Customer attrition in the payments industry
The payments industry is undergoing a major shift. Customer attrition (aka customer churn) is approaching crisis levels.
Obviously, no business can satisfy everyone, so some fluctuation in customers is expected. When customers leave the business gradually, in small numbers, the change is compared to the evaporation of water. However, when the number of customers leaving your business becomes significant, you should be ready to take action.
Your business may already have defined levels for acceptable churn but if you’re unsure you can look at other businesses in your category to compare. For example, even a household name company like Netflix has some customer churn, but remarkably, even during 2020, their annual churn rate was 2‒3%. For the tech industry, SaaS (software as a service) holds a general benchmark of 5‒7%.
When we take a look at the estimates for the payments industry, the numbers can be shocking. While leaders in this space such as BASYS Processing recommend no more than 10% churn for a healthy payments business, industry estimates suggest that some merchant acquirers may be seeing churn rates as high as 30%!
Race to Zero
Merchant acquirers have responded to customer attrition by lowering prices, traditionally the industry’s biggest selling factor. But instead of stopping the bleed, it has cut into profit margins. Net revenue declined 5 percent between 2008 and 2018 and has continued to fall.
With such high churn, companies are either working as hard as they can for minimal gains or slowly shrinking as their customer base is chipped away. Clearly, a new approach to retaining customers is needed, which is what Chargezoom provides. We help our partners overcome some of the most commonly cited reasons why customers switch to a competing service:
- Email invoicing
- Payment portals
- Subscription management
- Invoice reconciliation
Chargezoom offers all of these features (and more) while connecting to the merchant gateway account that you have already provided, saving your merchants time, effort, and money, while extending your catalog of services
Ready to learn about churn?
Our recent webinar is now available for on-demand replay. In under 10 minutes, hear about the best strategies to patch the leaks in your bucket and slow your customer churn.