Output’s musically inclined customers access the different software products either via a monthly subscription or by purchasing a perpetual license. Although Output’s General Manager Brian Zarlenga notes that the use of the subscription model is quite new in this space, he reports that they are seeing quite a bit of success with it. One key advantage of using a SaaS model is that the software is updated far more frequently. With a perpetual license, the software is almost never updated.
On the subscription side, new content is released every day, with bigger product updates at least once a month. This means that even customers using a one-month free trial version see important new features and content at some point, which reinforces the value of the product.
“We’ve always wanted to create a SaaS product so we could offer our customers far more, over time. We wanted to continue to improve the product without having to nickel and dime customers along the way. As a result of this new model, we have customers who are far more engaged with our products on a monthly basis, and it’s now our job to continue to offer great updates so they keep coming back.”
Before coming to Recurly, Output used a solution called WooCommerce to manage their subscription business. But, they quickly realized that they had a serious payment decline issue, with decline rates of almost 30%. They needed to determine what was causing those declines and how to stem this tide of lost revenue.
After implementing Recurly, we saw a 45% decrease in credit card declines.
Zarlenga describes spending the latter half of 2018 speaking with every payment expert he could and surveying most of the industry to figure out what was happening and how to resolve the problem. Eventually, Zarlenga connected with someone from Recurly, who outlined all the different features that the platform offers, particularly in terms of decline management.
“Recurly described how their subscription management solution could help us route payments using different gateways, what makes their retry system superior, their advanced dunning features, and all the other elements involved in addressing payment failures. WooCommerce was flexible, but we ran into problems as soon as we reached any kind of volume in processing transactions. We never have those problems with Recurly—it’s a very stable and robust solution,” says Zarlenga.
After implementing Recurly, Output saw an astounding 45% decrease in credit card declines.
With Recurly, we started having great success: more signups, a better customer experience, and a better experience managing subscriptions on the backend.
As time went on, Output gained a greater understanding of the many intricacies of running a subscription business. “The main thing we've learned in entering the subscription space is the need to continually test and learn—not just our marketing and landing pages but the flows in which people sign up for our product and all the ways that a customer interacts with our business. Recurly enables us to do this.”
Output soon concluded that given that they were testing nearly everything else, they needed to further test and refine their payment processes as well. Before Recurly, Outputs’ payments were essentially a black box: payments would succeed or fail, with no additional information as to the cause.
“With Recurly, we started having great success: more signups, a better customer experience, and a better experience managing subscriptions on the backend. And, we gained visibility into what’s happening at the most crucial point in our business: collecting money. Recurly really helped demystify payments for us,” says Zarlenga.
He goes on to note the aspects of Recurly have been most valuable in this turnaround. “Recurly gave us a much more sophisticated retry system, improved dunning, the benefits of using multiple gateways, and a variety of payment features and payment routing capabilities.”
Knowing that we can continue to process payments, even during an outage, gives us valuable peace of mind.
Recurly’s advanced dunning features and staff expertise was also a key driver of Output’s significant reduction in payment declines. For example, Recurly encouraged Zarlenga to extend their dunning period from seven to fourteen days to improve their dunning results. “Giving people an additional week to pay resulted in far lower involuntary churn rates,” notes Zarlenga.
90% of our customers came back after we started offering Recurly’s pause features. That’s massive.
Output also relies on Recurly’s gateway failover feature to ensure that they can continue to process payments even if their primary gateway has an outage. “Knowing that we can continue to process payments, even during an outage, gives us valuable peace of mind. And, establishing relationships with many different gateways gave us an opportunity to deepen the relationship with each one. We started to learn from them and strategize with them. But Recurly really led the way, helping us to dive into the details on how payments work and the mechanisms that drive payments on a daily basis.”
Recurly offers more than critical payment features and the ability to test and understand how to improve decline rates. According to Zarlenga, “Beyond the payment features, we knew we needed an incredibly stable solution, one that’s focused on achieving 100% uptime. And, we wanted a company whose core mission is subscriptions. We got that with Recurly—it’s what they do every day. With Recurly, we don’t ever have to ask ourselves, ‘Is this going to be billed correctly every month?’ because we know it is.”
Beyond the payment features, we knew we needed an incredibly stable solution, one that’s focused on achieving 100% uptime. We got that with Recurly.