Posts Tagged ‘microtransactions’

Data, Insights, and Best Practices

Wednesday, April 6th, 2011

The volume of data that now flows through CashBox (over $2bn worth last year) allows the marketers at our client companies to truly understand what’s happening in their business and compare it to the broader universe of the digital merchants that we service.  I’ve discussed in the past how SaaS Billing is really a Marketing asset, not just an operational necessity.  We’ve also been extremely vocal about the need for our clients to focus on long-term customer lives, whether this be for a subscription-style service or for a microtransaction service that uses a virtual currency.

Here is an example from an existing client that illustrates the importance of data. The chart below represents a cohort analysis of the subscribers to their 1-month plan. What it shows is that the average lifetime for subscribers to the monthly plan is about eight months or so. This client, however, does not offer an annual price plan and asked us whether we thought it would make sense. Based on this data, we said that if they offered a plan that generated more revenue than their average monthly lifetime value and that was at a discount to the annual value of their 1-month plan then, yes, it would make sense to do so assuming it fit with their business goals.  To put this into concrete terms, if their monthly plan was $10/mo, they could offer an annual plan anywhere from $81 to $119 and have it still make economic and subscriber sense.

We learn a lot about consumer behavior through our clients and the relative importance of changes to product and pricing mix on subscriber acquisition and retention, and look forward to sharing more of these insights on this blog in the future.

Sanjay SarathyTags: , , , , , , , , , , ,
Posted by Sanjay Sarathy in Best Practices, Data Geek, Marketing Fury | No Comments »

Vindicia CashBox StoreFront

Tuesday, March 1st, 2011

Call me a masochist if you will but, as I remarked yesterday on Twitter, I do enjoy product launches and the underlying processes that lead to them: understanding client requirements, creating functional specifications, building the product, defining pricing, crafting the go-to-market strategy and publicizing the actual product.  We’ve been busy the last few months on a new initiative that reinforces our mission to help merchants build online revenue and we’re excited about the results of that work announced today: CashBox StoreFront.

CashBox StoreFront optimizes customer acquisition for merchants selling digital content and services. Yes, there are numerous storefronts in the market so our product name by itself doesn’t distinguish ours. Few companies, however, focus on the tight relationship between the typical operational focus of SaaS billing and the marketing focus of customer acquisition and retention. The combination of CashBox StoreFront and CashBox offloads the tedium that most marketers (like myself) have to deal with in maximizing customer lives, whether working with a subscription or a microtransaction-based service.  Given the ongoing burden that PCI compliance puts on merchants (with version 2.0 of the standard rolling out this year), the fact that CashBox StoreFront completely offloads this issue onto Vindicia removes yet another worry for merchants.

Contact us with any questions you have, and we look forward to helping you build online revenue.

Sanjay SarathyTags: , , ,
Posted by Sanjay Sarathy in Industry News, Marketing Fury, Vindicia Press Release | No Comments »

Diversity

Monday, September 13th, 2010
Diversity is good in all aspects of life – in the workplace environment, in the gene pool, and even in business models.  On the latter topic, we spend a lot of time both internally and with our clients discussing and implementing best practices, and it was in the course of one such discussion that the concept of diversity really hit home.  

The client in question had seen a slight drop in subscribers.  We were initially puzzled that their overall revenues were up despite this subscriber drop, when we remembered that they also generated revenue from add-on microtransactions.  Sure enough, the revenue from existing subscribers buying additional items via microtransactions exceeded the lost revenue from those who unsubscribed, proving the old axiom that your loyal customers are willing to pay even more than what you charge them.  We investigated this trend across our client base and found that hybrid business models like the one above can add between 8-10% to the average revenue per user (ARPU).

We have two upcoming conversations on business models.  On Wednesday, Jeremy Nusser discusses free and freemium to kick off our Fall 2010 Webinar series.  Next week our CEO, Gene Hoffman, talks on a panel at the NY Games Conference about payment models that work.  We encourage you to join the debate.

Sanjay SarathyTags: , , , ,
Posted by Sanjay Sarathy in Best Practices, Marketing Fury | 1 Comment »

Payment Method Breakdown for Digital Commerce

Tuesday, May 18th, 2010

Many of the questions we get asked about online billing are focused on how prevalent certain payment methods are and which ones our merchants should offer for their customers.

As our CEO discussed in his last webinar (Innovation in Business Models), the overall breakdown for payments by type across all ecommerce is summarized in the chart below with information from Javelin Research.

The 29% labeled “other” consists of everything from bank transfers (ACH / ECP), PayPal, mobile SMS billing and additional alternative payment methods such as BillMeLater. As this breakdown is measured across all ecommerce, the results are skewed towards internet retailers such as Amazon.com, Ticketmaster and airlines. For digital commerce (merchants only offering digital goods and services and driving revenue with subscriptions, virtual goods or virtual currencies), the results are even more biased towards payment cards. Also, the mix of alternative payments will be different with the most common ones being prepaid cards, PayPal, and SMS billing.

However, not all payment card brands are created equal – while we were digging through the mountains of data handled by CashBox recently, we found a nice high-level summary for the breakdown of the payment cards brands (credit & debit) that passed through our systems last year.

  • Visa: 63%
  • MasterCard: 26%
  • American Express: 9%
  • Discover: 2%

Or, to put it graphically:

As you can see, the overwhelming majority belongs to Visa, with Mastercard making up just over a quarter of card-based transactions. The other card brands (Carte Bleu, JCB, Diner’s) make up a negligible percent of transactions. Admittedly, this is skewed towards the US, as over 2/3 of our merchant’s customers pay in US Dollars. Combining this with the ecommerce statistic, this means that Visa is responsible for almost 45% of all transactions on the internet.

As always, your mileage may vary with customer demographic and product uniqueness, but the key takeaway for merchants should be to focus on the big 2 or 3 brands and think about reducing the number of payment card choices on your buy page.

Jeremy NusserTags: , , , , ,
Posted by Jeremy Nusser in Data Geek, Marketing Fury, Payments 101.201.301 | 2 Comments »