[00:00:00] Lucas Lovell: There's lots of different stuff within payments that I think is important for people to consider before you even get to the point of failure. It's like, how do I actually maximize the success rate of payments? How do I maximize payment acceptance and payment authorization to sort of minimize a negative churn outcome that might occur from not thinking deeply enough or integrating deeply enough with that technology? From a Paddle perspective, we handle that all inside of the platform via one integration, but it's really important for folks to think about.

[00:00:38] Andrew Michael: This is Churn.FM, the podcast for subscription economy pros. Each week a hear how the world's fastest growing companies are tackling churn and using retention to fuel their growth.

[00:00:50] VO: How do you build a habit forming product? We crossed over that magic threshold to negative churn. You need to invest in customer success. It always comes down to retention and engagement. Completely bootstrapped, profitable and growing.

[00:01:04] Andrew Michael: Strategies, tactics and ideas brought together to help your business thrive in the subscription economy. I'm your host, Andrew Michael, and here's today's episode.

[00:01:14] Andrew Michael: Hey Lucas, welcome to the show.

[00:01:16] Lucas Lovell: Thanks Andrew, great to be here.

[00:01:18] Andrew Michael: It's great to have you. For the listeners, Lucas is the VP of product at Paddle, the merchant of record that helps you get paid anywhere. Prior to Paddle, Lucas was co-founder and managing director of Hopstay. And so my first question for you today, Lucas, is how did you go from a career in sales and promotions to financial paraplanner to eventually starting your own tech startup? How do you connect the dots?

[00:01:41] Lucas Lovell: That's a great question. Great starting point. The reason I started out in financial power planning was a bit of a family reason. My mom was a financial advisor and it was a bit of a university job for me while I was studying law. So that was more about finding my way in the world and finding something that would support the university lifestyle while I was busy in the book work.

[00:02:07] Lucas Lovell: Interestingly, I studied law which is quite an unusual path to get to tech. I actually studied law and international relations and did some languages as well. So very much not the typical path. But I think for me, going through that process of university, working in a couple of different roles across sort of finance and then also working a little bit in sales here and there, as you pointed out, I probably realized that law wasn't for me. I didn't want to be a lawyer. So I got through the degree. Never went on and did a practicing certificate. So I never actually practiced as a lawyer. So whilst I've got a degree, I'm not a lawyer itself.

[00:02:46] Lucas Lovell: And then went straight into tech. And I think that for me, the most obvious way to get into tech was to go and build something. Given my background wasn't of that nature. So I joined up with a couple of mates at home back in Australia and went about building a mobile app that took many iterations and many forms. And embarked on a journey of five or six years running our own company. Took that company from Adelaide in South Australia over to Paris in France as part of a really interesting program.

[00:03:18] Lucas Lovell: And then ultimately, all came to a bit of a head in COVID. We were selling to travel companies and really struggled during COVID for a number of reasons that I won't get into, but then sort of found my way across the Paddle and I've been here for four years. So it's been quite a journey for me. It's been a really interesting sort of 10 years since I finished and graduated from university, but very happy to be here at Paddle now.

[00:03:44] Andrew Michael: Yeah, it's very unusual path. And what does it feel like now to be an Australian living in London?

[00:03:51] Lucas Lovell: I mean, I'm not the only Australian living in London. That's for sure. You hear the accent a lot around the place. But yeah, it's good. I think London's a great city. It's a very dynamic city. It's a pretty easy city to live in as someone who is not from here. It's very global by nature. And yeah, it's great.

[00:04:12] Lucas Lovell: I used to work in London quite a bit when I was living in Paris. So I lived in Paris for four years and did quite a bit of work over here. So it was already quite familiar with London and what I offered. But yeah, it's great. I love the city. It's awesome.

[00:04:25] Andrew Michael: Yeah. It's amazing. There's also likewise, like you haven't picked up the accent. I grew up in South Africa, like in London as well, like walking down the streets. You can always pick up who's from South Africa when you were catching the Tube or anything very nice.

[00:04:38] Andrew Michael: So before we chatted, like you pointed out as well, and I think quite right. So is that, and this was going to probably be one of the first questions is that the product like Paddle becomes a platform product. It becomes like the rails by which all your payments go through. So for your business, like churn and retention is typically not going to be a problem because the switching costs are just extremely high of moving away from Paddle once you have customers locked in. But it's your business to help other companies reduce churn in ways through product.

[00:05:06] Andrew Michael: And so I'm keen to dive into that a little bit today, like what the process looks like, what are some of the ways that you're working with companies to help them reduce churn. And so maybe we just get started in that general direction in terms of what the product does, how you help companies? Like this new term merchant of record now started to grow in popularity. So what does it all mean and how are you helping your customers?

[00:05:30] Lucas Lovell: Sure. Absolutely. So Paddle is a end-to-end billing and payments platform. So as you mentioned, we power payments for companies that use Paddle. We help them capture revenue all over the world. And we do that under what is called a merchant of record model, as you pointed out, which at its very core means that we take full liability for the transaction and provide a bunch of value around compliance and sales tax that typical payment processes don't provide.

[00:06:02] Lucas Lovell: Which means that we will collect and remit the sales tax on your behalf, on our customers' behalf all over the world. And in that way, we're acting as a sort of reseller, if you like. So we are operating as the merchant in that transaction. So not only are we collecting payments and powering payments all over the world, but we're also collecting your sales tax and making sure that you're maintaining compliance all over the world so you can scale your business and grow successfully without some of those barriers that become quite complex as you start to internationalize and go global. So that's Paddle at its very core.

[00:06:38] Lucas Lovell: Now, as you mentioned, it's a platform company. There are a number of tools and products and bits and pieces that live within that. And I think that the lens through which we- there's a couple of different frameworks we use internally to talk about what Paddle does. One of those is operate and grow.

[00:06:56] Lucas Lovell: So Paddle as a payments infrastructure platform helps you operate your business insofar as we handle billing, we handle compliance, we handle fraud, we handle tax, we provide a checkout experience, we handle your subscription billing, we provide the payments, the payment methods, all of that stuff that you need to just get up and running and sell online. So that's very much in the operate column.

[00:07:18] Lucas Lovell: And then we also think about the world through to the growth lens. So okay, we're now powering your payments. How can we help you grow your businesses? And how can we use the different levers that exist within the paddle platform to help you do that? Now our retention tooling is one of them because we talk a lot about what helps a subscription company grow. It's acquisition, monetization, and retention.

[00:07:45] Lucas Lovell: We think and we do play a role across all three of those things. So we can help a company acquire more customers. We can help them monetize their existing customers and we can also help them retain their customers. So we very much think about our growth pillar as how can we help our customers do all of those three things through being uniquely positioned as a payments company.

[00:08:06] Andrew Michael: Interesting. So yeah, I think obviously part of like the product offering that you mentioned as well now came as a result of the acquisition from ProfitWell. I think they're existing tools and technology from that perspective. Maybe you can talk specifically to some of the tools that you offer today that help with retention and what are they specifically?

[00:08:28] Lucas Lovell: Yeah, sure. So we, as you mentioned, acquired ProfitWell two and a half years ago, two and a half, three years ago now, which was a really interesting acquisition for us. I think we'll probably have two core products, Metrix and Retain. Their Metrix product solved a big reporting problem for us. So we weren't overly mature or robust from a reporting and metrics perspective. And so that product plugged in nicely with Paddle and really solved a gap for our customers there.

[00:08:57] Lucas Lovell: And then from a retention perspective, their Retain product is what was best in class and still is. Now it's with Paddle. It's not theirs anymore. It's all of us. It's one of us. So that Retain product is very much geared at subscription companies wanting to improve their retention rates. And there are a number of different tools that exist within the retained offering.

[00:09:19] Lucas Lovell: The first and most obvious one is payment recovery. So I think actually, just to take a step back, when we think about retention, we think about voluntary churn and involuntary churn. So obviously, you have voluntary churn which can come as a result of many things. Product fear, you're not getting the value that you thought you would from the product. Supports letting you down, there might be features or bugs and you just decide that, hey, listen, this product isn't for me. And I'm no longer interested.

[00:09:44] Lucas Lovell: But then we also address things like involuntary churn, which is around payment failures and credit card expiries, when the customer isn't actively trying to churn or leave your product, but rather a situation has presented itself where they have for one reason or another. So the payment recovery piece, which is really interesting, has a bunch of components to it.

[00:10:10] Lucas Lovell: The first one is retry logic. So just having smart retries that reattempt payments at different intervals, which is really clever. And then goes and tries to capture that loss revenue. Very much addressed that... well, very much aimed at addressing that involuntary churn. But there are other things actually within Paddle. So not necessarily the Retain product itself that can also help with this.

[00:10:32] Lucas Lovell: A good example of that is card account updaters and network tokens. So we have functionality called card account updater, which actually calls an IP and updates all of our expired cards with the new date. So they're going to work at renewal. So there's a bunch of tech both within Paddle and within Retain that can help reduce the rate of failed payments, which represents quite a bit of upside for companies.

[00:10:57] Andrew Michael: Yeah. I mean, that one specific is very interesting because I think this previously wasn't well orchestrated or maybe even not possible. And it's quite a big reason for involuntary churn where the credit cards are expiring.

[00:11:12] Andrew Michael: I had a couple of questions. One is like, how are you doing that specifically? And the second part I think was as well to this, that there's a lot of reasons, well, for like failed payments that are really like to do with the rails and the actual payments themselves. And keen to dive into those a little bit, because I think these more technical reasons for failure are some of the things that most startups don't even think about, but can have a significant impact on their bottom line at scale.

[00:11:43] Andrew Michael: And like example, things like cross country payments and just being blocked because of the nature of being in this country and these sorts of details. So I'd love to dive into like the more technical aspects of these things today and get your input.

[00:11:57] Lucas Lovell: Sure. Yeah. We can talk about failed payments. Payments fail for many, many reasons. I won't bore you with the long list of reasons why payments fail.

[00:12:06] Andrew Michael: Bore us. Bore us.

[00:12:07] Lucas Lovell: [slight crosstalk] Well, I mean, to be honest, it's a bit of a black box. It's not an easy signal to obtain from when you think about the payments value chain and the actors and different components that exist and have to touch a payment. So many different players will either authorize or block payments for different reasons.

[00:12:29] Lucas Lovell: Paddle can block a payment at our level. Gateways can block payments like Stripe and Checkout. The rails can, so MasterCard and Visa. So there are lots of different points in the payments chain between hitting pay and that payment being successful, where that payment could fail for a number of reasons. Now we can obtain decline codes. We call them decline codes, which is basically a code that gets returned to a merchant like Paddle that can tell us or give us a signal as to why a payment might have failed.

[00:13:02] Lucas Lovell: And there are many, many different types of decline codes. One of which is insufficient funds is a good example of a decline code. Or it might say that the payment was thought to be fraudulent for a number of different reasons and it's a bit of a black box. The first thing that we think about from a payment failure perspective is reducing the number of failures in the first place.

[00:13:26] Lucas Lovell: There's a lot that you can do to do that actually. And we do a lot of that at Paddle. So to your point before, cross-border payments are more likely to fail than domestic payments, very simply. There's a ton of complexity in there. But at its highest level, cross-border payments are more likely to fail. So local acquiring is really important. So if you can leverage a system that is acquiring those payments locally, then that's going to help maximize the ultimate success rate of payments.

[00:13:54] Lucas Lovell: So at Paddle, we do local acquiring in a number of different geographies to try and maximize our payment acceptance rates. And then what we do is we will route payments or do payment orchestration to different merchant accounts or different payment gateways to make sure that we're maximizing the success of the payment. Because it's not just about trying to acquire locally as much as you can, but it's also about the fact that different processes and gateways actually perform differently in different regions.

[00:14:23] Lucas Lovell: Whilst one gateway might be strong in the US, another might be stronger in Europe. We need to take that data and use that data to build what we call routing logic to try and make sure that as many payments as possible are successful. We're reducing the rate of failed payments. That's the biggest leverage that I think you have as a payments company or as a software company to actually reduce the rate of failed payments is really thinking strategically about your payments partners and who's powering your payments to make sure that you're minimizing those failures themselves.

[00:14:58] Lucas Lovell: Another really interesting technical component of this around credit cards and expiries is... I think there's two pieces to this. Around credit card expiries, as I mentioned before, we have card account updater technology built into the product, meaning that we will automatically try and update the credit cards before they're processed for renewals to make sure that those cards will be processed successfully.

[00:15:22] Lucas Lovell: But there's also something called network tokens, which is relatively new technology. A good example of this is Apple Pay. So when you're on Apple Pay, you double click the side of your phone, you stare at your screen, and then you can pay. That is using what we call a network token, which is effectively a layer beneath the card itself. So when your card expires and you get a new card in the post, you don't need to change anything with Apple. Because Apple knows that's happened. It's using a different bit of technology.

[00:15:48] Lucas Lovell: So leveraging things like network tokens, which is tokenization at a network level is also really interesting as well. And I think that technology is going to become much more prevalent. And I actually think that we're not too far away from a world where expiry doesn't actually matter that much. Expiry of cards doesn't matter that much if most companies are leveraging this technology and increasingly, an increasing number of payments companies are leveraging this technology.

[00:16:15] Lucas Lovell: And then I think the other piece that's worth pointing out is offering the right payment methods. So different payment methods will have different types of failure reasons. So direct debit is a pretty robust payment method. It's a good thing to offer if you're offering at a higher price point where you're just debiting from a bank account. So you're not even using card technology. You're debiting straight from a bank account. It's a good way to reduce churn.

[00:16:38] Lucas Lovell: So there's lots of different stuff within payments that I think is important for people to consider before you even get to the point of failure. It's like, how do I actually maximize the success rate of payments? How do I maximize payment acceptance and payment authorization to sort of minimize a negative churn outcome that might occur from not thinking deeply enough or integrating deeply enough with that technology. From a Paddle perspective, we handle that all inside of the platform via one integration, but it's really important for folks to think about.

[00:17:07] Andrew Michael: Absolutely. I think definitely at scale as well when these start up and they start to have a significant impact on the bottom line. It's interesting you mentioned as well around like sort of the need for expiry dates and it just triggered a thought like, and maybe you know, like, why do we have expired dates on our credit cards? What is the purpose besides like being frustrating for the end user to have to wait for a new card in the post?

[00:17:30] Lucas Lovell: I actually don't know. I do not know the answer to that question. To be honest, it's a great question. I should probably ask that somewhere. I imagine it's some sort of legacy tech thing. Where like back in the day, when credit cards started to come to fruition.

[00:17:44] Andrew Michael: [crosstalk] Maybe then they had to have, I don't know, lose the magnetic strip or something like that.

[00:17:49] Lucas Lovell: Yeah, exactly. Maybe who knows?

[00:17:52] Andrew Michael: It feels like one of those things that like everybody just accepts for a norm and nobody goes back to question it. And then we just stuck with it for  generations. But like you say, hopefully that's something that's changing now with Apple pay. And so yeah, so to sum up like what we're talking about now is that, when it comes to sort of payments, we much more likely to have payments accepted if they done locally, or if they're an approved or better method of payment, like EG, debit cards.

[00:18:20] Andrew Michael: There's a lot of different logic and rules that goes into figuring this all out. It sounds like it's not as straightforward as just saying, okay, because you're a Brazilian company, let's accept payments in Brazil and that's it. So, you described the whole layer, another layer of complexity in there as well but there is a big opportunity, I think for businesses at scale to really take advantage of this routine and like other things around like the card expiry.

[00:18:45] Andrew Michael: So these are very little like technical at the application layer. What are you doing then at the user level that's really like customer facing and impact felt?

[00:18:56] Lucas Lovell: Yeah, absolutely. So we see a lot of success with what we call cancellation flows, which is another component of Retain which is aimed at introducing friction in the cancellation process to try and recapture that customer and stop them from churning. We see some really interesting results here, up to 30% improvement in outcomes for customers. And the way you usually do that is by tackling churn with what we call salvage offers.

[00:19:25] Lucas Lovell: So when someone goes to cancel, you can surface a questionnaire of sorts that asks them some information about why they're canceling. And based on the outcome of that questionnaire, you can issue a salvage offer. You might reduce a price or provide a discount for them to stay. It's quite effective and it's a really powerful tool to reduce churn.

[00:19:47] Lucas Lovell: And the other piece of it, I think, is about generating insights. So a lot of companies generate great insight from cancellation flows. So when you launch a cancellation flow, you can learn a bit more about why that customer is thinking about churning or thinking about leaving. So it's not just about actually tackling the churn of the cold phase, but also about generating the insight.

[00:20:06] Lucas Lovell: And the results from cancellation flows are quite strong. We see up to 30%, as I mentioned, and every range of in between, of course. But you can achieve pretty impressive outcomes just through really thinking about your off-boarding journey. All I'm saying is have an off-boarding journey that incorporates some sort of cancellation flow to gather insight and potentially salvage that customer with some sort of offer.

[00:20:28] Lucas Lovell: Now the one thing I would say about this is that we have cancellation flows and we have to think a lot about compliance. Because as you will have seen in the US, the FTC recently brought in a click to cancel rule which means that it has to be just as easy to cancel as it was to sign up to the product. So that's definitely introducing a little bit more complexity into off-boarding and how people think about cancellation. But nonetheless, I think there's still a lot of upside for folks to get from things like cancellation flows. So that's one example.

[00:21:03] Andrew Michael: Hopefully we don't see people making it more difficult to sign up so they can make it more difficult to offer.

[00:21:10] Lucas Lovell: That's a good point, isn't it? Yeah. Well, it's all balancing the sort of top of funnel and the bucket, right? Make it harder to get in the top of the bucket so you can make it harder to get out of it. But yeah. I still think there's upside there. I'd be very, you know, we talked to lots of customers about this and support them with cancellation flows, but it's a really powerful tool if used correctly. And sort of thinking about how you can really craft an off-boarding experience that generates the most upside for you, both from a churn reduction perspective, but also an insight perspective.

[00:21:44] Andrew Michael: Yeah. This triggered another thought as well, like of, I think it's Adobe's exit cancellation flow. And I think one of the things I think they do interestingly from a pricing and packaging perspective, and this is where I'd like to take the conversation next is get your feedback insights on this, is that they had a plan. I think it is that you can pay the yearly fee on a monthly basis, but if you decide to churn, then you need to pay the upfront fee for the year. So they sort of like give you the pseudo benefits of having a yearly plan thinking that you're going to continue paying for more than a year, but then if your time comes to cancel, you say, hey, I want to cancel now. It's like, okay, well, you still owe this much for the year. And this is the main thing.

[00:22:30] Lucas Lovell: Interesting.

[00:22:31] Andrew Michael: I found it very interesting. Like I thought, okay, like it caused me like to think, okay, maybe I should just keep it till the end of the year and then cancel at the end of the year. And like it caused me hesitation. But then also like I saw there's like huge backlash on Adobe for the specific concept and I've seen like quite a few actually on Twitter, on X expressing their negative sentiment towards this. I want to get your thoughts on that.

[00:22:53] Andrew Michael: But then second, like, are you seeing any interesting monetization ways that people are using to increase the chances of retention? Similar to this, but this is obviously like, I would probably call this a dark pattern because you don't realize you're getting into this until it's time to get out.

[00:23:10] Lucas Lovell: Yes. It's interesting. We tend to see more dark patterns on the acquisition front. So upfront, then you do from a cancellation perspective. So it's really interesting to hear about that. I think it's a great example. The direction of travel from a regulatory perspective is definitely protecting the consumers. People subscribe to so many things these days and I think regulators are starting to get on top of the fact that people have subscription fatigue and it's very easy to forget about subscriptions.

[00:23:44] Lucas Lovell: There's a lot of burden that's shifting onto companies to be really transparent about pricing and to be really transparent about what you're getting yourself into and sort of the mechanisms within that from a consumer perspective. So I'd be very wary of something like that. I can definitely understand the backlash and it's definitely something that we've seen before as well. It's fascinating.

[00:24:08] Andrew Michael: Yeah, absolutely. Circling back then on sort of the pricing front, because I think this, I found this interesting and this goes back to actually the ProfitWell acquisition, you mentioned one of the areas was the Retain product. The other area was the analytics product, but like ProfitWell themselves had also like a big part of their business was actually their consulting arm in Price Intelligently.

[00:24:32] Andrew Michael: And I saw recently that this arm now had left the company or I'm not sure how the details of it exactly, but there was an announcement and keen to understand a little bit about like that decision because I, as far as I knew and understood that, that was like a significant part of the actual business and revenue that was being generated from ProfitWell. So what was the decision there to make that move?

[00:24:53] Lucas Lovell: So you're referencing our divestment of ProfitWell in this case?

[00:24:57] Andrew Michael: Yes.

[00:24:58] Lucas Lovell: Yeah. Great question. ProfitWell, or Price Intelligently, the arm of ProfitWell, operated more as a services company. It did have some product to support that, but it was primarily a services company in our perspective. We are a product company. Paddle is a product company, and we wanted to really focus on expanding our platform capabilities. And we thought it would better... I think it's quite difficult for the team in Price Intelligently as well to be operating inside a product company from a sort of focus and career growth perspective.

[00:25:37] Lucas Lovell: So we thought ultimately that it was better for the ProfitWell team from a career growth perspective to be part of a company that operated in a very similar way. And I think better from a focus perspective for Paddle to be able to sort of focus on expanding our core product offering. Now, nonetheless, I think like, you know, we still think deeply about pricing and supporting our customers with pricing recommendations and helping them deploy pricing models that are most effective. But our vision is very much to think about that in the context of our product.

[00:26:06] Lucas Lovell: And we just decided that that sort of based on where we’re at as a business, it was the right thing to divest of that asset. So there were a run. There were a bunch of reasons, but I think that's the primary one. I think both parties are better off.

[00:26:21] Andrew Michael: I found it very interesting though, because of the point that you made now as well around like, Paddle being a payments provider, I felt like it was a good marriage, like being as well advice and how you can price and package your product better, because I do think this is like an area that is a black box for most startups, saying like most startups when they get started, they either just suck the number out of their thumb and just put the price tag on, or they look at the closest competitor or product to them and they say, that's what are we going to charge.

[00:26:48] Andrew Michael: And then at some point they realized that they held hostage by the decisions of the past and it's very difficult to make those changes. So it felt like with Paddle there was like, and probably it was a nice like sort of partnership involved. Obviously, I think there's conflicts in the one where you could see the one being a customer success role of like helping your customers be more successful. Whereas like, if it's a consulting side of business, then like the incentives aren't aligned to the customer success. They're aligned to maximizing revenue for the consulting business. So, interesting.

[00:27:21] Lucas Lovell: Yeah. That's fair enough. It was interesting, for sure.

[00:27:25] Andrew Michael: So the team is well now focused product perspective. What are some of the things that are coming up this year in 2025 that you're excited about and I think let's take this in the context now as well of LLMs and generative AI, every company is doing something. Is this something that Paddle has on the radar? Like what do you see the future of payments and how do you think this new way of operating is going to impact you as a business?

[00:27:50] Lucas Lovell: Yeah, great question. So we have a lot of exciting stuff planned this year. We are very much looking at AI, LLMs, that sort of stuff. I wouldn't say we're letting it distract us from our core competency, which is providing a very powerful and robust and performant payments platform. But we are putting some chips in that space. So I think in addition to doubling down on what we're already strong at, and we're being really careful about making sure that we're investing in the right areas to the right extent, you are going to see a more robust operate offering to making sure that our checkout keeps getting better, making sure that we expand our offering of payment methods to support the globalization of our customers.

[00:28:42] Lucas Lovell: We know that there are lots of local payment methods coming to market in different regions around the world. And that's to provide a great buying experience that maximizes acquisition, maximizes monetization and increases retention. It's important to be offering and staying up with the way that people want to buy a product. So a big focus for us is just continuing to do the things that we do well, which is expanding our payment method offering, having a world-class checkout that is reflective of a modern buying experience and also making sure that we're supporting the billing models and pricing models that companies want to support.

[00:29:19] Lucas Lovell: We can already support most of the classic ones. But I think to your point before AI is continuing to push how companies price and build their customers. We're seeing a lot more around consumption billing, usage-based billing, AI agents going and performing tasks and directly tying cost to the value outcome for a customer. So making sure we're set up to support those models is really important for us as well.

[00:29:48] Lucas Lovell: I think on the growth angle is where it starts to get interesting around AI. So we see on a lot of data, right? Because if you think about a payments platform, we see every dollar that goes through our customers and we have 3,000, 4,000, 5,000 of them. Our data source is incredibly rich. And we know that there's a big opportunity for us to use that data to power growth for our customers.

[00:30:13] Lucas Lovell: And I think the way that will come to fruition in the platform is very much through more insights. So being able to surface more insights to our customers. I'll talk you through that actually because when we think about data at Paddle, we think about, are we providing our customers with the raw data for them to manage their book of business? So if you think about, are we giving you the 2,500 rows that show you all the different payments and which one succeeded and which one failed? And then we're giving you the metric which says, okay, that gives you a payment acceptance rate or a checkout conversion rate of 84% or 88% or whatever that is.

[00:30:52] Lucas Lovell: I think it's going, okay, we've given you the data, we've given you the metric, we want to give you the insight, which is where does that benchmark you against other companies of your type? What is the thing that is dragging you down? So maybe you haven't adopted a local payment method in Brazil. So your checkout conversion in Brazil is only 30%. And if you fix that problem, then it will become higher.

[00:31:14] Lucas Lovell: And then being able to sort of issue the recommendation off the back of that. So saying, okay, you know, you have upside. There's a big opportunity for you in Brazil if you do XYZ. Or there's a big opportunity for you in Germany if you change your pricing by XYZ. Because we're tracking willingness to pay and we're looking at purchasing power and price elasticity across our whole customer base. So I think it's going to be about how are we taking that data that we have and surfacing that data as recommendations to help companies grow.

[00:31:47] Lucas Lovell: So it's very much a transition for us. I think it's gonna be a big transition for us from being an operational partner for our customers to being a growth partner for our customers. And there are some of the things you'll see. And other examples are like native A-B testing in the platform is something that we want to do soon. Enhanced experimentation. Dynamic pricing is another example as well. So in addition to the stuff that we just want to keep doing and doing well, which is checkout, payments, billing, compliance, fraud, et cetera, really starting to think about how we can leverage AI and data to help our customers grow.

[00:32:18] Andrew Michael: Very nice. I think the big question though is, is ProfitWell going to go full screen this year or not?

[00:32:27] Lucas Lovell: Do you mean the dashboard?

[00:32:28] Andrew Michael: Dashboard.

[00:32:30] Lucas Lovell: I'll pass on that feedback. I'll pass it on. Yeah.

[00:32:33] Andrew Michael: I think all the listeners are dying to know as well. It's like one of those things, it feels like it's like lost in time. Although like I've used it across like many different companies and working with different things, it's like just one of those, my pit views when I see it. But it sounds like you've got a very, very exciting sort of year ahead.

[00:32:50] Andrew Michael: Another thing you mentioned as well that was interesting was the, and I'm not sure like how true this is as well, but I saw somebody like a couple of weeks back on LinkedIn sort of post this idea that credit cards are potentially going to go away with this, like a new banking set up, I think within the EU where now operate like bank to bank payments and you can remove credit card processing fees from the middle. You must have a lot more context than this source. So I'm keen to hear your perspective on this and what is it that has actually changed and how do you see this impacting businesses?

[00:33:24] Lucas Lovell: I think this is really... I think this is quite early days at the moment. I'm not sure if I agree that credit cards are going to go out of fashion anytime soon. But there is a big push in the EU. I'm not super across it, to be honest, but there's a big push in the EU to start to improve I think the interoperability between a lot of the banking infrastructure so they can start to build products where you can sort of directly pay between banks across the EU.

[00:33:50] Lucas Lovell: So I think it's going to be interesting to see how it evolves. It's not something that like we do have payments experts here at Paddle who I think are much closer to it than I am. But it's going to be fascinating to see how it evolves and see how well sort of the collaboration between the EU and the government and the private sector goes in order to bring this to fruition in a meaningful way.

[00:34:11] Lucas Lovell: We've spoken about open banking for a while now. And I think in some markets, we are seeing signs that it's taking off, but I think it's been slower than what most industry people predicted maybe four or five, six years ago. So I still think there's a lot to come. I wouldn't be totally convinced of that just yet, but I think it's one to watch for sure.

[00:34:32] Andrew Michael: Interesting. All right, so I see we're running out of time. Two questions ask every guest. First one is, what's one thing that you know today about churn and retention that you wish you knew when you got started with your career?

[00:34:42] Lucas Lovell: What's one thing I know that I wish I'd known at the start? I actually think when I launched my first company, I didn't think about pricing at all. I just ignored it as a concept. It was all about finding customers and getting them on board. And I actually think that the pricing model that you deploy and the way you tie the value of your product to the price that people pay has a big impact on both the top of the bucket, so how well you can acquire customers, but also the bottom, so how quickly and easily are they leaving your company.

[00:35:15] Lucas Lovell: So I think that's probably the thing that I have learned. I mean, I've learned a lot of Paddle of that churn and retention from sort of a more tactical tooling perspective. But I think the thing that's going to maximize the outcome for your business is always going to be a really effective and powerful pricing model that has your value prop at the core, I think.

[00:35:33] Andrew Michael: Yep. It has a huge impact pricing and packaging, like getting it right can really make or break a business. And the last question is, obviously, you talked to a lot of companies about payments, about pricing and packaging. What's one thing, like what's one question that you wish more people would ask but they don't?

[00:35:52] Lucas Lovell: I think the one question that people don't ask enough is, how can I monetize my customer base more effectively and how can I retain more customers? I think when you think about growing a business, as I mentioned earlier, there are three ways to do that. You acquire more customers, you monetize your existing ones more effectively and you reduce churn.

[00:36:12] Lucas Lovell: And I think most people obsess over the first one at the expense of number two and number three. And I don't think that's the right way to go about it. I think, I think you need to really be asking yourself questions across all three of those vectors of growth and making sure they're getting the attention that they deserve to make sure that you're maximizing the growth outcome for your company.

[00:36:32] Andrew Michael: Yeah, absolutely. And [inaudible] like one of these, the things I love setting up from a like an analytics perspective is really having like acquisition, retention and monetization mapped up and how they sort of interconnected one another and how they layer it up to like the overall net revenue retention and ARR and all the good things that businesses need to survive in the world today.

[00:36:52] Lucas Lovell: Absolutely.

[00:36:53] Andrew Michael: Lucas, it's been an absolute pleasure chatting today. Is there any final thoughts you want to leave the listeners? Anything they should be aware of to be keep up to speed with your work?

[00:37:01] Lucas Lovell: I think, yeah, feel free to add me on LinkedIn. Follow me on X, reach out to me. I'm very happy to support. I love talking about this sort of stuff. I think the thing that I'm passionate about is very much how we can help companies grow their businesses. So yeah, we'd love to connect and please feel free to do so.

[00:37:18] Andrew Michael: Awesome. And for the listeners, whatever we discussed today, we'll make sure to leave in the show notes so you can pick those up there. Lucas, wish you best of luck now going forward and look forward to see the exciting updates that we discussed today from Paddle this year.

[00:37:31] Lucas Lovell: Awesome. Thanks very much, Andrew. Great to chat to you.

[00:37:33] Andrew Michael: Cheers.

[00:37:41] Andrew Michael: And that's a wrap for the show today with me, Andrew Michael. I really hope you enjoyed it and you were able to pull out something valuable for your business. To keep up to date with Churn.FM and be notified about new episodes, blog posts and more, subscribe to our mailing list by visiting churn.fm.

[00:38:01] Andrew Michael: Also don't forget to subscribe to our show on iTunes, Google Play or wherever you listen to your podcasts. If you have any feedback, good or bad, I would love to hear from you. And you can provide your blunt, direct feedback by sending it to andrew@churn.fm. Lastly, but most importantly, if you enjoyed this episode, please share it and leave a review as it really helps get the word out and grow the community. Thanks again for listening. See you again next week.