Wednesday, May 13, 2015

Comcast are SOBs

I thought I'd share some of my frustration with Comcast with the world. I'm trying to drop some of the services on my Comcast bill. It cannot be done online. There's no way to do it. There are dozens of ways with a single click to increase the services but there is no way in the world that you can drop a service online. You have to call.

Here's the problem that I face. My Mom has passed on and the condo is in probate. Comcast bills us $250 each month, $150 for cable, $50 for internet, and $50 for stuff. Since we often stay in the condo, we want to keep the Internet but not the cable. They will not allow us to make the change.  They will not even allow us to cancel the bill without:
- proof of death. This I have, a death certificate
- lots of other paperwork
- a copy of a court-ordered document proving that the correspondent is the executor of the estate

I've now spent hours on the phone with Comcast with people who think it's absolutely reasonable that they bill us for another 6-12 months while we get our hands on "a copy of a court-ordered document proving that the correspondent is the executor of the estate"

Does anyone know what to do?

Saturday, April 18, 2015

Recuring Monthly Billing Subscription Business Model

My business is a monthly subscription model known as recurring billing with the card not present and for an intangible good.

The core of my business is built on the idea that I have subscribers that I bill monthly, specifically, I hit their credit card. In exchange, they have the right to use my online educational service.  My rate is low, $20 per month.

The metrics on this business:

Bringing in Traffic to my site
SEO success which is SERP and traffic across many keywords and engines
PPC for paid search
Banner Advertising
Email advertising

Conversion Rates and PreSales Engagement
Total Traffic into the site
Traffic into my sales funnel
Traffic that gives an email, that confirms the subscription
Shopping cart abandons
Double or triple subscriptions, Annual Prepayment

Customers with no level of use or engagement - sleepers
Customers with a modest level of use and engagement
High levels of use and engagement
Add a child
Customers that evangelize and recruit: referrers
Credit card declines from expiration, funds not available, cancelled card

Customer Recovery at Quit

Customer Recovery post Quit

Saturday, April 11, 2015

Credit Cards at Retail: Why not take pictures?

Credit Card Terminal At Super Market
Credit Card Terminal
At Super Market
It's amazing that the credit card industry hasn't been totally wiped out of business by a more efficient approach. Everyone knows that credit cards are used for fraud all the time. Yes, somehow, the retail terminals still have us signing onto a screen.

How stupid is that?

Why don't they just require us to look into the screen and take our picture.  Then, if it turns out someone disputes the bill, they have photographic record of us staring into the amount.

Or, like my gym, when they slide the card, my picture comes up on their screen. If my face doesn't match the picture, they call the gym goons to come reshape my face.

Surely it's time for a better idea company, an Apple pay or Square or someone to come up with a card or system that has zero fraud and doesn't waste everyone's time with meaningless signatures?

Recurring Billing Business Models. And Who the heck is Recurly?

Click for a Summary of Subscription Recurring Business Model Metrics

I just followed some link to the recurly website. It's the first credit card processing company website that I've seen that looked like it belonged in this century!

And, check out this content marketing!  Want proper metrics for measuring customer churn?  Why, yes I do.  In fact, I'm delighted that somebody else out there even understands the question!!!

They seem to be backed by some slick first rate VCs.

 Board of Directors 

  • Dave Barrett Polaris Partners 
  • Shervin Ghaemmaghami Devonshire Partners
  •  Irfan Salim Independent 
  • Isaac Hall Recurly Co-Founder, 
  • Chairman Dan Burkhart Recurly CEO & Co-Founder 
 I wonder how much they know about credit card recycling?

How did we miss them when we were exploring all the credit card companies out there?

 But I'm not sure that I agree with their focus on doing the detailed curn rate based on man days. Is it the right place to start?

 I think the first metric to understand is the general pattern of quits. For instance, for January, with a company, there might be a 100 sign-ups. I'd first measure:- how any asked for their money back either directly or thru a charge-back. - how many paid a 2nd time - how many paid a 3rd time etc. Then I'd compare that with where the customers came from, other segmentation of the customer base, and what month they signed up in.

 This feels like it produces more actionable datat than the Recurly point of departure on analysis.

 Click for a Summary of Subscription Recurring Business Model Metrics

Thursday, July 10, 2014

Merchant Account Contracts

OMG, the credit card processing industry is so messed up.  I'm tempted to go start my own and cut through the industry like a knife through butter.

First, a little background, I run a ~$10M online business based on recurring monthly billing.  It's all about efficiency, effective handling of credit card data, and cost control. Also reliability. After a decade with one vendor that we have totally outgrown, we are finally switching vendors. After a few months of talking to vendors, we finally found one with great technology and prices for the handling of recurring card not present data.

I'm ready to sign and they send over the contract. OMG!  So poorly written and one-sided that instead of signing, we are now going back to our candidates two through five to see what's going on.

Our third favorite candidate immediately flew in (I'm going to see them this morning) and said: "You are a great merchant, we'll do whatever you want contractually."

Meanwhile, the first choice company just sent me a revised version of the contract which still has:
- a three year initial term during which there's no way out unless the processor messes up, gets notified in writing formally, and fails to address it within 60 days.  So they could stop answering the phone and  go down weekly and my business would be legally stuck with them for two months.  I don't think I'm going to sign that.
- no clarity (despite my request) that the customer's credit card data is ours and is available upon request to move
- not a single obligation by the processor to us that they'll remain compliant with all laws, stay solvent, safeguard data, do their best for us, etc etc But there's probably 1-2 pages of such certifications requested of us. Here's a for instance. They claim the right to see all of our financial statements upon request. Fair enough since they are underwriting. I told them in the conference call that this sort of thing needs to be clarified. For what purposes do they get to pull our data? Who gets to see it?  This will be confidential data etc etc.  Oops, it's not there!  Does this mean that other vendors agree to provide their financials but they do so with no if, ands or buts about it?
- they did in the latest draft agree to freeze prices during the initial 3 years but they didn't agree after that to any prior notice period before changing prices.  They did say that in the long term if they change prices, we can complain in writing and if they fail to address or reprice within 60- days, we would be allowed to change vendors.
- the agreement includes five specific references to processors "standard operating procedures."  Remember, this is a contract, not a conversation. I asked about getting a copy of the standard operating procedures. It turns out that these are not written down. I asked about the transparency of these procedures to an outsider and if there was any way that the Merchant could verify them or was it just: "whatever the Processor says it is."  Of course, it's a totally nebulous opaque concept. Yet they left it in the contract.  Who does that?

Of course, I understand that mostly, contract don't matter. People and companies do what they want to and the contract is one of many pieces of the process and relationship so focusing on the contract too much is not smart business.  But still, my minimum requirements;
- freedom to move if it's in our business interest
- clarity on the cost and mechanism for us getting our credit card data
- nothing weird in the rules that will come back to haunt us.

Wednesday, May 14, 2014

Chips on the Cards, EMV, Shifting Liability

I'd like to thank Wikipedia for this info.

What is EMV? EMV stands for EuropayMasterCard and Visa, a global standard for inter-operation of integrated circuit cards (IC cards or "chip cards") and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions.

What about EMV in Card Not Present Situations?  Visa and MasterCard have developed standards for using EMV cards in devices to support card-not-present transactions over the telephone and Internet. MasterCard has the Chip Authentication Program (CAP) for secure e-commerce. Its implementation is known as EMV-CAP and supports a number of modes. Visa has the Dynamic Password Authentication (DPA) scheme, which is their implementation of CAP using different default values.

Why should I, an online merchant, care about EMV?  The supposed increased protection from fraud from EMV has allowed banks and credit card issuers to push through a 'liability shift' such that merchants are now liable  for any fraud that results from transactions on systems that are not EMV capable. This is true as 1 January 2005 in the EU region and it is supposedly coming to the US in "two years", ie 2016. (Note,  I don't have a source for this.)

Credit Card Processing for Monthly Recurring Billing

We have used the same vendor for ten years and we are sick of him. He has never really helped us understand the industry,  how things work, or helped us with improving operations. Service is intermittent. Problems are frequent. There are three areas that we ought to be able to really improve our situation.

1. Declines processing.  On any day, X% of our monthly subscribers are declined.  They are declined conceptually for a few reasons:
A.  insufficient funds
B.  expired credit card
C.  updated credit card due to security
D.  credit card account closed

Our vendors returns a few different pieces of information on the credit card declines:
1.  Call a 1 800 number to get the sale approved. The number is our own credit card processor who then gives us a phone number and the credit card number so that we can get a voice authorization. This is time consuming and results nine times out of ten in a failure.
2.  Invalid account number. Does this cover B, C, & D?
3.  Expired.
4.  Declined. This is the vast majority but they do come with a code: 0700540009  (BTW, if you google that code you get a fair number of people asking about what that decline code means).

Our traditional system of handling declines is to try again every ten days:
D1 - The first decline. We ignore it.
D2 - Second decline. If they are an active user, we send them an email
D3 - Third decline. If they are an active user, we send them an email and turn off their account with a message
D4 - If they are an active user, we send them an email and turn off their account with a message.
Also, we notify those with credit cards that are going to decline in the next 60 days that they need to update their credit card.
Recently, we've tried some robocalling to notify our users about declines and that has been surprisingly successful.  No numbers yet. We used to try to call ourselves and never found a way for it to be effective.

Questions - Ideally by A, B, C, & D above...

1.  Overall percent of D1s of billings?
2.  Overall number of D1s that become D2s?
3.  Overall number of D2s that become D3s?
4.  Overall number of D3s that become D4s?
5.   Credit card updates by users because we notify them that their credit card is expiring?
6.  Percent of each type of decline that our vendor returns to us?
7.  Updates between D2/D3, D3/D4?

Overall, our real questions are:

- What's the best method for avoiding declines with updaters and submission of AVS data and whatever.
- Once declined, how best to proceed in terms of trying again, contacting user, using technology to update?
BTW, all of this is focused on recurring billing cancellation, what about initial cancellations?

2. Costs. We are still in a system of tiered pricing which is confusing. There are costs and credits. Overall, we are paying ~4% to the gateway, processor, and credit card vendors. A lot!  Just getting this down by a percent will save us a lot of money per year.

3.  Reliability and reports. Compliance too.