UrbanSitter boosts recurring revenue from failed payments by 8% with Butter

Advancement in payment recovery technology unlocks growth opportunity

Since their launch in 2011, UrbanSitter has been keenly aware of the importance of an optimized payments flow. To curb involuntary churn due to failed payments, the marketplace developed an in-house solution. 

The solution was successful, but as time passed, payments technology evolved, and UrbanSitter recognized an opportunity to boost subscriber retention, top-line revenue, and profits by switching to a dedicated third-party platform.

“Partnering with a payments solution was the right move,” said Laura Crowther, Director of Product at UrbanSitter. “We knew a provider could tackle failed payments better than we could.” 

UrbanSitter quickly launched with a well-known payment recovery solution, but after the provider failed to meet their expectations, the subscription-based brand migrated to a second platform. But this solution also didn’t meet their expectations. UrbanSitter was still losing 7% of their subscribers due to failed payments, and their hard-earned relationship with their members was threatened.

“The second platform would just retry a user’s card over and over again until they got a successful charge,” Laura said. “It caused a lot of problems.”

Because of the retries, UrbanSitter was hit with excessive fees, and their support team was inundated with calls from members asking why the marketplace was attempting multiple transactions. 

“Our brand became associated with this spammy behavior,” Laura said. “It’s important for us to provide trust because we provide care in people’s homes—that’s why the solution didn’t work for us. That’s why we brought in Butter.”

UrbanSitter says no to disruptive recovery tactics by switching to Butter

After only five months with Butter, UrbanSitter saw a 40% relative lift in subscriber retention, contributing to an 8% increase in annual recurring revenue from recovered failed payments, improved customer lifetime value, and higher profits.

“Butter has been great because they are a scalpel rather than a blunt tool,” Laura said. “They have the knowledge base to know when to charge someone again and when to be completely silent.”

Butter’s advanced machine-learning technology analyzes hundreds of data points associated with every transaction to determine the most efficient strategy to solve each category of failed payments. The result is a highly effective, individualized approach that solves payment issues in the background without disrupting subscribers, increasing customer friction, and eroding trust. 

“Butter really changed the game for us because it’s largely invisible to our users, and that’s a good thing,” Laura said.

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Improved reputation boosts retention and bargaining power

With Butter’s help, UrbanSitter also improved their Transaction Authorization Rate (TAR) and Merchant ID (MID) score, leading to a higher acquisition rate and a better reputation with banks and payment processors.

TAR is the rate of successful transactions compared to attempted transactions, including retry attempts for failed payments. The more failed transactions, the worse your TAR, and more importantly, the worse your MID.

Think of your MID like a credit score. Banks and processors use it to rank the trustworthiness of your transactions. With a low MID, they’ll approach your transactions more cautiously, causing more declines. 

Enterprise brands with a high MID are better positioned to negotiate with banks and payment processors to lower transaction fees and other associated costs.

“If your ratio is too high, you don’t get benefits like contract negotiations,” Laura said.

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Strengthening strategic flexibility in a fast-moving business environment

Partnering with Butter had a long-term strategic impact as well. By making subscriber retention more predictable, UrbanSitter can better forecast and plan for future projects, gaining a decisive business advantage over competitors. 

“The recovery we’ve maintained through Butter has really given us the wiggle room to be more flexible and take more risk with our businesses,” Laura said.

The switch also empowered the brand to do what it does best.

“Frankly, we shouldn’t have to think about the payment process that much,” Laura said. “We should be focusing on delivering value to our members, and that’s what we’re doing.”