A start up named Gravy has found a little niche within the payments industry that has a lot of potential. Apparently, some investors agree as Gravy has raised $4.5 million in their Series A raise according to TechCrunch.
Gravy helps merchants and billers to recover subscription payments that fail and may result in not only a lost payment, but a long-term client relationship. In a recent report from Mercator Advisory Group, we found the subscription market in the U.S. during 2020 to encompass approximately $28 billion in payments. That report can be found here.
More about Gravy and what they do:
Gravy, a startup helping subscription-based businesses recover failed payments, has raised $4.5 million in Series A funding for its specialized combination of technology and a human workspace that works to reacquire customers lost to what’s known as “involuntary churn.” That means the customer didn’t choose to end their subscription, but — for any one of hundreds of possible reasons — their credit card payment failed.
Typically, subscription-powered businesses attempt to correct this issue with technology — like sending automated emails, for example. Gravy, however, has developed a different solution that pairs its U.S.-based retention specialists with technology that alerts them to the failed payments. It then sells this whole system as a package to clients who use Gravy as an extension of their own workforce.
They use a unique approach to recovering these payments:
We spent two years fixing [the problem of failed payments] in the last company and created a tech-enabled solution where we leveraged actual human beings to win back failed payments for subscriptions. And by doing that, we got a 5x offer higher than the initial offer because we fixed the failed payment problem,” [Gravy co-founder and CEO, Casey] Graham notes.
He first assumed other subscription businesses were doing the same, but later discovered that many were not. Instead, they tended to use automated means to address the problem, which would only recoup about 15% to 20% of the failed payments.
These tech-only solutions don’t work as well because customers often dismiss automated emails from companies, Graham says. However, customers do respond to personal outreach — but that’s something many new and fast-growing businesses can’t afford as they’re investing more heavily in growth and scale.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group