Leadership, Growth, and the Power of Connection with Business Leader Priya Lakshminarayanan

Welcome to the Biz to Biz Podcast, your number one source for all business news. Hello everybody, welcome to B2B Vault, the Biz to Biz Podcast, sponsored by NPS One. That's our new smart invoicing product that you can use to run your business, does everything for your business. You can book a demo at nationwidepaymentsystems.com. And today on the podcast, we're going to talk about a subject matter that I've written about in a couple of different magazines. I've done podcasts about it, this subscriptions, and I've written articles about the subscription economy. And I think a lot of businesses today either have subscriptions and or they're looking to do get into having a subscription for their business, no matter what kind of business they have, whether it's e-commerce or a service business. This is definitely a growing business trend, and we're here to talk to an expert today, Priya from Recurly, and hopefully everybody's going to learn something today, even me. So Priya, welcome to the podcast. Introduce yourself to the audience.

Thank you so much, Allen. It's great to be here. Hello to everybody. I'm Priya Lakshmi Narayanan. I'm the Chief Product Officer at Recurly. Recurly is a subscription management and recurring billing platform. And we help businesses handle all of the complexities of the subscription business model. We have about 70 million subscribers on the platform, process over $12 billion annually, and have a bunch of household brands like Paramount, Twitch, NFL, etc. on our platform. So very excited to be here.

And also you service smaller merchants too, right? Yes.

Yes. All the way from really small merchants to large enterprise brands.

Right. And you know, a lot of times when people are doing, you know, having subscriptions, they don't realize, especially if they're running them on like Stripe or Square or someplace like that, doesn't even matter what merchant company you're using, it's a lot— you, it's better if you own your own data, right? And you use a third party like Recurly —so that you own your own data. So talk about that a little bit.

Yeah, I think merchants that come to us, you know, either like you said earlier, Allen, who already have a subscription business, but they're not getting the most out of it, or who are thinking of expanding into new monetization models and want to offer subscriptions going forward, they come to Recurly because they want to focus on their core business and not worry about payments integration compliance that comes related to managing payments, or how do they get, how do they not leave money on the table related to recurring revenue that comes from subscriptions. And so we, with our expertise, help them get set up with this new model or optimize what's already there so that they can focus on their core business, you know, their customer retention, helping them provide new offers or discounts, etc.

Yeah, one of the things like we'll advise clients, like when they're, when they have a subscription model and somebody goes to cancel, is do you have another like lower priced option for them to opt into? So maybe they don't want to pay the $24.95 or $49.95. Be prepared to have like a lower option. Is that something that you— that Recurly does?

Yeah, I'm glad you brought up the cancel option. When I talk to merchants, I always say, hey, don't treat cancellation as goodbye. Right? Right. It's a way to— it's an opportunity. The moment they are trying to cancel is an opportunity to understand that, hey, this is not I want to leave you forever, but maybe I want to take a pause right now. I'm going to travel. So I'm in a tight— I have a tight budget this month, so I'm looking to cut someplace. But they might come back to the platform if you treat them right at that moment of cancellation. So offering the right discounts or saying that, hey, you can now get the next 6 months free if you stay on. Or you can provide a downgraded option saying, for example, YouTube offered like a YouTube Lite, which was, you know, just $7.99 a month versus Premium, which is $13.99 a month. And they saw a lot of subscribers who, you know, who started with YouTube Lite actually upgrade to Premium after a couple of subscriber cycles. And so that's something that Recurly absolutely helps our merchants with.

Yeah, because it's very important. You want to have retention of clients and not just lose them over price. So it's important to have different pricing levels when you're doing that. And also, you know, we were talking about before we hopped on the podcast was these new click-to-cancel laws. And there's about 20 states that have their own laws. And I think that's growing. The first one was California and the FTC. So it's very important that you have this cancel button on your site. And then have a business plan to try to retain your customers.

Yeah, absolutely. And California's law is the Automatic Renewal Law and False Advertising Law, where they want to ensure that businesses prioritize, you know, simple, transparent cancellation processes, especially, you know, so that consumers are not caught unawares. And that is something Recurly has invested in. You know, we tell our merchants, even though the FTC clicked to cancel was sort of thrown out of the courts right now. It's just like because of a small process gotcha, so it's definitely bound to come back. So businesses should have this top of mind and we help our businesses, we enable them to follow the right regulation here as well as to do the right thing by their subscribers as well. So we allow for enablement of the checkbox to say, hey, easy to cancel. Like if they signed up online to give them the same mechanism, they can cancel online as well. And we help our merchants through that.

And I know one of the things is like with billing, you know, a lot of recurring billing, you know, comes with people having, you know, a lot of people will have a website and then they'll have an app or a game. And how does Recurly help so that merchants that want to get a merchant account can help you with that? But then you have an app in the App Store and you want to avoid the App Store fees because the App Store fees are way higher than credit card processing fees. So how do you help with that?

Yeah, absolutely. And that was a very refreshing ruling where Now Apple App Store, Google App Store should allow third-party payment processing to happen on the app. And so Recurly, you know, integrates with multiple payment gateways and we offer the ability to then have a third-party checkout experience as well. So now we integrate with Adyen Web Components, we integrate with Stripe too on Stripe Elements. And so you can, you can utilize that to have third-party checkout. That can, you know, that you can accept on your in-app experience.

Yeah, because that business keeps growing all the time. Everybody's trying to make an app, although they think they've made it a lot harder to get into the App Store now. Yeah, that's true. And so when you look at subscription billing models besides, you know, internet websites and SaaS models and you know, the usual things. We see a lot of service providers like plumbers, air conditioning companies, and different types of, you know, besides the normal thing you would see like pool, but, you know, we're seeing, you know, lawn services and everybody trying to get into this because it gives a lower barrier, a lower price point to your customer, and then How, how are you seeing that growth in that area?

Yeah, we definitely see, you know, car washes. There's a big car wash vendor that we're working with. We see lawn care services quite a bit, dental services, a lot of these small businesses that want to take advantage of the subscription model in order to, you know, get for acquisition and then use a platform like Recurly to have retention as well, right? Going forward, yes, you tried this new lawn care service, but then how do you keep this interesting and engaging for your subscribers to stay on the platform and not move to, you know, your nearby competitor lawn mowing service? And so we help businesses, small businesses drive the entire lifecycle from acquisition all the way to retention.

Yeah, it's definitely interesting that how many different types of businesses started getting into subscription services that contact us and then we're like, we, or they have, you know, like, how do you help clients? Let's say someone's on Stripe. Are you able to, do they have to go to their gateway or you help them get their data from Stripe?

Yeah, so we have a very simple way for merchants to come into Recurly. And if they already are using Stripe for payment processing, they can, you know, it's a user experience that is very simple. They can connect there to their Stripe gateway by just entering their credentials. And from there on, we help them with a lot of the voluntary, involuntary churn payment collection, and they get a single pane of view glass into Curly. They can see all the subscribers that have signed up. And then we can also help them with what we call as dunning, which is payment collection. If somebody, you know, their credit card is expired or got canceled because of fraud, then how do we help with payment collection post that? The email communication, they can customize that. So we have a lot of functionality within Recurly that can help subscribers with that.

And yeah, because it's complicated sometimes someone gets they want to leave Stripe and then they need to get their data. So it's super important. And one of the things like we've been getting phone calls from merchants about is, um, gift cards. So people will sign up for a recurring service, use a gift card, and then, you know, the next time around, yeah, they don't— do you, do you help identify, um, gift cards so that Because a lot of gift cards, well, you don't have to register them with like your address and your zip code. They're basically anonymous.

So we've heard sort of like prepaid cards. Yeah, we, we work with payment process. We have certain codes that we get back depending on what the payment method is. We can use that to sort of help educate as well as if the gift card expires, then we provide the right email communication. That merchants can customize. It's a template that Recurly has and they can send that out to subscribers saying, hey, you probably used a gift card before, but now you want— we would want you to update the payment method so that your service is not disrupted. And we have a cycle of how many times this communication should go out, and that is customizable as well. Yeah, because that seems to be—

I get phone calls about that all the time. Oh, we're getting all these declines. And then we'll go into the system and go, well, all those people paid with a gift card. So, you know, that's why I recommend, like, you know, when you're trying to— you know, I always talk to people and I go, you know, what's your growth mode, you know, going to look like, right? Yeah. At some point, you know, you reach a level of subscribers, you, you need to get more sophisticated. And I tell people, you know, technology is out there to help you run your business, and we're all about technology. So yeah, it's really important to take the technology and then do, you know, use that in, in your business. And are you at Recurly, are you guys doing anything with AI right now?

Yes, absolutely. It's always a big topic, right? AI, correct? Correct. Uh, I would say who is not doing AI right now? Um, yeah, that, you know, Recurly, We want to make sure that we are the enablers of subscription growth for the AI era. So we are investing quite a bit both in our product so that we can bring that experience into the product for our merchants, as well as internally in the company as well, like transforming how we work using the AI tools and technology. In terms of products, we want the experience to be what now consumers are used to with, you know, ChatGPT or Gemini, like how they have this chat interface and they're used to that so much. So rethinking, if Recurly were a company that was, you know, created in the last year, then what would that user interface be, right? So that's how we are thinking about it. And so instead of having like a regular SaaS product experience where you come in, there's a, whole menu of configuration options that you have to go through, figure out what to set up where. You get lost in the complexity. Now, we have our Recurly Compass AI assistant that you can just chat with and then get set up in Recurly, right? Hey Recurly, help me. I want to do a fall promotion to increase sales. Like, help me set that up. And then it would just, you know, you can go through that conversationally with our AI assistant. We are also investing quite a bit in bringing conversational insights so that you don't have to go chasing after complex analytics dashboards. So a whole lot of AI investments that are happening within Recurly right now.

Yeah, it's really interesting how I'm watching different payment companies implement AI into their systems that answer instead of going to the help desk. Help desk, you know, type in a question, get an answer. It's, it's really time-saving for the, for the merchants, you know, and the business owner that they don't have to like sit on hold to make a phone call. They can get many, many, probably more than 50% of their questions answered by the chatbot, which is crazy.

Yeah, we also offer merchants. So for example, if a merchant wants to have their subscribers, you know, set up a backup payment method. Like if your primary fails, use that. And, you know, previously they would have to go through the Recurly API documentation. Okay, how do I set that up? Like what, what do I need to write code on my side? Like what code do I have to do? Now they could come into our Compass Assistant and say, hey, I want to set up a backup payment method. Can you help me generate the code for it? This is the payment gateway I use. And this is the language that I use. And boom, we, we help you with CodeGen for integrating with Recurly as well.

Yeah, it's like, it's amazing. Coding is like one of the biggest things that AI is like cutting the time down on. I mean, I was talking to somebody and they were like, a project that would take us 6 months takes 6 weeks. Yes. Like, wow, that's crazy. Yeah, I mean, it's, it's crazy. So What kind of role— when you look at subscriptions, you know, how does that relate to like the lifetime value of a customer to merchants that are considering like, should I do something with subscriptions or not? Explain how that lifetime value is a lot higher when you're running a subscription model.

Yeah, absolutely. I think it's, you know, it's— you definitely have a an engaged consumer interacting with you periodically, right? If it's a weekly subscription or a monthly or an annual, and each of those moments is an opportunity for you to interest them more with other products and services that increases the lifetime value of the subscriber, um, and provides an opportunity for cross-sell, upsell, um, as, as well as, you know, upgrading them from a lower plan to a higher plan. When you introduce new plans. So I think it's a fantastic way to increase lifetime value overall. In e-commerce in particular, I'm also seeing this as an opportunity to increase the average order value, right? You can suggest add-ons for their next subscription cycle. Say, hey, we added these new products to our inventory. Do you want to add this on just for the next box that's going to come to you? And people are more prone to trying things out if they think, okay, it's a one-time thing I can try. But then you can interest them, keep their interest in your service by switching products frequently through the regular subscriber lifecycle. And so I have— I think that merchants have a lot of options now to improve LTV.

No, definitely. It's definitely a growing— it's been a growing trend for the last couple of years. Subscription model businesses. And I think it's going to continue to just to keep growing. And it's all in the creativity, you know, of your mind, of what you can— yes, of what you can do, you know, from, from the standpoint of your business. What can you imagine that somebody would put on a recurring, uh, bill, you know, a recurring transaction? So if you were going to give, um I don't know, 4 or 5 tips to a merchant considering to get into the subscription space? What would be the tips for them?

I would say, you know, this is definitely a model that can drive revenue growth significantly, particularly with the AI tools that are coming out. And so this should be one, one arrow in your quiver of arrows to drive business and revenue growth. And once you are beginning with the subscription model, I would also say think about engagement, subscriber engagement. It's not just you've given them a way to now pay you recurring, but how can you engage them at the point of acquisition when they've activated your service and then over their lifetime experience with you? How do you retain them more by thinking about, you know, pause options, by thinking about different payment methods that you can provide so it makes it really easy for them to pay. So there's a variety through the entire lifecycle that you can gain more value from each subscriber that you bring onto the platform. And so a lot of exciting things to look forward to. So definitely as a model that people should be thinking about.

And so what advantages— like, you just, you know, we talked about a lot of advantages from just— because you can run recurring transactions just on a basic gateway. So like, where do you see, like, somebody has like 100 subscribers that they're just starting out with, or they get to 500, when is the time to like look at like your service and implement something like that in the very beginning? Or do you see people like, oh, I got this thing going and now I need to make some changes for growth?

Yeah, I mean, we help, you know, from small SMBs to large enterprises. So I think you want to get started with the right practices in place already. And we bring that expertise to our merchants. And so I would say just starting out, and you can start with our startup plan with no major big commitment, annual commitment to Recurly. So if you start there, then all of the AI investments we are making today will give you the right recommendations and help you scale and grow as you increase subscriber base, increase your subscriber base. And so I would say that start well with a platform like Recurly that can help you out. And then you can grow with, grow with Recurly as well. The key thing is to think about the entire subscriber lifecycle. So not just payments, because that's a mistake I see a lot of merchants making. Oh, can I collect payment on a recurring basis? Yes, you can do that. But how do you think about engaging your subscribers so they feel more value out of your service so they're not going to churn quickly?

So you provide like other email marketing as part of the service, or?

We have, we acquired a product called Recurly Engage, sort of startup called Redfast that we acquired earlier this year, and they do in-app prompts. So if you have, you know, an application where your subscriber logs in, then the in-app prompts at various points of using your app, you can engage them with, hey, I now have a new product, or I now have this additional service. Or if they want to pause or cancel, you can provide a cancel-save offer at the time. It's just an entire end-to-end experience that you can offer with Recurly now.

Yeah, that's really cool. Yeah, it's very important. I think people tend to not think about the customer experience. Correct. What is the experience that the customer has? People always— I always tell people, I go, look at Starbucks, you know, they give a customer experience. They use your name. You can order a coffee on the app, not even talk to them, get your app, get points. So people, I think businesses need to look at things, and it's like not just collecting the money, like boom, boom, boom, I'm collecting, I'm collecting. Also about, you know, engaging with your customers. But not too much. Yeah, yeah.

I mean, Starbucks has a subscription model without calling it a subscription model because I know the dollars that my daughter is spending like every week at Starbucks. So literally we have a weekly subscription to Starbucks without, you know, literally signing up for one.

Yeah, it's crazy. But I read one, you know, I looked at— there was a story that came out about them several years ago said Starbucks is really not a coffee company, they're actually a bank because they have over— at the time they had $1.6 billion in the bank of prepaid coffee. And I read recently, a few months ago, that it was over $2 billion right now. Oh wow, wow. So you know, when you read about things in the news, you go, okay, you know, that just shows you like how successful a subscription model can be if you're delivering a really good customer experience. Because that's what they do. They deliver a really good customer experience. And that's what you're talking about, is that recurring payments is not just like, oh, can you do a recurring payment? It's, can you do recurring payments? And then you— Recurly has all these add-on features that help you maintain your base, give options when people are trying to cancel. You know, the Engage part, and I'm sure you guys are working on all kinds of new stuff over there.

Yeah, absolutely. And like I said, we are investing more and more in AI so that we are able to give you timely recommendations on, you know, even for example, how to save on gateway costs, like which gateway would give you better offers or what additional, you know, add-ons you could create, what offers you could create. Detecting fraud, if there's any spike in fraud that you're seeing, timely notifications of those anomalies. All of those capabilities are coming to the platform as part of our fall release.

And then do you, do you link into the chargeback process as well, or that's something separate?

We do partner with third-party companies for chargeback presentment. And so our merchants can then have a single pane of glass view. So as of now, we get the chargeback data from the payment providers, but we are looking at, you know, more and more integrations with other chargeback providers who are, you know, specifically investing in this and doing this very well.

Yeah, because it's, you know, I know like we have some quite a few like subscription merchants and, you know, low, you know, very low ticket ones. And, you know, they have to be really careful, especially now with the new rules with the VAMP. You know, and, you know, using RDR and alerts so that they can control chargebacks and not end up on the VAMP list.

Yeah. And that reminded me of, you know, another core problem our merchants face, which is tax compliance, invoice compliance, etc. Like particularly our merchants in Europe have to adhere to many local laws across different countries. And so it's hard for them to track, okay, Spain has this law around tax versus France has this different law. And Recurly helps our merchants with that so they don't have to worry about it. We take care of compliance and enable them to be compliant in those countries.

Yeah, it's always interesting whenever we're dealing with any kind of merchant where it's recurring transactions or they're doing things in other countries, we always have to talk to them about, you know, different types of compliance issues. And make sure, like, okay, you know, you have to comply with this and you have to comply with that, and it's by different business types and, you know, countries and, and different things like that. So, you know, it always meant— it's, it sounds complicated, but it's not complicated if you do it right from the beginning. And then you don't get your— you don't get all of a sudden you get slapped and go, you want to make sure you set up right from the beginning. So as we finish up today, any final words or tips that you want to give people? Tell us where to find, uh, how they— people can get more information. Obviously recurly.com.

Yes, absolutely, uh, recurly.com, as well as, um, you know, people can feel free to reach out to me on LinkedIn if they are just, you know, thinking about a subscription model, not ready to commit to a product yet. Happy to provide, you know, guidance, tips as well. And I would say that more and more new monetization models are coming up, particularly with new AI-related startups that want to offer end-consumer-facing AI services. And so Recurly can help with that as well because it's not only just, you know, recurring subscriptions, but other models like usage-based billing or outcome-based billing, and we are investing in all of those areas too. So any type of new monetization model, we are here to help and, you know, happy to, happy to chat.

Yeah, those are interesting models when you talk about usage-based and things like that. And Mert, you know, you don't have to go out and reinvent the wheel. You can use a third party like Recurly that can help you accomplish those type of things. So it's really interesting, all the options that are out there. So thank you, Priya, for joining us on the podcast. I am not going to try to say Priya's last name because it is like really, really long. But you can say it one time for us.

Yeah, will do. Priya Lakshminarayanan. And Allen Kopelman, that is not my full last name. It's actually Priyamvada Panamana Lakshminarayanan. I have 34 letters in my full name.

But we will post her LinkedIn link and when we— when the podcast is out so you can find her easily and you don't have to guess how to spell her last name.

Yes, absolutely. Thank you so much for having me, Allen.

Well, thank you for being a guest on B2B Vault. You can find us on Spotify, Apple, YouTube, or on LinkedIn. You can go to nationwidepaymentsystems.com, click on the podcast link, go to our podcast page. And you can find Priya on LinkedIn. You can go to recurly.com and find more about— if you want more about subscriptions and set up an appointment and learn how you can implement that in your business, because the subscription economy is growing by leaps and bounds. Just got to follow the rules. So thanks for listening today. Carpe diem and peace out, everybody. Have a great day. Thank you.