Achieving Payments Optimization Part II: Unlocking Revenue Potential

Grace Greenwood

February 2, 2024

February 2, 2024

February 2, 2024

Welcome back to our ongoing series on payments optimization! In our previous post, we laid the groundwork by defining what "optimized" payment processing actually means and introduced you to five key objectives guiding your optimization journey. Now, let's delve deeper into the first cornerstone: realizing your greatest revenue potential.

Realizing Revenue Potential

If you’re thinking this is just a fancy way of saying “make more money,” you’re not wrong. But when we use this phrase in reference to payments optimization, we do so with slightly more nuance. It's not just about selling more; it's about selling smarter. Truly maximizing revenue potential means approaching payment processing not just as a means of accepting payments, but as a strategic tool for driving successful sales. 

Here at Pagos, we believe that with the right tools and an informed analysis of historical payment trends, every commerce business can unlock previously unimagined revenue potential. In this post, we’ll walk through three ways the Pagos birds can get you there.

Identify New Markets and Customers

The most obvious way to increase your revenue is to sell more to more people. In the past, doing so often required some trial and error of testing out new markets until you identified one where your business was in high demand. With a modern payments data visualization tool like Peacock by Pagos, however, you can instead use your historical payments data to quickly identify missed market opportunities and start immediately selling to new customers.

To get started, you simply connect your payment processor(s) to Pagos using our Data Ingestion API or our simple no-code data connections. We can ingest your historical and ongoing payments data—transactions, returns, refunds, chargebacks, and more—and normalize that data across sources so you can view it all together in one place. We display this data in a series of charts and graphs, organized into dashboards that make it easy for you to dig into specific markets, payment brands, or customer segments. 

Here are some examples of how you can identify new opportunities in your payments data:

  • View the breakdown of attempted transactions by customer country and currency to determine where your customer base is. You can then cater to those countries by setting up local processors, accepting desired currencies, and offering local payment methods at checkout. You can even increase marketing efforts or customize marketing campaigns for those regions, as well.

  • Identify the card types and brands that result in the highest average order value. By promoting these cards in your marketing messaging or highlighting them on your checkout page, you can drive sales to the customers who prefer them.

  • Using stored credential data, measure the split in your customer base between those who make one-time transactions and those who make recurring, card-on-file purchases. If more customers make purchases with vaulted payment methods, improving your vaulting process and encouraging more customers to store cards with you can drive sales volume.

Delight Existing Customers

Sometimes driving revenue doesn’t mean finding new customers, but simply improving experiences for existing customers. We briefly touched on this in our Unwrapping Holiday Revenue with Pagos blog post: competition in e-commerce is at an all-time high and nothing improves your bottom line quite like locking in loyal customers for repeat purchases. You may be familiar with the term “customer lifetime value” or LTV, which refers to the average amount of money a single customer will spend on your business over the life of their relationship with you. When it comes to realizing your greatest revenue potential, nothing is quite as effective as locking in customers for their estimated LTV.

Delight Customers by Storing (and Protecting) Payment Credentials

One surefire way to encourage repeat purchases is to offer customers the opportunity to safely store their preferred payment cards on file with your business. That being said, vaulted cards are only valuable to you and your customers if they’re kept up to date. To ensure customers can make repeat purchases with as little friction as possible, take advantage of account updater services from all four major card brands with Loon by Pagos. Whenever a customer’s stored card is lost, stolen, or replaced, Loon updates your vault with the new credentials—all without burdening the customer in any way. This is especially valuable to subscription businesses; if a customer’s payment method expires and they forget to manually update it in your system, they may involuntarily stop their subscription to your services. With Loon, this will never happen again.

Similarly, customer loyalty often hinges on your ability to keep stored payment methods safe and secure; no customer is going to keep coming back if they don’t trust you with their personal data. Toucan by Pagos has you covered with global network tokenization services for all four major card brands. Network tokenization is the process through which card brands substitute a cardholder’s primary account number (PAN) and other card details with a restricted-use, unique ID known as a network token. Storing network tokens instead of PANs greatly improves customer security, as fraudulent parties can’t use stolen network tokens to make purchases or even pull critical customer information from them.

Delight Customers by Accepting Their Payments

Admittedly, this section header sounds silly, but we stand by it. Customers are guaranteed to have a positive experience with your business (and will be more likely to return in the future) if they can successfully check out with the products or services they added to their cart. A decline of a legitimate transaction attempt will cause your customers to second guess their purchase, get frustrated with your brand, or—worst of all—turn to one of your competitors instead. 

By monitoring your decline data in Peacock and responding to them appropriately, you can both improve your bottom line and generate more happy customers. Here are just a few examples of the types of declines we’re talking about and how something as simple as responsive messaging on your checkout page can flip them to successful sales:

  • Non-Sufficient Funds (NSF) Declines - This decline indicates the customer doesn’t have enough funds in their account to cover the cost of their order; prompt the customer to provide an alternative payment method

  • Expired Card Declines - You can’t accept the customer’s payment card because it has expired; prompt the customer to update their credentials to an unexpired card

  • Invalid Expiring Month/Year Declines - Customers often receive this type of decline when they accidentally type in the wrong value or write the date in the wrong format (e.g. MM/YY instead of MM/YYYY); prompt them to review their entry for typos

Keep an eye out for a future blog post digging further into addressable declines and our tips and tricks for recovering them!

Respond to Outages Immediately

So far we’ve spoken only about ways to increase revenue through business expansion—either by selling to new customers or driving repeat purchases from existing customers. On perhaps the other end of the spectrum is increasing revenue by decreasing the impact of outages on attempted sales. Swiftly detecting and responding to outages ensures your customers can always make purchases, even during technical hiccups. In other words, when something goes wrong either with your systems, your payment processors, or even the card brands, your bottom line will suffer unless you act quickly.

For example, a processor outage can result in them declining hundreds if not thousands of legitimate transactions; if you can spot that revenue dip in real time and proactively alert the processor, you can get your systems back up and running before the issue kills your sales volume (and negatively impacts customer experiences). Similarly, you may have a setup error in your payments stack or even just on your website that blocks a subset of customers from checking out successfully. If you’re not actively monitoring your payments data, you might not realize the issue until your approval rate has degraded significantly.

Canary by Pagos, our ​​data anomaly detection solution, is the ideal tool for automatically monitoring every part of your payment processing infrastructure for outages. Using our no-code connections, you can connect your payment processors to Pagos and start monitoring incoming data immediately. Choose which metrics you want to monitor (e.g. approval rate, transaction count, etc.), and receive Canary alerts via email, Slack, or general webhook whenever they deviate from a historical norm or cross an acceptable threshold. 

Stay Tuned For More!

At Pagos, we're committed to helping you achieve payments excellence. Our platform and suite of products offer powerful tools to streamline your payment processes, boost efficiency, and enhance profitability. Adding any one of our birds to your payments stack can result in tangible growth for your business. Employing a network tokenization strategy like that offered through Toucan can increase issuer approval rates by around 2-7%! Add on outage monitoring with Canary, data-driven insights in Peacock, and account updater services with Loon, and your revenue can reach unimagined heights! Join us on this journey to unlock your business's full payments potential.

In the next installment of our series, we explore the second cornerstone of payments optimization: optimizing your total cost of payment acceptance. We'll uncover ways to manage and reduce the expenses associated with payment processing, ensuring that your business remains profitable. Stay tuned for valuable insights and strategies to optimize your payment operations with Pagos.

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