Long-Term Impact

Over the course of the following year:

1. Sustained Revenue Growth:
   • ○  The revenue increase stabilized at 12%
   • ○  Cumulative additional revenue reached $8 million
2.  
3. Improved Customer Metrics:
   • ○  Cart abandonment rates dropped by 15%
   • ○  Repeat purchase rate increased by 26%
4.  
5. Operational Efficiencies:

○ Customer service contacts about payment issues decreased by 10%

Market Position:
○ The client reported gaining market share, partly attributed to improved checkout success

What set the solution apart in this case:

1. Speed of Integration: Full implementation in just three weeks
2. Immediate Impact: Significant results within the first week of launch
3. Scalability: Cloud native system can easily scale to handle millions of transactions per hour
4. Continuous Improvement: AI system kept learning and improving recovery rates
5. Simple MSA: No set up fees or penalties to disconnect

Conclusion

This case study demonstrates the ability to make a substantial impact on a company’s bottom line by addressing the critical issue of declined transactions. By recovering lost sales in real-time, we not only boost revenue but also enhance customer experience and loyalty.

Calculations and Explanations

1. Annual Processing Volume

• ●  Pre-Implementation: $67M (Combined Customer Initiated (CIT) and Merchant Initiated (MIT) volumes)
• ●  Post-Implementation: $75M
• ●  Calculation: Sum of CIT and MIT Volumes
• ●  Impact: The business experienced organic growth, but with improved checkout rates

  
  2. Decline Rate

• ●  Pre-Implementation: 32%
• ●  Post-Implementation: 25%
• ●  Calculation: Original Decline Rate × (1 – Cure Rate)
•      ○ 32%×(1-22%)=25%
  ●  Impact: platform significantly improves conversion rates
• 
  3. Value of Declines

●  Pre-Implementation: $35M

• ●  Post-Implementation: $27M
• ●  Calculation: Annual Attempted Processing Volume × Decline Rate
• ●  Impact: Declines grew at a significantly slower pace than top-line revenue with FlexFactor

  
  4. Dispute Rate

• ●  Pre-Implementation: 0.2%
• ●  Post-Implementation: 0.2%
• ●  Calculation: (Number of Disputes / Total Transactions) × 100
• ●  Impact: While the rate remains the same, the absolute number of disputes decreases due to fewer declined transactions

  
  Financial Impact Summary

1. 
   1.Recovered Revenue from Declined Transactions:
   • ○  Annual Recovery: $8M
   • ○  Calculation: Post-FlexFactor Decline Value – Pre-FlexFactor Decline Value
2. 
   2. Additional Customer Lifetime Value (CLV):
   • ○  Estimated Additional CLV: $4.5M
   • ○  Calculation: (CIT Added CLV × CIT Saved Declines) + (MIT Added CLV × MIT Saved Declines)
   • ○  Note: This is a long-term benefit based on retaining customers whose transactions would have been declined. The cost saved by avoiding additional churn wasn’t factored into this.

      

3. 
   3. Flex Costs:
   • ○  Estimated Annual Cost: $1.2M
   • ○  Calculation: Flex Fees + Flex Dispute Fees
4. 
   4. Net Financial Impact:
   • ○  First-Year Benefit: $6.8M
   • ○  Calculation: Recovered Revenue – Flex Costs
   • ○  Long-Term Benefit: $11.3M
   • ○  Calculation: (Recovered Revenue + Additional CLV) – Flex Costs

     By implementing these solutions, this model projects a first-year financial benefit of $8M, primarily from recovered revenue that would have been lost to declined transactions. The long-term benefit, including additional Customer Lifetime Value, is estimated at $11.3M. These figures demonstrate the significant positive impact on a merchant’s bottom line.