Dr. Squatch boosts monthly recovered revenue by 11% with Butter in 5 months.

Failed payments drove 25% of overall churn

While reviewing business goals, Dr. Squatch identified that 25% of their overall churn was due to failed payments, leading to an annual loss of tens of millions of dollars. Realizing this represented a significant opportunity to boost customer retention and revenue, the company embarked on a mission to address the issue, only to quickly uncover its complexity.

Why? There are 128 pieces of data associated with every transaction and more than 2,000 error codes, making it nearly impossible to determine the actual cause of a failed transaction without a dedicated payment recovery solution.

“There's a deep and complex layer of data-point assembly happening below the surface of transactions that you just can't see,” said Avi Jhingan, Sr. Product Manager at Dr. Squatch. “I thought about building an internal solution for five seconds and realized it didn’t make sense.”

Machine learning maximizes revenue recovery

Acting swiftly, Dr. Squatch conducted a thorough evaluation of various solutions, assessing factors such as use, effectiveness, and cost. After careful consideration, they determined Butter was the best solution. The deciding factor was Butter’s powerful machine-learning (ML) technology.

Unlike other solutions, Butter’s ML technology doesn't just retry failed payments. It analyzes hundreds of data points associated with each transaction and uses this information to determine the most effective retry strategy for each payment. Using data-driven logic, Butter then continually optimizes to recover more failed payments faster, in fewer retries. This unique approach drives optimal recovery at reduced costs and significantly increases payment success and recovery rates, maximizing revenue potential—without manual management.

“Some pieces of software require more hand-holding and active participation in the strategy of how the software works in the context of the business,” Avi said. “I don’t have to do that with Butter because the model self-optimizes.”

Dr. Squatch boosts monthly recovered revenue by 11% and sees 9X ROI with Butter

In only a few months with Butter, Dr. Squatch significantly reduced involuntary churn—leading to an 11% growth in monthly recovered revenue, an impressive 41% recovery rate, and a 5% boost to their authorization rate.

• 11% growth in  monthly recovered revenue
  Through Butter’s approach to revenue recovery, Dr. Squatch was able to effectively solve failed payments, boosting the success of their payment processes and driving compounding increases across checkout conversion, retention, and key payment metrics. These improvements lead to an astounding 11% growth in monthly recovered revenue, increased profitability, and a remarkable 9X ROI.
• 41% recovery rate
  By implementing Butter and relying on the payment optimization platform’s team of experts, Dr. Squatch increased their recovery rate to 41%—significantly higher than the industry average of 15% for DTC companies. The increase has translated into more subscribers, improved customer lifetime value, and higher profit margins.
• 5% boost in authorization rate
  Failed payments impact more than retention. They also negatively impact acquisition efforts. The higher the rate of failed payments you receive, the worse your TAR (sometimes also called Transaction Success Rate) and, more importantly, your merchant ID (MID). Banks and processors are more cautious of subscription companies with a low MID, which can lead to more declines across your payment flow, including your top-of-funnel conversions. As an illustration, for Dr. Squatch, this meant not only losing existing subscribers but also difficulties in acquiring new ones.

“There are downstream impacts associated with failed payments that may not be readily apparent,” Avi said. “If you improve your transaction rate, there can be a corresponding upstream impact.”