Using KPIs and Payments Data to Drive Your Business: A Fresh Perspective

Transcription

1 Using KPIs and Payments Data to Drive Your Business: A Fresh Perspective Cybersource Payment Management Summit June 1, 2017

2 About Glenbrook Partners WHO ARE WE? Founded in 2001 and headquartered in Silicon Valley, Glenbrook s core team is composed of executives with broad exposure to the payments industry, including business management, marketing, technology, operations, and risk management. WHAT DO WE DO? Glenbrook offers strategy consulting, research, and industry education programs. We sit at the intersection of traditional payments providers seeking growth and revenue, and Innovators seeking to change the status quo. WHO DO WE SERVE? Clients include players from across the traditional and emerging payments value chain: Banks, processors, networks Merchants, billers, corporate treasuries, governments Fintech enablers, investors and emerging technology providers. 1

3 About Chris Uriarte 19 Years payments strategy, operations and product development experience Global payments and fraud specialist with Glenbrook Partners Former CTO at Retail Decisions (ReD Now Part of ACI Worldwide) Former VP, Head of International Operations at American Express Former Chief Payments and Strategy Officer at Vesta Corporation Advisor and board member to a number of FinTech startups 2

4 Payments Key Performance Indicators (KPIs) are Boring! # KPI Calculation 1 Post Settlement Fraud Detection Rate # of "no" from "Approved" from PreSettl + PostSettl / # of "Customer FINISHED Checkout" # of orders cancelled as fraud / total number of orders taken 1 Pre Settlement Fraud Detection Rate # of "no" from "Approved" / # of "Customer FINISHED Checkout" 2 Payment Reversal Fraud (manual) Review Rate # of "YES" from "RealtimeMerchant Detection " from PreSettl+ PostSettl+ PayReversal/ # of "Customer FINISHED Checkout"no. of orders reviewed real-time or offline / total number of orders taken 2 Post Settlement Fraud (manual) Review Rate # of "YES" from "Realtime Merchant Detection " from PreSettl + PostSettl + PayReversal / # of "Customer FINISHED Checkout"# of orders eviewed/total # of orders taken 2 Pre Settlement Fraud (manual) Review Rate # of "YES" from "Realtime Merchant Detection " from PreSettl + PostSettl + PayReversal / # of "Customer FINISHED Checkout" 3 Pre Settlement Validation Rate # of "YES" from "TXN details validated " / # of "Customer FINISHED Checkout"# of TXN "yes" validated / total # TXNs attempted (successful and failed) 4 Pre Settlement Authorisation Rate # of "YES" from "Payment authorised" / # of "Customer FINISHED Checkout"# of "Yes" successful TXNs / total # TXNs attempted 5 Pre Settlement 3rd Party Conversion Rate (Authentifiaction) # of "YES" from "Successfully authenticated" / # of "Customer FINISHED Checkout" should be against total # TXNs attempted (successful and failed) 6 Pre Settlement Confirmation Rate # of "YES" from "Order Confirmed" / # of "Customer FINISHED Checkout" should be against total of all orders attempted so including successful and failed. 7 Post Settlement Collection Service Rate # of Invoices from "Collection Service" / # of "NO" from "Settlement Successful?" 7 Post Settlement Collection Service Rate # of Invoices from "Collection Service" / # of "NO" from "Settlement Successful?" 8 Post Settlement Paid / Settlement Rate # of "YES" from "Settlement Successful" / # of "Order Confirmed" agreed 9 Post Settlement Retry Success Rate # of transactions successfully retried/total # transactions retried 10 Payment Reversal Reversed / Chargeback Rate # of "Payment reversed by Customer or Issuer" / # of "Order Confirmed" agreed 11 Payment Reversal Representment Success Rate # of chargebacks won/total no. of chargebacks represented 12 Payment Reversal Dispute Success Rate same as above? 13 Payment Reversal Refund Rate # of "Payment returned to customer" / # of "Order Confirmed" agreed 14 Payment Reversal Collection Paid Rate # of "YES" from "Collections Paid?" / # of "YES" from "Collections Service?" 3

5 Boring, but Critical! You will struggle to understand the true impact that payments has on your business today AND tomorrow unless you have comprehensive understanding of your KPIs 4

6 Data is Great, But Data that isn t actionable is useless. 5

7 The Case for Driving Your Business off of KPIs Enable business decisions to be tied back to trends Alert you to specific problems immediate and long term Provide reasoning and justification for budget planning, hiring and expansion Monitor third-party vendor performance Measure performance down to the employee level (e.g. manual reviews, agent performance) 6

8 KPIs Can Range from Simple to More Advanced Simple KPI A More Advanced View Bank Authorization Approval / Decline Rate Breakdown of declines aggregated by BIN and auth reason category Ratio of hard declines to approvals Chargeback Rate Map rate vs. Run Rate Chargeback rates per card brand in reference to network fraud threshold rules Fraud System Approval /Decline Rate % of fraudulent transactions being sent to manual review or declined Fraud Manual Review Rate Fraud manual review decision success (false positives rate across all reviews) Average Manual Review Time Average review time by agent (top/bottom 5%) Distribution of reviewer actions by agent Average Payment Cost Payment cost broken down by geography Payment cost variation vs. benchmarks 7

9 But, Relying on KPIs Can Present Challenges Lack of standardization across merchants and vendors Data overload and analysis paralysis: Too much data isn t always good a thing Getting to right the data can be a chore in and of itself Merchants have tremendously different variances in what KPIs are most important to them 8

10 Different Merchants Have Different Views as to What KPIs are Important to Them SEGMENT PHYSICAL DIGITAL TRAVEL GAMBLING ACCEPTANCE RATE RISK DECLINE RATE MANUAL REVIEW RATE 97% 3% 6% 85% 20% 0% 90% 8% 5% 70% 18% 0% Your industry has unique characteristics. Your business is unique. 9

11 So Where Do KPIs Come From? KPIs 10

12 Data that Influences your KPIs Comes from Inside and Outside of Your Organization INTERNAL SOURCES EXTERNAL SOURCES Traditional Calculated KPIs based on transaction flows and key touch-points Conversion rates Staff Performance Cost of payments / operations External studies and surveys Market trends and insights from your vendors Collaboration with other merchants Industry forums and conferences 11

13 Looking Internally For the Right KPIs: A Structured Methodology Data by itself is useless, but we can use a structured methodology to get to the right data that we need 12

14 Looking Internally For the Right KPIs: A Structured Methodology IDENTIFY I. S. A. A. A. SOURCE AGGREGATE ANALYZE AUTOMATE 13

15 IDENTIFYING Which KPIs are Critical to You Examining your end-to-end transaction flow for critical decision points and metrics Identifying key contributors to cost and customer satisfaction Asking internal stakeholders what how they define success Taking a first try at developing creating KPIs based on what you ve discovered 14

16 IDENTIFYING Which KPIs are Critical to You 15

17 SOURCING Key Data Points and AGGREGATING Them Into an Accessible Place Determining the exact sources for the key data points that you ve identified Gateway and acquirer reports and data feeds? Fraud system provider data? Internal customer service system data? Putting the data in a place that is accessible and format that is usable 16

18 ANALYZING Data and AUTOMATING Reporting and Analysis Using the aggregated data that you ve to calculate your KPIs and drive action Integrating reporting tools Automating reporting and alerting Automating future forecasting This is KPI Nirvana! 17

19 A Critical Mistake: Ignoring the Future Your KPIs need to look at the state of your business today AND tomorrow! 18

20 Looking Into the Future Can Be Scary (But gives you time to react!) Current Rate Future Forecast KPI Rate (Last 30 days) Count (Average per day, Last 30 days) Count (Average per day, based on future predicted volumes) Fraud Manual Review Rate 2.24% Great rate! We re handling this just fine! Uh Oh! Now What? 19

21 Tips for using the ISAAA Methodology Take it slow a phased approach Focus on what s important: Too much data can be confusing Find someone in IT to be your friend Future forecasting is as important as seeing what happened yesterday 20

22 Looking Externally for Help with KPIs Other merchants find friends inside and outside of your industry Industry benchmark reports Cybersource Fraud Survey LexisNexis Total Cost of Fraud Survey Industry Mailing Lists, Conferences and Media Merchant Risk Council DRF Payments Ed Forum Glenbrook s Payments New and Payments Views 21

23 Realms of KPIs: A Starting Point ACCEPTANCE Bank acceptance, Bad BINS, Soft vs. Hard Declines, Refund rates FRAUD Declines, False Positives, Manual Review Rates, Avg. Time to Review, Chargebacks, CB Win Rate COST Domestic vs. Int l trends, Downgrades, Cross Boarder Fees, Acquirer and Gateway Fees Glenbrook Partners, LLC

24 But Payments Data Isn t Just Useful for KPIs Premium card Spends >$80 over ATV Never had an NSF Decline Uses a variety of prepaid cards Spends less than ATV Has trouble with frequent declines What can we learn based on how people pay? 23

25 Identifying Premium Cardholders Premium card holders can be targeted for appropriate marketing campaigns Targeted upsell at the checkout page can drive additional revenue BIN-based data helps identify premium cardholders. 24

26 Increasing Conversion with Prepaid Cardholders Soft declines on pre-paid cards can drive attempts to save the sale : Offering the ability to use an additional payment device (split tender) Alternative payment methods, such as PayPal Credit or Affirm BIN-based data can help identify pre-paid cardholders. 25

27 Driving Conversion and Reducing Fraud Based on Transaction History Known card Good transaction history Key attributes match history (IP, Device ID, Browser, etc.) New card No transaction history High value transaction or other potentially risky attributes No Payer Authentication No Manual Review Send for 3D Secure Authentication 26

28 Driving Consumers to Payment Devices that will Increase Conversion Identifying Apple Pay, Android Pay, Visa Checkout and Masterpass users as early as possible and prominently presenting them with those checkout options helps drive conversion. Shopify reports a 200% increase in conversion for online merchants who offer Apple Pay Shopify Q3 Earnings Call, October 12,

29 Keep Up With Payments PAYMENTS NEWS PAYMENTS VIEWS Payments News Curated News Feed Web, RSS, digest Payments Views Payments Industry Commentary Blog PAYMENTS ON FIRE Payments On Fire Payments Interviews Series Podcast Mailing List Glenbrook Partners, LLC

30 Schedule of Events Two-Day Payments Boot Camps May 16-17, 2017 Atlanta Oct 3-4, 2017 San Jose Oct 17-18, 2017 New York Dec 5-6, 2017 Palo Alto One-Day Payments Insight Workshops May 18, 2017 Atlanta Digital Payments Oct 5, 2017 San Jose Global Payments Oct 19, 2017 New York Digital Payments Dec 7, 2017 Palo Alto Innovation in Payments Glenbrook Partners, LLC

31 Thank you Chris Uriarte