We’ve often talked in past posts about the importance of customer retention and the impact on customer lifetime value.  A lot of the dialog centered around the retention uplift that CashBox provides.  Today’s post highlights a few examples of our subscription billing clients and the *actual* number of subscribers saved from their time of going live with us through the end of last month.

Example 1. A video publishing service with both monthly and annual plans across different product lines.  Nearly 8,500 subscribers retained.

Example 2. A kids’ based virtual world.  Over 65,000 subscribers retained via CashBox.

Example 3. A sports franchise with a distinct season – February through October – which can be immediately gleaned from the graphic below.  In ten months we’ve saved 6,500 subscribers.

Example 4. An online dating company that bills in multiple currencies around the world.  Over 44,000 saved subscribers.

That’s a little under 125,000 saved subscribers for just four clients.  The value of those subscribers?  Millions in annual revenue once you take into account the compound effect of those subscribers over time.  The Digital Economy is alive and well, but it takes a clear focus on subscriber retention to fully benefit from it.

Our singular focus at Vindicia is to maximize customer acquisition and retention on behalf of our clients.  We also know that providing deep support for the most common digital business models is a critical foundational element.  We’ve had extensive client engagement around subscriptions, microtransactions, one-time transactions, freemium and hybrids, and our focus in building marketing and selling automation solutions is to help create extremely long-term customer lives, independent of business model.

Today’s announcement that highlights our expanded usage-based billing support fits squarely into this theme.  We now provide capabilities that cut across various usage based scenarios.

• License-based pricing:  Pricing for many CRM products fit this mold.  Businesses charge per seat pricing and the aggregate price changes based on the number of users licensed by the client.
• Variable-usage pricing:  Vindicia uses this pricing model, whereby we charge a percentage of successful revenue transacted on our clients’ behalf.  You can have different rates by tier.
• Highest-tier pricing:  Pricing is simply determined by how much you use and which “band” that usage falls into for that period of time.
• Flat fee pricing:  Pretty self-explanatory.

There are many combinations and permutations of these and other models that fit the “usage/rating” sector.  Most importantly, all these models benefit from the ancillary CashBox services including our broad payment method support, native sales tax engine, high reliability and scalability, and the aforementioned focus on acquisition and retention.

There are multiple examples of business model success in the Digital Economy.  We want to support you across all of them.

While preparing a blog post for an upcoming product launch next week, it struck me that our clients truly span a range of business models.  I investigated the specifics of our five largest clients:

• Two of them have freemium models, where the premium component is based on subscriptions.  While both are global companies and growing rapidly, one of them prices exclusively in USD, while the other prices in six different currencies.
• Two of them are traditional subscription services, with either a 7 or 14-day free trial, and both clients have multiple subscription offerings targeted at different segments of the market.
• One of them relies almost exclusively on one-time transactions, primarily because it has an app-store model.

The common thread is that all five emphasize best practices around making their services accessible, convenient and compelling, which at the end of the day is what distinguishes the winners in the Digital Economy.

Today our client Next Issue Media launched its digital newsstand.  Their storefront provides an interesting view into hybrid business models as a way to pique interest among potential subscribers.  Next Issue offers a couple of different “unlimited” subscription plans which provide access to a bundle of different magazines.  In addition, for those still interested in just one particular magazine you can purchase titles a la carte.

What I personally like about their subscription strategy is their focus on making the consumption extremely convenient.  I may spend a few days reading the latest issue of Fortune and only then switch my attention to Sports Illustrated.  The idea of having all the content I care about at my fingertips and within a single app is far different than what currently exists, and the analogy a number of journalists have made to this being the “Netflix of Magazines” is not a bad one.  The bundled strategy also gives them the flexibility to experiment with pricing to better understand the elasticity of demand for their digital service.  The publishers that back Next Issue also get data that helps them understand the relevance of specific content in digital format, something that would be much harder to obtain via their print versions.

There are many components to a customer acquisition strategy. For digital businesses, especially those that have a worldwide reach, the choice of payment methods they offer to customers significantly influences which demographics they can reach. That’s why we are excited to offer mobile carrier billing on the CashBox platform via an integration through and partnership with BOKU. The growth of mobile phone use, coupled with falling rates, makes mobile carrier billing a compelling offering for customers who either want the convenience of paying through their mobile carrier or don’t have a bank account/credit card to use.

We have an extremely broad array of payment methods that digital businesses can now offer: credit and debit cards, PayPal, stored value cards, regional payment methods like Boleto Bancario in Brazil and European Direct Debit, ACH, and now mobile carrier billing. Independent of what payment methods you offer, CashBox will still support you with industry leading scale and reliability, and continue to offer a broad spectrum of business model support: subscriptions, usage, microtransactions and hybrid models.

There is a lot more in the works on the product front. Stay tuned.

Having finished a hectic and rewarding December, we thought it would be worthwhile to go back and analyze activity on Christmas day and the week that followed, as it’s one of the busiest periods of the year for our digital clients.  We compared the data from this period to our “run-rate” business.  Hats off to my colleague, CTO Brett Thomas, for the numbers.

• On December 25th, CashBox processed 3.77 million SOAP calls – think of a SOAP call as a “message” calling our system from any of our clients.  A SOAP call could be setting up an account, retrieving a customer record, initiating a refund, or any other activity.  Our typical daily run-rate for the month was approximately a million, which means we saw a Christmas day increase of 275%+
• During the busiest period on that day, we were handling a peak load of 400 concurrent calls.  Most of these were related to account sign-ups and activations, as gift recipients went online in droves. This is about 10 times our normal peak load in 2011.
• During the week between Christmas and New Year’s Day, we signed up nearly one million accounts for a client who experienced a very busy and successful digital shopping season.

As I’ve alluded to in recent posts, the Digital Economy has significant implications on scalability and uptime, and during very specific periods in the year.  The wave of activity can include Christmas week for digital retail; the lead up to Valentine’s Day for online dating sites; the start to each sports season, whether we’re talking the NBA, Nascar, NFL, or any other sports league; and the first day of a large scale MMO game launch.

Vindicia is rapidly closing in on one billion SOAP calls processed since the inception of CashBox, which we will hit in 2012.  Hitting this major milestone is something our whole team should be proud of; it highlights how we support and help grow the Digital Economy.  And this looks like only the beginning.

My blog post last month on scalability generated many interesting internal and external conversations around reliability and uptime.  I am guilty of occasionally flippantly stating that Vindicia has a SLA that focuses on 99.99% uptime, but what this means in real life compared to, say, a guarantee of 99.9% uptime reveals fascinating business implications.

Here are the differences between the two uptime SLAs at a monthly level, courtesy Wikipedia:

99.9% = 43.2 minutes downtime

99.99% = 4.32 minutes downtime

The difference of nearly 39 minutes a month might not seem like a big deal.  However, if you are an online merchant that is going through a huge Christmas surge, that hypothetical downtime would create a significant business loss.  For example, if one of our clients would have experienced the additional downtime during their heaviest signup period in 2011, they would have lost over 50,000 new customers in that 39 minute span.  This is especially relevant because it is more likely that there would be a downtime during an extended peak surge.

If each customer is worth $20 that first year, that’s a million dollar mistake.  The reality is that the amount is greater because you have to account for the the lifetime value of those customers.  Also, don’t forget the opportunity cost:  all the customers you never sign in the first place because of the bad publicity.

Reliable infrastructure matters:  putting uptime numbers in the context of what clients do in the Digital Economy is incredibly revealing.

The chart below truly highlights the scalability requirements for SaaS providers like ourselves in the Digital Economy, especially during the Holiday Season.  With consumers activating devices, downloading applications, and turning on subscriptions, some of the peak scale needs for merchants don’t fall on Black Friday or CyberMonday, but on Christmas and the days immediately following it.  The graph below highlights one particular client, who saw a fair bit of revenue leading up to Christmas, but knew that December 25th and the days following would dwarf anything they had done to date, and relied on us to support their key marketing and sales requirements for the Holiday Season.

For readability purposes, this chart excludes non-USD currencies but the argument remains true independent of the origins of the transaction.  In fact, some of the percentage increases are even higher for non-USD currencies.  Just in case you wondered if this client could be an outlier, here are a couple of additional digital clients who also saw a sizable Christmas spike.

]]> http://blog.vindicia.com/2011/12/27/scalability-matters-in-the-digital-economy/feed/ 3 http://blog.vindicia.com/2011/12/27/scalability-matters-in-the-digital-economy/ http://feedproxy.google.com/~r/BlogVindiciaSoapbox/~3/zIJLc5LSs_k/ http://blog.vindicia.com/2011/12/13/the-vindicia-holiday-twitter-program-plaxo/#comments Tue, 13 Dec 2011 17:23:09 +0000 Sanjay Sarathy http://blog.vindicia.com/?p=1147

Managing contacts and virtual address books can be a huge burden.  And, given how much people move in their careers, keeping your address book up to date is a huge challenge.  Our client, Plaxo, has a great service that will help you deal with the explosion of people you want to keep in touch with: Plaxo Personal Assistant.  For this week’s holiday promotion, Plaxo is offering four FREE subscriptions to this service.

Similar to yesterday’s promotion with TuneUp Media, all you have to do is send us your email address to info (at) vindicia (dot) com.  We’ll take care of the rest!

Music is the most popular form of digital entertainment and our client TuneUp Media has the ultimate digital stocking stuffer.  For those unaware, TuneUp Media provides a compelling service to add cover art, remove duplicate songs and fix song content (e.g., missing artist names). Better yet, it plugs directly and “automagically” into your iTunes or Windows Media music library.

TuneUp Media just launched its promotion for the 2011 Holiday season.  For our 5th Holiday Tweets promo, TuneUp has contributed activation codes for two FREE Lifetime TuneUp Bundles.  Just send us a note at info (at) vindicia (dot) com to get them (first come, first rewarded!).  It’s as simple as that.