It seems you can’t turn on the news or open the paper without reading another story about credit card data breaches. As data is being exchanged via more media and with more frequency, these breaches seem an unavoidable risk of being a credit card consumer. The popular crowd discount site, Living Social, fell victim to one of the latest massive exposures of personal data – with 50 million accounts affected. During the investigation it became evident that credit card data was not exposed, but user information including passwords, emails, phone numbers, were.
Engaging in an ongoing relationship with a customer is challenging under the best of circumstances. When you are a merchant in the business of continuity, billing for a good or service with a set frequency – weekly, monthly, quarterly, annually, or anything in between – maintaining this relationship for the duration is the crux of your revenue stream. We will always lose some customers due to the customer’s desire to end the relationship. What’s untenable is losing a valuable customer who wishes to remain a customer, but whose billing fails. Payment declines can cost merchants thousands to millions of dollars in lifetime value of a customer.
The universe of credit and debit cards that churn is about 40% each year. So continuity programs without decline prevention and recovery tactics are losing almost half of their otherwise happy and willing customers. The rate of churn is largely due to data breaches and lack of customer loyalty to a specific issuer. Data breaches have been on the rise in the past decade as an increasing number of transactions and data are being housed online. Cardholders are more likely to switch plastic as they are solicited by other issuers with promises of lower interest rates, more points/rewards, or the ability to consolidate debt with lower payments.
What’s a Merchant to Do?
Implementing best practices around preventing, recycling, and recovering declines is key to extending the lives of those customers that wish to remain customers. Understanding the nuances between decline codes and how to treat each will help close the gap between approvals and declines. Detailed reporting that gets to the heart of your card type mix and enables you to delve deeply into the process flow can give additional insight into […]