AdaptedMind derives 5%–10% of revenue from recovered payments captured with Stripe

AdaptedMind is a subscription-based education platform that offers customized online lessons for school children, with a focus on K-6 grade math and reading. Over 3 million students use AdaptedMind, and its research-based curriculum is used by teachers in 60% of US school districts.

Productos utilizados

    Billing
    Link
    Payments
    Radar
América del Norte
Startup

Challenge

As an online education platform, AdaptedMind saw a frequent pattern among subscribers: parents would sign up for a whole school year to supplement classroom learning, or they’d enroll over the summer to combat the “summer slump” that can occur when kids are away from school for a few months. These trends created some subscription management and billing challenges, including the need to start, pause, and stop subscriptions—as well as offer discounts and scholarships.

However, AdaptedMind’s payment and billing provider didn’t make it easy to manage these changes. AdaptedMind was also experiencing a higher rate of failed payments as the company and usage continued to grow. The legacy provider made it challenging to even understand patterns of fraud, let alone investigate them thoroughly. To improve revenue and enhance the customer experience, AdaptedMind prioritized reducing fraud and recovering as many failed payments as possible.

In 2019, AdaptedMind saw an opportunity to leave its legacy payment and billing provider, which at the time was making it more difficult to receive payments and credit card data. To handle its recurring billing challenges, AdaptedMind wanted a partner that truly understood subscriptions.

“We needed something that deals with subscriptions as a first-class citizen,” said Nolan Frausto, AdaptedMind’s CTO.

The company was also looking for a provider with payment technology that would help with its future ambitions, including the addition of more payment methods, the ability to support global expansion, and better fraud management. “We wanted to find a provider that was really at the forefront of payments, and that was easy for our developers to work with,” said Frausto. “We were looking for a partner that could help with not just what we were imagining at the time, but with whatever was going to come our way.”

Solution

AdaptedMind selected Stripe to upgrade its subscription management and payment platform, and also position the company for growth.

Stripe Billing offered more advanced capabilities to help AdaptiveMind manage recurring payments and subscription lifecycles. For example, the company added an option that allowed subscribers to pause their membership and billing for a certain period of time and resume it when that period ended. Billing also supports many different pricing models, with built-in support for free trials and coupons. These features enabled AdaptiveMind to test new pricing models, including a potential freemium tier.

With Billing, AdaptedMind gained access to several built-in authorization optimizations and recovery tools to help reduce failed payments. For example, Adaptive Acceptance uses machine learning to identify refined messaging and routing combinations to recover 10% of false declines, and Smart Retries addresses insufficient funds declines by identifying the optimal day and time to retry a payment.

In addition, AdaptedMind integrated Stripe webhooks to ingest payment data and create a custom recovery flow. The company combined its user data—including which marketing channel users came from (and how often), and how recently they used the platform—with Stripe transaction data to identify the failed payments that AdaptedMind was most likely to recover. For example, the company learned that users’ payments from certain marketing channels were more likely to succeed after a certain number of retries, while users’ payments from other channels were more likely to fail; with this information, the company could cancel the second group’s subscriptions earlier and focus its marketing spend on higher-value users.

The integration between Billing and Stripe Payments also allowed AdaptedMind to offer additional payment methods beyond credit cards. With Payments, AdaptedMind added Apple Pay and Google Pay, and it recently turned on Link, which saves and autofills users’ payment information to create an easy, secure checkout experience. As the company expands internationally, Payments will allow AdaptedMind to turn on new payment methods appropriate for the regions where it’s operating with a single integration.

Finally, the company adopted Stripe Radar to fight fraud, get ahead of chargebacks, and mitigate the need for dispute management. Radar’s machine learning models are trained with hundreds of billions of data points—including actual dispute data and other rich first-party data—to more accurately identify and block fraudulent transactions. Because 91% of cards used on Stripe have been seen by Stripe before, Radar’s algorithms quickly adapt to shifting fraud patterns and to the patterns of each unique business to keep up with the latest fraud trends.

Results

19% of subscribers take advantage of the ability to pause their subscription

Nearly a fifth of AdaptedMind subscribers now take advantage of the ability to pause their subscription. This shift has a significant impact on the company’s ability to retain customers and drive revenue: today, about 7.5% of AdaptedMind’s monthly revenue comes from released subscription holds.

“One of Stripe’s benefits is how easy it is to use their APIs for billing management,” Frausto said. “It’s a much simpler process than we were able to use previously.”

5%–10% of monthly revenue is derived from recovered payments

Stripe’s built-in optimizations, plus the custom recovery tools it enabled AdaptedMind to build, have significantly improved the company’s ability to recover failed payments. Today, 5%–10% of AdaptedMind’s monthly revenue comes from failed payment recovery.

“With the data that Stripe provides, we’re able to tie all the pieces together based on where the customer came from,” said Frausto. “We’ve leveraged that power to our benefit.”

Adding Link as another payment option has helped AdaptiveMind continue to improve its checkout process. “Link transactions seem to be growing every month. So the more time goes on, the more it helps us,” said Frausto.

Ability to optimize payment methods for international expansion

Initially, the company saw a higher rate of failed credit card payments from international customers. So AdaptedMind is now turning on local payment methods customized to regions where it’s seeing strong sign-ups, but high rates of failed payments.

“Stripe gives us the ability to be agile and try new experiments, without having to sacrifice the stable foundation that we’ve built,” said Frausto.

Radar blocks hundreds of thousands of dollars in annual fraud losses and reduces disputes

The Stripe team worked to help AdaptedMind understand and address fraudulent payments, including facilitating relationships with card networks. Radar helps keep AdaptedMind’s fraud rate low, saving hundreds of thousands of dollars in fraud losses annually. It also prevents fraudulent transactions from occurring, so those transactions never have the opportunity to turn into chargebacks.

Even better, gaining more control over subscriptions through Billing has helped AdaptedMind reduce disputes with legitimate customers. When one does occur, the company is now able to give customers the benefit of the doubt, automatically refunding their subscription fee and canceling their account. It’s just one way that AdaptedMind’s updated payment approach is enabling better customer service.

“With Stripe, we’ve set up systems to make it very easy for our customer service team to do whatever they need to do on the account—hold, cancel, refund, or give a scholarship,” said Frausto. “It saves a lot of time and has driven rave reviews for our customer service team.”

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