Product Analytics: Merchant Retention Dashboard

Welcome to the Retention Dashboard, a comprehensive tool designed to monitor, analyze, and improve your merchant retention strategies. In today’s highly competitive cards and payments landscape, retaining existing merchants is often more cost-effective than acquiring new ones. This dashboard provides a granular look at key metrics that can help you understand your retention rates, identify potential risks, and take proactive measures to keep your merchants engaged and satisfied.

Header

• Title: Merchant Retention Dashboard

Filters

1. Time Period: Daily, Weekly, Monthly, Quarterly, Yearly
2. Merchant Segment: Small, Medium, and Large Businesses
3. Industry Type: Retail, Food & Beverage, Healthcare, etc.
4. Geography: Country, State, City
5. Risk Level: High, Medium, Low
6. Activity Status: Active, Inactive

Metrics

Retention

1. Merchant Retention Rate: Percentage of merchants retained over a specific period.

In this formula:

• “Number of Merchants at End of Period” refers to the total number of merchants you have at the end of the time frame you’re interested in.
• “Number of New Merchants During Period” refers to the merchants who have started using your service during this period.
• “Number of Merchants at Start of Period” is the total number of merchants you had at the beginning of that same period.

The result is usually multiplied by 100 to get a percentage. A higher Merchant Retention Rate is generally better, as it indicates that a greater proportion of your merchants are continuing to use your service.

2. Churn Rate: Percentage of merchants leaving the platform within a given time.

In this formula:

• “Number of Merchants Lost During Period” refers to the merchants who have stopped using your service during the time frame you’re interested in.
• “Number of Merchants at Start of Period” refers to the total number of merchants you had at the beginning of that same period.

The result is usually multiplied by 100 to get a percentage. A lower churn rate is generally better, as it means fewer merchants are leaving your platform.

3. Merchant Lifetime Value (MLV): The total revenue expected from a merchant over their entire lifecycle with your business.

In this formula:

• ARPM (Average Revenue Per Merchant): The average revenue generated per merchant over a specific period (e.g., per month or per year).
• Average Merchant Lifespan: The average duration a merchant stays active on your platform, typically measured in the same unit as ARPM (e.g., months or years).

By multiplying ARPM and the Average Merchant Lifespan, you estimate the total value a merchant will bring to your business over the course of their engagement with your platform.

4. Customer Acquisition Cost (CAC)

In this formula:

• “Total Cost of Acquisition” is the sum of all expenses involved in acquiring new merchants. This can include marketing costs, sales costs, overhead, and any other costs directly attributable to the acquisition process.
• “Number of New Merchants Acquired” is the total number of new merchants that were successfully onboarded during the time period in question.

The unit of CAC would typically be in currency terms. This metric is essential for understanding the financial efficiency of your acquisition strategies.

5. MLV: CAC: Revenue generated by a merchant during its lifecycle.

In this formula:

• “Merchant Lifetime Value (MLV)” represents the total net profit a company expects to earn from a merchant during its entire life.
• “Cost of Acquiring a Customer (CAC)” represents the total costs involved in acquiring a new merchant.

The MLV: CAC ratio gives you a sense of how well your investment in acquiring new merchants is paying off over the long term. A higher ratio indicates a more effective acquisition strategy and a more sustainable business model.

6. Time-to-Churn: Calculated as the average time it takes for a merchant to leave (churn from) the platform after joining. It is expressed in days, months, or years, depending on the nature of the business and the typical lifespan of a merchant on the platform.

In this formula:

• Total Time of Stay for Churned Merchants: This is the sum of the lengths of time each churned merchant stayed on the platform. If Merchant A stayed for 2 months and Merchant B stayed for 3 months before churning, the total time of stay for churned merchants would be 2+3=52+3=5 months.
• Number of Churned Merchants: This is the total number of merchants who have left the platform within the time frame you are analyzing.

Satisfaction & Loyalty

1. Merchant Satisfaction Scores: Results from satisfaction surveys or Net Promoter Score (NPS). NPS provides a qualitative measure of merchant satisfaction and loyalty. It can offer clues to the reasons behind the retention or churn rates and can help you take targeted actions to improve merchant experience.

In this formula;

• The “% Promoters” is the percentage of respondents who are promoters (those who gave a rating of 9 or 10),
• The “% Detractors” is the percentage of respondents who are detractors (those who gave a rating between 0 and 6). The NPS score ranges from -100 to 100.

Note that the percentage is calculated based on the total number of respondents who provided feedback.

2. Customer Support Rating: Average rating for customer service interactions.

In this formula:

• The “Sum of All Ratings” is the sum of all the star ratings received (e.g., five 5-star ratings would sum to 25)
• The “Total Number of Ratings” is the total number of reviews or ratings received.

This will give you an average rating out of 5, which you can multiply by 20 to convert into a percentage if needed.

3. Repeat Transaction Rate: Percentage of merchants making more than one transaction, indicating satisfaction and utility.

Here, the “Number of Repeat Transactions” is the count of transactions made by customers who have transacted more than once with the merchant within the specified time frame. The “Total Number of Transactions” is the overall count of transactions, including both first-time and repeat transactions, made within the same time frame.

4. Merchant Satisfaction Score: The Merchant Satisfaction Score is a metric that aims to quantify the overall satisfaction level of merchants using a particular service, platform, or solution.

The purpose of measuring Merchant Satisfaction is to better understand how well your business is meeting the needs of your merchants and to identify areas for improvement. A high Merchant Satisfaction Score generally indicates that merchants are happy with your service and are more likely to continue doing business with you. Conversely, a low score could be a red flag that there may be issues that need to be addressed to prevent merchant churn.

This score is usually calculated based on responses to a series of survey questions designed to gauge various aspects of the merchant’s experience. The questions can cover a wide range of topics, such as:

• Quality of service or product
• Ease of use
• Customer support experience
• Value for money
• Overall satisfaction

• Sum of Survey Scores: This is the sum of all the scores you received from the completed surveys. For example, if you have 3 merchants giving scores of 4, 5, and 3 on a scale of 1–5, the sum of survey scores would be 4+5+3=124+5+3=12.
• Total Number of Responses: This is the total number of completed surveys. In the above example, it would be 3.

Revenue Expansion

1. Average Revenue Per Merchant (ARPM): Average revenue generated per merchant.

In this formula:

• Total Revenue refers to the complete revenue generated from all transactions or services involving the merchants within a specific period.
• Total Number of Merchants refers to the number of individual merchants that have generated revenue within the same time frame.

ARPM provides a useful metric for understanding the revenue-generating capacity of each merchant, helping to guide business strategies and decision-making.

2. Upsell/Cross-Sell Rate: Percentage of existing merchants purchasing additional features or plans.

In this formula:

• “Number of Merchants Upsold or Cross-Sold” refers to the number of merchants who have purchased an additional product, feature, or plan beyond their initial purchase.
• “Total Number of Merchants Contacted” refers to the total number of merchants who were approached with an upsell or cross-sell opportunity.

Multiplying by 100 converts the ratio to a percentage. This metric is helpful for evaluating the effectiveness of your upselling and cross-selling strategies.

Reactivation

1. Reactivation Rate: Percentage of previously inactive merchants who have become active again.

In this formula:

• “Number of Reactivated Merchants” refers to the merchants who were inactive but have become active again during the period under study.
• “Total Number of Inactive Merchants at Start of Period” is the number of merchants who were inactive at the beginning of the period you are analyzing.

Multiply the result by 100 to express it as a percentage. A higher Reactivation Rate is generally a good sign, as it indicates that you’re successfully encouraging previously inactive merchants to engage with your service again.

2. Time-to-Reactivation: Average time it takes for an inactive merchant to become active again.

In this formula:

• “Total Time for Reactivation” is the cumulative time taken for all reactivated merchants to go from being inactive to active again. This could be measured in days, weeks, or months, depending on the specifics of your business model and the granularity of the data available.
• “Number of Reactivated Merchants” is the total number of merchants that became active again during the time period in question.

The unit of Time-to-Reactivation would be the same as the unit used for “Total Time for Reactivation.” For example, if you measured “Total Time for Reactivation” in days, then the Time-to-Reactivation would also be expressed in days.

This metric helps you gauge how quickly your re-engagement efforts are translating into actual reactivation, allowing you to adjust your strategies as necessary.

Footer

• Export Options: PDF | CSV | Excel
• User Settings: Profile | Notifications | Alerts

Conclusion

The Retention Dashboard is more than just a data visualization tool; it is a strategic asset for your business. By focusing on key retention metrics, this dashboard allows you to dig deep into your merchant relationships, understand their lifecycle, and implement effective strategies for long-term engagement. In the ever-changing world of cards and payments, having a data-driven approach to merchant retention is not just advantageous — it is imperative.

Keep an eye out for my upcoming post, where I will break down the criteria and trend analysis for each metric highlighted in this Dashboard. We will get into the nitty-gritty to help you make data-driven decisions in the next article “Data-Driven Decisions: Merchant Retention Metrics”.

If you are interested in circling back to the foundational discussion on data-driven insights, you can find that article here: “Data-Driven Insights: Payment Platform”.

Stay engaged for more!