“It’s much easier to double your business by doubling your conversion rate than by doubling your traffic.” – Jeffrey Eisenberg, Buyer Legends CEO
From a Western perspective it may be easy to assume that everyone has access to a credit card, which they can use to buy products with.
But payments truly are Pandora’s box. When you start digging into online payments and your payment funnel, you begin to understand how complex some of the issues are.
- Debit cards are the preferred method of payment online in France.
- Most payment methods in Brazil only work domestically.
- You need to establish a local entity in Indonesia to be able to collect payments. The local currency also can’t be repatriated offshore.
- Some countries like Argentina tax their citizens on foreign currency transactions.
This means that if your business has grown internationally, your product might have been turning away good prospects and customers—without you even realizing it.
Amidst total sales and payment data, it’s easy to miss subtle issues, but delinquent credit cards or payment methods are a major cause of payment failures and churn. For regular credit cards alone, there can be more than 130 reasons why prospects experience payment failures.
Establishing Benchmarks for Your Payment Funnel
Because payment is fairly straightforward in the United-States, and because most major payment gateways like Stripe, PayPal, and Braintree have been optimized in part for the US market, it’s a good idea to benchmark against your US payment flow.
Looking at your analytics for the US market—or your highest converting market—evaluate:
- the percentage of site visitors visiting your pricing page;
- the percentage of pricing page visitors initiating the purchase process (e.g. Add to cart);
- the percentage of users beginning the purchase process and then the ensuing process step by step;
- the percentage of users converting; and
- the percentage of users whose payment was accepted (e.g. successful payments).
By analyzing this process as a funnel, you will be able to pinpoint issues. This will also give you comparison points for analyzing your other markets.
Get the same data points for each of your highest potential geographical markets: Are there significant outliers? Conversion rates well below the average?
When visitors drop off before beginning the payment process, issues are often related to language, pricing or currencies.
When they make it all the way to the payment funnel, the main problems tend to be the payment methods available. If you haven’t done so already, it can be a good idea to start thinking about localizing payments (e.g. offering pricing in another country’s currency). Localization has been proven to improve conversions by 11 to 18%.
Optimizing Payment Recurrence
Once you have identified a few outliers, you can start running experiments to address issues one by one. Payment gateways like Adyen will swap out payment methods to help increase conversions.
For subscription businesses, sometimes you’ll be able to capture the first payment, but run into problems when recurring payments begin.
For this reason—and because it’s estimated that 20 to 40% of churn is caused by delinquent credit cards—it’s a good idea to conduct the same analysis for recurring payments.
By first setting a benchmark for recurring payment success in your core market, you’ll then be able to compare success per country.
Through this analysis, you can identify issues associated with payment processors, credit card expirations, payment limit failures, and false fraud prevention.
Only 5% of delinquent churners ever re-subscribe. You may be leaving a lot of money on the table.
This post in an excerpt from Solving Product. If you enjoyed the content, you'll love the new book. You can download the first 3 chapters here →.