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4 ways founders can amplify revenue during hard times – TechCrunch


Anyone who travels frequently will tell you that one of the greatest innovations of the past decade has been the TSA PreCheck.

It’s so simple and effective that it makes you wonder why no one thought of it before. This example can serve as adequate inspiration for businesses, especially as the markets show no signs of recovery: How can companies, hoping to retain revenue during the recession, do something similar?

Companies should be offering an express lane when times are tight so customers can get into the online store, check out and be done without any roadblocks or friction to mar their experience.

How do we create customer experiences that are equivalent to the TSA PreCheck to help us retain revenue?

The biggest stumbling block for repeat customers and retained revenue might come from an unlikely place — your security protocols.

Know thy customer: A password-less future

It is critical to understand if a visitor to your site is a new customer trying to create an account, a returning customer or a fraudster trying to steal your customer data. If you can determine whether someone is a legitimate customer up front, you won’t have to verify their email addresses or phone numbers during the account creation workflow — friction that security teams introduce to keep things secure.

I read a sobering statistic recently: While U.S. businesses will lose $95 billion to fraud this year, incorrectly identifying prospective and returning customers will cost those businesses almost $1.8 trillion.

About 58% of U.S. consumers abandon their cart due to difficulties managing their password, according to the FIDO Alliance. This shows us that you should grease the wheels of the sale in any way possible. In times of recession, you have to make things easier, not more difficult.

A business can very likely calculate the cost it incurs to get each new individual to create an account on their site or app. It should also know what the lifetime value (LTV) of a customer is and what impact its brand reputation has when things don’t go right. In other words, a company  should be aware of how many potential new customers complete the sign-up form but are then challenged to “verify their email” and never do so.

Parameter Calculated values
Number of monthly accounts created 50,000
Percentage of incomplete account creations 9.00
Number of accounts incomplete or churned 4,500
Customer LTV $50
Lost LTV due to churn $225,000
Percentage of LTV attributed to cost of acquisition 10
Monthly cost of acquisition lost $22,500
Percentage of LTV attributed to brand reputation damage 1
Total monthly brand reputation damage $2,250
Total loss per month $249,750
Annual loss due to account churn $2,997,000

Let’s say you see 50,000 accounts created per month, and 9% (the industry average) never complete the sign-up process due to the authentication step. If your LTV is $50 and your cost of acquisition is 10% of LTV ($5), and your brand reputation damage was 1% of LTV ($0.50), then your security measures are costing you nearly $2.5 million per year.



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