Recovering Lost Revenue: Vindicia CEO Gene Hoffman (Part 6)

Sramana: Can you give me a quantifiable example of the type of impact your solution has for your clients?

Gene Hoffman: Let’s say you have 100 subscribers on any given month. Five of them will opt out which means you cannot bill them again and while we can try to help companies retain them if a customer really wants to opt out then there is not much we can do about that. Of the remaining 95 customers you may only be able to get 82 of them to recur. That leaves a gap of 13. Whatever number of those 13 we can recover is huge. Those are cards that are lost, stolen, expired or their bank went out of business. In some bases they turn the card off and you have to do the right marketing message to get that customer to update their billing profiles.

We go in with our practices and technology and raise our clients monthly retention as much as 6%. When compounding is taken into account on customer lives we can double our clients customer lives and raise annual revenues for our clients from 10% to 20%.

Sramana: In 2004 and 2005 where your customers all digital merchants?

Gene Hoffman: Yes, they generally are all digital merchants. The furthest you get aware from that is where a magazine company sells their online subscription and includes a print copy of the magazine in some of their pricing bundles. Traditionally we are talking about gaming, dating, software, and content businesses.

Sramana: How do you accomplish your charge back offering? Is it a software offering or a best practices offering?

Gene Hoffman: There is a feature called account updater which is available from the card associations. If you do it right you can get updates to cards that are being changed for whatever reason. There are also techniques and approaches to consider. For example, what is the best day to re-try a failed transaction? That varies on things like what bank business day it is and what geographical region you are in. In Europe it is better to try on a Friday versus Monday. As usage of debit cards and increased and credit cards has decreased that has changed things a bit as well. Credit cards were primarily about your billing cycle whereas debit cards are more centered on payroll coming through.

We have about 120 million consumer accounts amongst our merchants and we store about 80 million credit cards. We are able to use that information to figure out what the optimal data is. Of course that changes. When TARP happened and the recession hit the timing to attempt a recharge changed as well because credit limits contracted. Consumers moved to debit cards. As the credit environment evolved we were able to use our data set to get the additional answers desired. It may only be a .2% improvement here or a .5% improvement there, which sounds small, but if you have a year long customer life then .2% compounded by 12 approaches 6%.

Sramana: Where do you get the data? How do you know if payroll has been debited into your account?

Gene Hoffman: We determine that information from the dataset itself. We look at the likelihood of a debit card getting approved on certain days and it becomes clear that it is higher on the 1st and 15th of each month.

This segment is part 6 in the series : Recovering Lost Revenue: Vindicia CEO Gene Hoffman
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