Marketing must monitor online payments, warns Avangate

Profile picture for user pwainewright By Phil Wainewright July 8, 2015
Many sales and marketing campaigns are let down because they don't monitor online payments processing, according to commerce vendor Avangate

Empty shopping cart on black background © nikkytok -
It's now two decades since online commerce first became an important revenue source for many businesses. Yet the entire process of online billing and payment processing (what I once termed the Internet of ka-chings) is still regarded as something of a dark art in the world of enterprise IT.

Back in the days of the dot-com boom, traditional enterprise application stacks didn't have the 24x7 availability and Internet-grade security to handle online commerce (and many still don't to this day!). So this increasingly important revenue stream was handed over to web developers to take care of — or, in many cases, effectively outsourced to online payment processors. Almost unnoticed at the time, online commerce become one of the earliest and largest cloud application categories in the business software market, even before the term 'SaaS' had been invented.

Even today, payment processing tends to stay in its own online silo, despite the rise of ecommerce channels and related trends such as the shift to subscription billing. Only a few vendors are starting to catch on to the importance of bolting ecommerce capabilities onto ERP systems. Witness SAP's acquisition of hybris two years ago and NetSuite's success in online retail thanks to its SuiteCommerce offering.

Plugging this neglected gap has become an opportunity for ecommerce specialist Avangate, which aims to give enterprises more direct insight into their online commerce revenue streams. Founded in the Netherlands in 2005 by serial entrepreneur Radu Georgescu, Avangate provides online commerce, subscription billing, and global payments for a predominantly software industry customer base that includes Brocade, FICO, HP Software, Kaspersky and Software AG. It was acquired in 2013 by Silicon Valley private equity fund Francisco Partners.

Commerce touchpoints

As Michael Ni, CMO and VP product marketing, explained to me in a phone briefing last month, Avangate argues that, in an increasingly digital world, all of an organization's commerce touchpoints have to be automated and responsive. Therefore the ecommerce element can no longer remain this neglected black box off to the side.

With the advent of services and the shift towards pay-as-you-go business models, everyone gets the first revenue moment, but when we start looking across the board, the first time you get a usage based bill or you need an add-on, you realize there are hundreds of touchpoints across the commerce lifecycle.

Upgrading, downgrading, calling up and changing something — marketers are creating all these points of contact across the customer lifecycle. That's why you need commerce to be able to interact at each of these touchpoints.

Marketing effectiveness is increasingly being impacted by things marketers don't have access to.

Greater insight into these "commerce touchpoints" has a marked effect on conversion rates and revenue retention, explained Ni:

  • The recovery rate when following up on new subscribers whose payment fails can be as high as 70 percent.
  • Proactively contacting subscribers before renewal to update expired card-on-file details can more than double successful conversions.
  • Having a local payment option in some countries can increase authorization rates by 25 percent.
  • Adding a second payment processor as a failover can lift conversion rates by 5 percent.
  • One customer that had previously been tracking subscriptions in a spreadsheet discovered several thousand that were no longer being paid for.

Connected into marketing

Avangate's pitch therefore is that enterprises have to start thinking of online billing and payment as just another touchpoint in their ongoing relationship with the customer, and therefore it needs to be connected into all of the other marketing and customer engagement activities. Often this means connecting across multiple websites, multiple ordering systems and into partner relationships too.

The aim should be to have a common layer of commerce policies that can be applied to all customer billing and payment touchpoints irrespective whether they're online and offline. Then those touchpoints should report back into marketing campaign metrics so that the impact of billing and payment systems is taken into account when weighing the effectiveness of marketing activities.

The latest release of Avangate, which came out last month, introduces several new features designed to streamline this integration and improve revenue retention:

  • Active conversion: giving marketers tools, including conversion dashboards, to drive proactive account engagement and deflect cancelations.
  • Enhanced marketing tools: Provide better visibility into payment processes and enable rapid experimentation and A/B testing to improve retention.
  • Revenue recovery: Expanded localized payment methods and more automated payment authorization and conversion.

My take

Of course Avangate has a vested interest in raising this issue, but whatever the merits of specific offerings, it's an important point to make.

Sales and marketing people are often measured on their success in closing deals yet frequently overlook the small but significant detail of collecting payments. In the traditional enterprise, there was a completely separate department called accounts receivables that dealt with this, and that divison of labor has been carried over into the ecommerce world with payment processors left similarly out on a limb.

This divison of labor is no longer necessary in a digitally connected world. Sales and marketing teams should own collections so that they're able to take responsibility for the ultimate success of the initial sale and also key subscription milestones that they already have signficant influence over, such as renewals, upgrades and add-ons.

Disclosure: NetSuite and SAP are diginomica premier partners.

Image credit: Empty shopping cart on black background © nikkytok -