So here’s five key points to set up a successful payment processor partnership.

Know Your Customer Lifetime Value

No one wants to lose a customer, so it’s important to do everything you can to keep them. 

Payment service providers typically offer retention tools that allow you to present a discount or new program when the customer wishes to cancel your service. Find out if your processor has a customer service team to help you with representatives to save the sale. Also, does your payment processor provide tools for you to direct your customer to make basic updates like email and credit card numbers? 

Payment service providers also have access to card-update files from their banks. This notifies them when a card number changes. Your payment service provider has other helpful tools like cancel reports, which allow you to remarket to those specific consumers who canceled. 

At Segpay, we postback to merchants whenever we receive a cancellation request from a consumer. Postbacks are notifications that ensure important data is sent to you after specific events like signups, purchases, or cancelations.  The business is then able to market its products at a reduced rate or via a new offer, which can help prevent the customer from leaving or churning.

Optimize Your Billing Solution

It’s a good idea to find out if your account is set up for rebill re-tries.

Segpay’s data show that merchants with rebill re-try settings pick up at least 11% of initially declined transactions.  Most payment service providers have this feature. It allows merchants to try and process a transaction up to three times before letting a customer churn. We see an 11% recovery rate through this process. Most providers will allow you to establish the timeframe in which you can re-try declined transactions.

Provide Excellent Customer Service Through Your Payment Processor Partnership

It’s important to ensure that your program has strong customer service. This will help you retain members and encourage consumers to come back to your program.  Our tech team see about 20% of our rebills decline on the first try, that’s 20% you could be losing if you don’t do rebill retries.

If you can’t provide 24/7 customer support, see if your payment processor can.

Providing good customer service can help eliminate chargebacks, which can cost you to lose the sale while also facing bank penalties of up to $35 per transaction.

Your payment service provider is likely to also have the latest dispute resolution services from Visa and Mastercard. If they have these solutions, you can be alerted of incoming chargebacks and be able to offer a refund ahead of it becoming a chargeback. 

Most payment processors offer 3D secure solutions to better authenticate your customer too.  It’s not a requirement in the U.S. at this point, but it is.  Authenticating your customer helps you combat fraud and chargebacks.

Collect All Data You Can Through Reporting

Your payment service provider should have a large amount of data available that helps you optimize your subscription site.

You’ll be able to see things like which price points are selling and rebilling the best. You can also see where your customers are coming from and refine your marketing strategy based on their locations.  

It’s important to build solid rebilling so you can see what’s in the pipeline and how long you’re able to retain members. If you’re not familiar with all the reports your processor offers, ask the support team to walk you through their back office. Remember: Knowledge is power.

Make Friends and Partners with Payment Processors

Check with your payment service provider to see if they can present any great marketing partnerships that you can cross sell with your or upsell in your member area. One of our merchants says cross sales and up-sales can represent anywhere from 15 to 40% of their revenue. 

By just adding a one-click to sell one of your partner’s products, you can keep your customers engaged and create some additional money for yourself.

According to a recent Forbes article, the global subscription e-commerce market size is expected to increase from $72.91 billion in 2021 to $120.04 billion in 2022.  That number could continue to grow to $904.2 billion by 2026.  It’s important to work with a payment processor that is willing to be there to ensure you get the most out of your subscription offerings. 

When signing up, make sure you know what you’re getting, especially when it comes to available tools.  When your profit margins are tight, it’s important to be smart and make sure you don’t overpay unnecessary processing fees.

Want to learn more about growing your profits with a successful payment processor partnership?

Contact us today, we’d love to chat with you about delivering the best, most desirable items to your customers, all while still generating revenue. It’s another way we are here for our merchants All the Way to Paid ™. Reach out to us with your questions at [email protected] 

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