In high-growth businesses, founders and COOs frequently redirect their energy toward ‘the next big thing’, product innovation, aggressive marketing, and customer acquisition.
But there is a ‘high-growth trap’ that many successful companies end up entering: Overlooking the tech backbone that’s essential in order for them to collect the money they’re making.
In this article, we’ll cover six strategic safeguards that can help keep your revenue stream uninterrupted.
Hedge Your Risks with a Multi-Processor Strategy
‘Single point of failure’ is a major risk in any other part of your business.
If you never choose to be one supplier for your most popular product, you’d never have to use all of the suppliers, but a lot of businesses use one payment processor for 100% of their income. So if that processor has a technical problem, freezes your account, and is scheduled to be manually inspected, your business basically goes dark.
More sophisticated strategy: One is to diversify your payment channels. So by using merchant account solutions, you can protect yourself by being able to distribute your transaction volume. You can then bypass a bottleneck of one processor and send it to another as soon as it is caught, by default.
This is especially useful if one processor goes down or the type of transaction is flagged; you can switch your traffic directly to another account.
This redundancy is your cash-flow insurance.
Geography of Your Growth Localized
Business strategy is seldom divided into two by borders today.
But as you increase your reach, you realize that ‘money doesn’t speak the same language’ in different places in the world.
If your business operates from a domestic hub, like Dallas, for example, to be selling it to international markets such as London, Singapore, or some other new, geographically integrated market, you’ll have to be careful not to take it for granted that your local set-up will succeed everywhere. It’ll do your business a great deal of good if you use reliable merchant account solutions to make your way through different regulators or fraud-prevention measures in different countries.
Global continuity requires merchant accounts that are locally based.
Without this, your foreign clients may well suffer high dropouts just because their bank does not ‘recognize’ your US-based processor.
Localization of your existing merchant infrastructure to your target cities is a crucial and important aspect of global scaling.
Proactive Chargeback Management
Chargebacks occur when a customer disputes a charge with the bank rather than asking for a refund.
The chargeback is more than a headache for an expanding economy; it is an issue for major banks, too. Should your chargeback rate get too high, then your account may close off entirely. Strategically, you need to move from a ‘reactive’ to a ‘proactive’ viewpoint. It means using devices that notify you the second a dispute is filed.
Because of this, the customer knows that they no longer have to worry about what happens next. You can resolve the issue with the customer before it reaches a formal chargeback.
Protecting your merchant’s health is just as important as defending your brand’s reputation on social media.
Managing the ‘High-Risk’ Label
The more businesses expand in certain industries, for example, travel, subscription software, and wellness products, the more banks usually slap a ‘high-risk’ label on these transactions.
This may not be indicative of the ethics of the business, however, but more the probability of refunds being issued to that sector or of disputes taking place in that sector. If you’re labeled as high-risk, your revenues are significantly more likely to be ‘paused’ by traditional banks.
The protection of this system is transparency.
Through collaboration with industry specialists who can provide you with honest and transparent data on your business model, you can lock in accounts created to support your unique risk profile without the constant threat of a freeze.
Put an End to the ‘Silent Killers’ of Revenue
Sometimes, a paid customer has a certain amount of money in their account and wants to purchase from you, but the transaction gets declined nonetheless.
And this is usually because of ‘legacy friction’, of ancient security standards between the customer’s bank and the site you are working for. These ‘silent kills’ are a tragedy, because one could not even realize they are occurring.
Leaders want to audit their ‘Authorization Rates’ (the fraction of attempted payments that succeed). If your rate is too low, it signals your technical infrastructure is leaking money.
But in a modern gateway, ‘retries’ payments at the right times can make up to thousands of dollars of otherwise uncollected revenue.
The Revenue Continuity Audit (Layman’s Terms)
Every leadership team should perform a ‘Continuity Audit’ once a quarter to tie these strategies together.
Three simple questions:
- Do we have a backup? But if our main payment account disappeared tomorrow, can we find a backup, reliable merchant account solution that is up to the challenge?
- Are we frustrating our customers? Is our checkout process getting people through a lot of security hoops, or is it fast and practically invisible (it’s not disrupting flow)?
- Is our ’Dunning’ smart? When a card’s refused (e.g., maybe just because it’s a day before payday), does our system automatically reboot a few days afterward, or do we simply cancel the customer’s subscription?
Conclusion
The greatness of a business leader can be measured by their ability to perceive any possible barriers long before they even become an issue.
As you put in place these six safeguards, you’re not only safeguarding your revenue, you’re expanding it. In today’s economy, winners aren’t just those with the best marketing techniques, but those with the most robust systems for capturing the value that’s created.
Would you prefer me to create a roadmap for 30 days’ implementation to help your entire team develop the needed safeguards?
