October 22, 2021

Supercharging your revenue with better retention & financing

Capchase Co-founder and CEO, Miguel Fernandez, sat down for a conversation with Profitwell Founder and CEO, Patrick Campbell, to discuss revenue automation

Better Retention & Financing

On Thursday, October 21, Capchase Co-founder and CEO, Miguel Fernandez, joined ProfitWell Founder and CEO, Patrick Campbell, to unpack how to leverage data clarity for better customer retention and financing.

Churn and customer retention are huge factors for companies, especially startups, to consider. Beyond a few salvage emails and some dunning on failed payments, most companies fail at a cohesive strategy around retention. That fact is hugely costing companies, both in revenue and missed growth potential. To better understand the churn phenomenon, ProfitWell has collected the largest recurring revenue data set in the world (over 28.4k companies), and broke down the data to pinpoint the best retention and financing strategies for a company's growth and development. By better understanding voluntary and involuntary churn, companies can also strategize around quick hit changes to immediately implement to boost revenue automation.

Retention

Campbell referred to Churn automation as retention automation, which he said ultimately linked to revenue automation. He named three key factors for revenue automation via churn automation:

  • Active cancellations
  • Expansion Revenue
  • Payment failures

Active cancellations

To combat active cancellations, do the following:

  • Offer deals to customers that reward them for staying on as customers longer (ie: yearly subscription rate being lower vs monthly subscription rate being higher)-- Customers on yearly subscriptions tend to provide 300% more lifetime value than customers not on yearly subscriptions
  • Email customers actively and regularly encouraging them to go from monthly to yearly subscriptions (email them monthly or quarterly)
  • When customers cancel, try to win them back with a "win-back" offer (small percentage off type of offer) -- salvage offers can lower cancellations by 10-25% which is a lot in one year

Ultimately, it's ok to lose customers because it's unavoidable as long as you do everything you can to try and win them back, this includes trying to cross sell and upsell them.

Expansion revenue & payment failures

Payment failures are the largest bucket of lost customers.

  • There are 130+ reasons why a payment may fail
  • Companies only ever recover 30/100 of the customers they might lose to payments failures. This number could easily be 60-80 customer recoveries if companies tried harder
  • Time recovery emails around known pay days
  • Send plain text emails to do a recovery (not a rich-text, the performance difference of these two types of emails are huge)

Ultimately, building out a system to try and recharge cards before a user is cancelled is best.

The revenue automation guide

Revenue Financing

Capchase Co-founder and CEO offered insights into the benefits of revenue financing for entrepreneurs:

  • Founders spend a lot of time on fundraising, only to have their companies severely diluted when they are done raising funds
  • It takes an average of >30 meetings, to get a terms sheet with founders owning <15% at time of exit and 60% of founders worry about the terms of their funding
  • Revenue financing scales as your company scales

What you get with revenue financing
  • Faster growth without sacrificing dilution
  • Increased runway without the hassle
  • 100% of your focus on building and growing your business

Metrics that move the needle when accessing future revenues
  • Revenue growth y-o-y
  • LTV/CAC
  • Gross Margin
  • Net churn
  • Retention y-o-y

For companies with recurring revenue, revenue financing can offer the non-dilutive growth capital a company may need to succeed and get to the next level.

Revenue financing for recurring revenue companies

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Watch the recording.