One of the great mysteries for me is why so many otherwise sophisticated companies don’t focus on involuntary churn. Also known as passive churn or accidental churn, involuntary churn happens when a payment issue raises a flag that causes a merchant to cancel a customer’s subscription. In 70% of these cases, there is no fraud, so the company is literally turning away excellent customers.

Involuntary churn routinely impacts about 10% of Annualized Recurring Revenue (ARR), according to some estimates. In today’s episode, Vijay Menon, founder and CEO of Butter Payments, and I discuss what drives involuntary churn, why so many companies underinvest in this problem, and some key tactics to drive revenue growth through better payment management.

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Everything You Wanted to Know About Involuntary Churn with Butter Payments’ Vijay Menon

One of the great mysteries for me is why so many otherwise sophisticated companies don’t focus on involuntary churn. Also known as passive churn or accidental churn, involuntary churn happens when a payment issue raises a flag that causes a merchant to cancel a customer’s subscription. In 70% of these cases, there is no fraud, so the company is literally turning away excellent customers.

Involuntary churn routinely impacts about 10% of Annualized Recurring Revenue (ARR), according to some estimates. In today’s episode, Vijay Menon, founder and CEO of Butter Payments, and I discuss what drives involuntary churn, why so many companies underinvest in this problem, and some key tactics to drive revenue growth through better payment management.

Robbie Baxter: Vijay, welcome to the show.

Vijay Menon: Wonderful to meet you, Robbie. Thanks for having me.

Robbie Baxter: I’m really excited to have you as a guest. Because we’re going to dig into a topic that I think is so important for so many subscription professionals which is involuntary churn.

You’re a real expert on this. How do you define involuntary churn?

Vijay Menon: It’s known among the industry in many different ways and I think involuntary churn is the most obvious semantic way to describe it, but we describe it as accidental churn, and I’ve heard it described variously as passive churn or billing churn. I think accidental churn kind of encompasses it the best. That’s the type of churn that I’m focused on solving and that any subscription business should be focused on solving.

It’s when a user truly has the intent to pay, a willingness to pay, but they don’t have an ability to pay and that’s the way that I would define involuntary churn. It’s the type of churn where you’re saying, “Hey Netflix take my $15, I want access to the service” and the user can’t get it because the card response comes back as a payment failure or transaction failure. And because of Netflix’s inability to actually go get their payment from you, you (the user) get churned from the service. So the right way to think about involuntary churn is basically the opposite of how you’d classically think about churn. In a classical churn scenario, I actively don’t want the service anymore and that’s me saying, “Hey I don’t want Netflix. $15 is too much” and as a result, I’m going to call customer service or go to a downgrade cancellation flow.

We are not talking about that type of churn when we talk about involuntary churn. In this case, we’re talking about what happens when, “I’ve put my card on file or my payment method on file; you can’t collect my payment; and your inability to process my payment is resulting in me not having access to the service.” So that’s how I think about involuntary churn.

Accidental Churn: This type of churn occurs when users want to pay but can’t, a key issue for subscription businesses.


Robbie Baxter: I love how you explain that, especially that bit at the end where you said, I want to pay but you are not able to receive my payment as the vendor or as the merchant and therefore you choose to end the relationship with me. What might be a reason for that to happen? Is the customer in the scenario a fraudster? Or are there more innocent ways that this can happen to somebody who actually does have the ability to pay but somehow the wires are getting crossed?

Vijay Menon: It’s a great question because there’s no intentionality on either side. I see that the world tends to view payment failure as a pretty binary problem, right? It’s either very black or very white. The world today views payment failure more on the side of, “well, any payment failure must be genuine payment failure.” It must be fraud, or if it’s not fraud, the user probably has to call up their bank and go get something fixed. They don’t acknowledge that actually, there’s an in-between world. To your point, Robbie, there’s innocuous payment failure.

Not every payment failure is a legitimate user trying to pay for the service. However, what may surprise you is that roughly 70% of payment failures across my experience on large subscription platforms—and we’re talking all shapes and sizes, but generally $100 million plus—a good baseline is about 70% of the payment failure on these platforms is actually a genuine user trying to pay for the service, who’s been caught, to use your words, “with the wires crossed.” It can be anything from a configuration error with how a payment is formatted and presented which can be done in a variety of ways to even a very, very small vagary of how the system is set up.

As you think about an example, and where I got my foot into this world, was by realizing that over at Microsoft back in 2013 we did something that was very engineering optimal, which was to run cron jobs on subscription payments. All the users who signed up for Xbox Live on April 10th, they’re going to get billed on May 10th, and we’re going to run a queue at 12 noon local time in Seattle, Washington.” Well, Robbie, if I’d signed up from India, it wouldn’t be 12 o’clock local time when they run my card; it would actually be 1:30 in the morning. And if the State Bank of India has issued this card, then they’re wondering what I’m doing swiping an Indian issued card in the United States at 1:30 in the morning. And they’re thinking that might be fraud – and you would want them to think that might be fraud because I don’t want someone swiping my card in India at 1:30 in the morning at a gas station. And as a result of that, Microsoft’s getting a fraud response.

So doing nothing wrong from a technical perspective – but because of the way the payment system is set up, they’re actually falsely flagging a bunch of payments and those are legitimate users who are going to wake up in the morning and realize they can’t play Halo anymore and wonder what’s going on. And they can’t call the State Bank of India to fix that, Microsoft’s going to have to fix that for them. And it turns out there are dozens and actually hundreds and even thousands of reasons why these payments fail.

But to answer your question directly – about 70% of those payment failures are very innocuous. They are scenarios like this – and about 30% are legitimately fraud or card testers or it might just be that a card got stolen. I don’t want that card to be rerun if it was stolen, so we have to be thoughtful about distinguishing between those cases that are remediable and fixable and innocuous and those cases that aren’t. But I think the industry basically views it as one way or another, and the industry mostly views 100% of those payment failures as unfixable – and that’s something that we need to change. We need to start to realize that the majority of payment failures are innocuous and fixable and we need to be thoughtful about how we distinguish between those two cases.

Robbie Baxter: So you started a company Butter Payments to dig in on all of the many reasons that involuntary churn happens, can you walk me through it? You alluded to your time at Microsoft and working with the Xbox team, but I know you’ve worked at several different places where involuntary churn has reared its ugly head can you walk me through your journey of discovery that led you to the point where you said, “I need to build a solution to solve this problem.”

Vijay Menon: Absolutely and it’s a journey that spans across three different subscription organizations. In fact, in all 3 cases, $100 million plus recurring revenue.

We need to start to realize that the majority of payment failures are innocuous and fixable Click To Tweet

These 3 particular cases happen to be B2C subscription businesses but over the years I’ve found that it’s not just B2C subscription businesses that have this problem – it’s B2B self-serve businesses where there’s a lot of card volume on sign up. So companies like Zoom, Figma, Notion, etc. And it’s also direct-to-consumer brands. Right? Companies that ship boxes where actually you can imagine a payment failure is more salient. Because in a digital world, if a payment fails, we can continue giving you access to our product for a while without any physical repercussions. If I’m shipping diapers, I’m going to notice the diapers are not here in 3 days and we have to fix that problem quickly. So it applies across all3 of those scenarios.

But to come back to my specific experience you mentioned it’s a journey of discovery, right? And I can imagine similar to your case, you didn’t wake up in the crib and say, “Hey, one day I’m going to be the world’s greatest subscription expert,” but you got there over a process of discovery. And I didn’t wake up thinking from the crib that I was going to become a pre-eminent payments expert, but my path to getting there involved a couple of core interests for myself growing up. Those would be sports and video games.

Sports got me very deep into statistics and understanding the “why”; sabermetrics and other kinds of tools. I ended up getting a degree in statistics, and the video game aspect brought me to Xbox for my first job. Between 2013 and 2016, I started diving deeply into the causes of churn on the retention side from a product perspective. At the time the industry was focused heavily around active churn and engagement, which is to say, “users will be stickier on a subscription service if they use that service more.” This is true – if you’re more engaged with playing games, or adding friends, or hours of activity, you’re more likely to continue to stick on Xbox Live just as if you watch 50 hours of movies a month you’re more likely to stay on Netflix than if you watch 50 minutes of movies a month. And so teams should be doing good work here.

However, what was overlooked was that actually the leading driver — the single biggest cause of churn — was involuntary churn or accidental churn.

And at Microsoft, it was roughly 20% of the overall churn. I moved to Dropbox before their IPO back in 2016 and the first thing I looked into of course was the accidental churn or the involuntary churn component, and that blew some minds. But I now see this is normal across the industry. At Dropbox, at the time more than half of churn was involuntary, meaning due to payment failure. I moved later on in my career into Scribd, and at Scribd another $100 million plus subscription service, there was another massive black hole when it came to involuntary churn to the point where roughly 40% of our transactions were being declined due to payment failure at a transaction level.

And this is my process of discovery – to say well, if these three large $100 million plus B2C subscription organizations have not gotten a full handle on solving accidental churn – and the biggest singular thing they’ve done within the organization to drive revenue is to fix this problem – there’s a solution to build at scale here, and the market is not caught up. And that led me on my journey to building Butter and ending churn.

Robbie Baxter: There are still companies that are not focusing on involuntary churn and from my perspective working with businesses that are often trying to optimize their existing subscription model and particularly in the last year or 2, retention has been such a big focus for so many businesses it’s baffling to me why, organizations wouldn’t do a deep dive into what’s driving this accidental form of churn of customer loss, what are the reasons? Assuming that these people, Xbox, Dropbox, Scribd, smart people work there, people who want to make money, people who are trying to do right by their shareholders. What are the reasons that you see for why people don’t invest in this accidental churn?

Vijay Menon: Well, it’s a great question, actually very multi-layered. I would say this to begin with and it’s kind of, as you’ve heard from my own experience — I myself didn’t actively choose to get involved in the payments or involuntary churn space. So I think the first reason is that every organization would rather outsource payments is because their smartest and their brightest people prefer to work on stuff that is core to the product and to the value prop. If I’m at Netflix, I probably want to work on sourcing fantastic content, or if I’m on the technical side I probably want to work on building fantastic machine learning algorithms to recommend great content to Robbie and Vijay. I probably don’t come to Netflix to say well, I want to work on transacting payments. And similarly, at Spotify I want to work on music and if I’m over on the Xbox team, I want to work on building great games. So most organizations are going to outsource payments and their smartest people aren’t necessarily going to want to work on payments in the first place.

As a person that has led back end teams across not just payments, but also back end teams across search and recommendations, I have seen firsthand: when we go to outsource search, or go to outsource recommendations, the organization throws bloody elbows up because the people in-house want to work on that stuff; it’s core to their identity and their algorithms. Nobody is fighting to own any part of the payment stack; they’re ready to outsource it. So I think it’s interesting – that just foundationally makes sense from a human perspective. But what I would say beyond that and to get even more layered into why organizations don’t look at it, the first piece is that they need to realize how big the problem is.

Most organizations view failed payments as a minor cost of doing business. When I have a conversation with someone that’s in a large subscription organization even all the way up to the finance suite, they’re kind of broadly aware of involuntary churn and failed payments; but they don’t have a clue how big it is. They think it’s roughly 1-2% of the top line and maybe you can get a little bit back but the majority of it has been fixed. And they just assume that there’s not a whole lot they can do there.

Now the reality is that when I go into organizations, and I pull data directly from their payment service providers, in 95% of cases I find a minimum of 10% of the organization’s top-line revenue has gone into a failed payments bucket in the last year. To be very concrete about that, it’s a $100M dollar business and 95% of the time, sight unseen, I can guarantee there has been $10M+ failed payments volume in the last year at an invoice level.

I think if there were broad awareness of that then everyone would say, this is the number 1 thing I should be doing. Because if I can say, “Hey, your $100M business has $10M failed payments and we can give you $5M back” — and I can tell you that yes, I am saying that — then I think most organizations would say that 5% ARR lift is probably the number one thing to work on. I’m going to prioritize it this year.

And again I can say that having been on AB testing teams, product teams, and growth teams in the past – if we ran an experiment that drove top-line ARR by half a percentage point, it was the best thing we did all year and we’re going out to Alexander’s Steakhouse and we’re having a big meal to celebrate. So if you can come in and say well, actually involuntary churn could be 10 times that impact if you focus on it correctly and you prioritize it correctly. I think the market would say, “I need to prioritize that.” But I think the first and most foundational answer to your question of why companies aren’t really running after it, is they know it exists but they just don’t think it’s that big because teams don’t really look into that and similarly, again, as you go back to search + recommendations teams everywhere they all look at latency and they look at recommendation success and the metrics are kind of the same across the board. Payments teams across the board are not the same. Sometimes they don’t exist, sometimes they’re just one person and sometimes they don’t even track the core authorization metrics. So that’s scratching the surface, but I would say foundationally it’s an awareness problem and then even when you get past the awareness problem it becomes an incredibly difficult problem to solve, and I’m happy to spend a lot more time there diving into that but that’s the very high level.

Robbie Baxter: No, that’s super helpful and I would like to go into the specifics. Remembering that there are a lot of lay people here in the audience who may not be in the payments team, but might be more generalists or leading other parts of the organization. What are some of the tactics that chip away at a big involuntary churn number? I understand that it’s a lot of little things that add up to that, that 5% of ARR, what are some of those elements?

Vijay Menon: I would say several things. The first thing that makes it particularly difficult to solve is that there is no 80-20 rule for solving failed payments. When we talked up front I kind of brought up my “AHA” moment. That “AHA” moment was wow, these engineering optimal queues result in some payments being flagged for fraud and we can anticipate this and see this in our minds. We can say, “If somebody did take my card and ran it at 1 in the morning I don’t think it would go through and so we can think about that particular use case. But, like I said, there are lots and lots of reasons why payments fail so if you’re trying to chip away at the problem I’ll start to break it down a little bit.

The first thing we need to do, we need to identify the volume of payments that have failed in the last year, then we need to go categorize them and at a very high level we can put them into 2 categories.

First, we can say hard errors, and these are things that should not be retried and cannot be fixed like a stolen card, or things like actual fraud. When we see those cases and we get those error codes back we don’t want to try and fix that, we want to let that drop. So then I need to look at what portion of my failed payments are soft errors and those are things that we can fix, soft errors are things like processor error. Well, if there’s a processor error what do we do? We don’t want to wait a week to rerun the payment, we probably want to do it in a couple of hours. So just differentiating between those two, soft versus hard, is somewhat difficult. As we talked upfront, roughly two-thirds of payment errors are soft and retriable but it’s going to depend on your business if we need to go look into your data.

Robbie Baxter: The example you gave at the beginning is the Bank of India midnight charge. Would that be a soft error or a process error, because of the time of the processing?

Vijay Menon: Right and it’s tricky to go make those calls in real time because there’s so much volume that’s coming in, and in particular, if you’re a very large enterprise you might get 50 failed payments just in the last hour alone. So if a human is trying to categorize and do all of that, it’s really difficult to do. Ultimately what you need to do is build a system to address that in real-time, which is very difficult. Well, let’s assume that you don’t have a machine learning function in-house and you don’t have a cloud platform to make those decisions well, what else can you do?

The first thing you would do if you’re savvy is go into your payment service provider like an Adyen or a Stripe or a Braintree and just start to look at the error codes; look at the reasons that are being given for why the payments are failing and you can again make some progress here, so you might find again some that say processor error or some that say generic failure. And the reason why it becomes really difficult to make sense of all those error codes is because each of the payment service providers are rolling up the error codes from the downstream issuers, and when I say the issuer I mean the bank, and when I say the banks I’m talking about Wells Fargo, Chase, PNC, Banamex, BBVA, Bank of America, Bank of Colombia, Cartes Bancaires. There’s over a thousand different banks in the world. The problem is all those banks have their own rules and the problem is that those rules are not unified. So when you go into a dashboard for instance within Stripe or Adyen and you see something that says generic failure you are not able to make sense of that because it means something different depending on whether that payment failure came from an issuer in France versus an issuer in Colombia. At this high level, it gets really difficult to break down, and now, if you actually do understand the volume of failed payments, you can differentiate well between hard and soft declines, and you can start to understand the actual issuer level error response, this is when you can finally start to think about the strategy.

The strategy is the timing and the metadata. Timing means knowing what time to run the transaction to maximize the likelihood of success. Metadata means what fields to present with the authorization. And if you’re wondering, what does that mean? Well, there are actually up to 128 different data elements you can present when you’re transacting on a card, but most businesses are presenting it one way. Let’s just take one of those elements, for instance, a zip code.

Well, if I go look at a Barclays-issued card from the UK, the zip code format is different than when I’m looking at a case where you and I are both in the Bay Area and we have Chase issued cards. Well, there are 5 digits involved there – or depending on how much complexity we want, there can be 5 digits plus 4 digits. So we could do something like 9, 4, 1, 1, 5, or it could be formatted as 94115-1719 to go with 5 plus 4. But then, if that was a Barclays-issued card it would have to include some J’s and some C’s and some K’s and some characters, so now there’s that element to consider and it gets really hard really fast to consider all that complexity for every payment failure, in every case, from every issuer.

There are ways that you can start to address the problem and start to improve. The first step, of course, is to say, “Well let me just try and group the world into soft versus hard. Let me try and do a little bit better on the soft errors and maybe a little bit better means saying well at least I’ll run the cards at noon local time and I’ll try and do a little bit of that intermixing to look into my data to see if there’s more to uncover.” But you also get to a point where you say if you want to get an A plus on the test, you’ve got to build a machine learning platform to go figure some of this stuff out.

Robbie Baxter: Got it. I know you guys talk about friction-free fixes. What is a friction-free fix and what doesn’t that include in terms of this big pool of rejected payments?

Vijay Menon: One of the things that you want to think about when you’re thinking about friction-free fixes is that it’s part of the canonical knowledge on payment failure is that when there’s a payment failure event, I need to text my user, I should email my user, I should essentially harass them. Right? The payments failed, so let’s get to Robbie and make sure she updates it.`

When we talk about friction-free, what we basically mean is to say that well, hopefully, we’ve identified and clarified for several of the folks here that in many cases we don’t need to be calling Robbie or texting Robbie, and it’s annoying for us to put that onus on our customer to go fix the payment failure when it can be something that we can actually simply do ourselves by cleaning up our back end. When we’re talking about friction-free, what we’re trying to say is most payment failures are remediable without end-user intervention—I don’t actually need to reach out to the customer or make the customer do something, and this is something that the industry doesn’t understand.

The industry thinks that all of these payment failure cases, I need Robbie and Vijay to go call up their bank and go fix a problem that they’ve created and they’re not acknowledging that I’ve created the problem and I can fix it without that end-user intervention.

When we're talking about friction-free, what we're trying to say is most payment failures are remediable without end-user intervention Click To Tweet

What we like to do is make sure that for the 70% of payment failures that are actually fixable, remove those from your dunning communications, customer support actions, etc. Myself, as a consumer, get annoyed when someone reaches out to me to make an update, especially if that company could have just fixed it. So you’ve trimmed the bucket down because you’ve automatically recovered payments for these subscribers and they continue to get their boxes, services, etc. Then for cases where you legitimately need a user to actually update their credentials or go to a ban, say there’s actual fraud happening, then you can be intentional and very selective around how you communicate that. That’s what we’re talking about when we say friction-free—it’s removing unneeded friction from the subscriber experience and being deliberate about when and how you communicate with those you actually need to.

The other element that we wanted to address when we’re talking about friction-free is to say that there are businesses that don’t do this level of differentiation between addressable payment failure and non-addressable payment failure. Instead you can actually go overboard on the other side of the problem, by not being nuanced. If you see a payment failure, and every single time you try to recover it 10 to 15 times, which I’ve seen a lot of businesses do because now they’re like, “Oh, Vijay you have convinced me this is a big problem. Here’s my way of investing in it.” They slam payment retries and just run the payment over and over and over again and they’re like, “what’s the downside?” because the thought is, “well, if the payment failed and he owes me the money then I should just keep trying to run the card.” No, no, no there is a downside there.

Number one, you’re creating friction for the customer which should be the only reason I need to give you; that you’re running Robbie’s card 20-25 times failing and failing and failing, and every time Robbie gets a notification. That’s a problem.

Even if you’re not convinced by that there’s actually a downside to over attempting to retry failed payments: the transaction authorization rate goes down. If the transaction authorization rate goes down the banks, the issuers, and the downstream network start to see your business as a shady merchant because they say, wait a minute, is your business a hub for card testing? Is that why so many payments are failing? And because of that, they start to penalize you and they say, “Hey, when I think about accepting or rejecting a card payment I’m going to make the rules harsher now because I see your business as a shady merchant.”

That’s the nuance that comes to this problem: friction-free means let’s go solve the problems that are fixable without calling up our customers. It also means do not overdo it when it comes to trying to solve the problem, and that if you do overdo it there’s a downside with a negative feedback loop that’s created there, not just for the customer, but also for your business and your bottom line and that’s where nuance needs to come into play.


Friction-Free Payments: 70% of payment failures are resolved without customer intervention, support emails, or notifications.


Robbie Baxter: Super interesting and I wanted to stay on this topic of friction-free versus when you have to communicate with the customer, with the subscriber in that, the messages, at a minimum are annoying but they can also be hurtful. When, if I say to you, even the language of “your payment failed” – it implies that you did something wrong and that it’s not just something wrong but something dishonest and I think even if it’s fixed, I know that in many cases that consumer has changed their attitude about the company and they said, this is a company that doesn’t trust me. And in our world of subscriptions, trust is everything – this is all about a relationship where someone is automatically charging your payment, your credit card or whatever your payment method, they’re charging it automatically without touching base with you first and so the level of trust and goodwill has to be high.

Vijay Menon: Agreed, and I think it leaves a bad taste in the consumer’s mouth because it’s the standard practice. Standard practice is not necessarily best practice as this industry shows you, but the standard practice today is every time I run Robbie’s card and it doesn’t go through, I tie an email to it and in that email say, “Hi, Robbie your payment failed and you need to go fix it” which as you said is putting the responsibility on you to go fix the card and saying, “Hey, you are presenting fraudulent information.”

But we’ve all had that experience where we’re like I didn’t do anything wrong, this is my card, why is it being declined? You’ve particularly had that experience if you’ve tried to sign up for something cross-border, maybe a service or product headquartered somewhere else, and that does violate trust. It tells the consumer that you’re not taking responsibility for the issue that you have created and we see because of that if a user ultimately gets involuntary churned from a service, in 75% of cases, they’ll never sign back up for that service. That’s a question that I get quite a bit which; even if they churn but they really like the service, wouldn’t they just go sign back up? It’s not that simple.

The reason for that is because they’ve lost trust in your service and so there’s generally other alternatives out there for them to consider. So if I’ve lost trust in Box, I might go to Dropbox because of a payment failure related issue that has nothing to do with how much I appreciated the product or not. That’s why you need to be mindful and wary of when you’re working with your customers. I’ll say, I saw that first hand and part of the motivation for starting my business was large companies, when we see high volumes of payment failure, tend to put it on the customer.

If a user ultimately gets involuntary churned from a service, in 75% of cases, they’ll never sign back up Click To Tweet

What we say is, “Hey, why are 80% of Indian payments failing? Or why is India a small market? Why is Indonesia a small market?” And we say, “Well, it’s because they don’t want to pay for the service.” I’m a well-traveled guy. I know people all over the world want to read books and people all over the world want to play games. It’s not that simple, right? And so if we’re not setting our businesses up in a way that these people can actually pay us and then we’re just throwing up our hands saying, “Well, they don’t want to pay” We’re missing out on lots of volume, and lots of opportunity.

The reality is that you can guarantee if you address the fundamental payments issues. For instance, providing local payment methods. Global businesses need to offer local payment methods to accommodate how those users want to pay—i.e., direct debit or direct carrier billing or otherwise. Build that into your product flows, giving them their preferred ways to pay, something that’s not US-centric), that allows them to pay how they choose. Then let’s come back and review, tell me if their sign-up volume has spiked or not. I can say I’ve seen that firsthand, right, just by introducing a way for users to pay you, you can make those markets become top 5 overnight because the demand was already there. The ability just wasn’t. This is why it’s so important to consider your users and where geographically you’re doing business when it comes to payments. It’s time for organizations to take the onus away from the user and instead consider how it can make it easier for someone to come in and easily pay for the service.

Robbie Baxter: The moral of the story is that the Payments Department is actually a pretty powerful department to be in if you want to have a big impact on revenue growth.

Vijay Menon: I would argue it’s the single biggest lever towards revenue growth.

People might look at the reputation of payments and say it’s slow, there are minor improvements, it’s basis points and little optimal optimizations that you can make. I’m like no, this is the singular biggest revenue driver. I’ve made a career out of it, this is why I’m in this industry, right?

Because there’s not a whole lot of other things that you can put on your product roadmap that literally bleed 10% of your top line and that can give you 5 to 10 points back to top-line revenue and if you think about what solving involuntary turn does for your business. It really means you’re improving your LTV to CAC and that flows through to your margins. What it means is that businesses are also impacting, contracting top level growth. Revenue impacts every department. Right? If you solve downstream payment failure and you improve that LTV to CAC ratio and you improve those contribution margins, your CMO now has money to spend on new acquisition channels and can go fix the top of the funnel problem. But if you completely ignore that downstream then you’re going to have 2 problems.

In a global macroeconomic downturn, you’re going to have a harder time with acquisition generally and efficiency is key. But now, because you haven’t solved downstream, you are certainly not going to have money to go invest in upstream and acquisition efforts as needed. That leaky funnel at the bottom is siphoning off at the top too. It’s why I think solving involuntary churn is the singular biggest thing you can do to drive revenue. Myself and Butter are on a mission to bring awareness and shed a light on this issue, helping subscription organizations start to realize this. We want to give them the path forward and show them where to help drive investment so they can solve this problem.


The Payments Department holds significant power in driving revenue growth and stands out as the primary driver due to its profound impact on both reputation and financial performance.


Robbie Baxter: It’s fascinating and the involuntary churn piece that you work on and solve at Butter as well as your kind of offhand point about having the right payment method for the local market before you say they don’t want to pay, make sure they’re able to pay before you decide whether they want to pay or not. It’s such an important area of your subscription strategy and I’m so delighted that you joined us today.

Before I let you go, do you have time for a speed round?

Vijay Menon: Let’s do it.

Robbie Baxter: Okay. First subscription you ever had?

Vijay Menon: I was very OG Xbox Live, so that’s actually a very full circle one for me. so early, Halo 2 probably would have been like 2005 or so, and that is probably the first Xbox Live subscription that I had.

Robbie Baxter: Favorite subscription you’re using right now?

Vijay Menon: Spotify for me is my go to. I use it every day for podcasts and, 1-hour commute to Bay Area traffic, it keeps my sanity.

Robbie Baxter: You wrote a book, A Brown Man in Russia.

A Brown Man in Russia: Lessons Learned on the Trans-Siberian by Vijay Menon

What motivated you to write it and what advice do you have for others who would be memoirists?

Vijay Menon: That is a great question. I am a big reader myself, a writer, and a backpacker prior to starting Butter.

Today, people are aware of these cheap flight finders like Scott’s Cheap Flights. But back in the day, you had to do the heavy lifting yourself. I would change my geolocation to figure out the best prices, best flights, the best places to go and I did end up going to Russia with a backpack in the winter of 2013. As someone who grew up in California, that was the first time I’d seen snow in my life so it’s a little bit of a crazy experience. I went third class the whole way, took it across from St. Petersburg and ended up ultimately in Ulaanbaatar, Mongolia. I had a series of crazy experiences.

I think my takeaway from that was to travel not to a place that’s unique to you but where you are unique to the place. I kind of call that my golden rule of travel, because when you do that you create experiences out of thin air. Everyone comes to you and is like what the hell are you doing here which creates connection and experiences. It burns down a lot of understanding.

Now when it comes to people who want to write a memoir, for me, I would say it wasn’t planned. I’d given a Ted Talk on it, and a publisher approached me and said, “Hey, this would make for a good book”, which led to the book. But if you are a memoirist out there, actually sitting down and scheduling time to write is important. I would just force my ass into a seat and just start writing. But also keep a journal, a diary, and a couple of notes every day that just remind you of times and places and the ideas will come to you.

Robbie Baxter: If you want to be a writer, rule number one is to start writing.

Okay, last question. You’ve said you believe in karma and in paying it forward, how does that manifest in your life today?

Vijay Menon: In so many ways. I think coming in to start Butter, I mean, a lot of people start companies because they have always had that dream, right? A serial entrepreneur or I come from an entrepreneurship background – you want to build, to run something. I don’t come from that world, I don’t have serial entrepreneurship within my family or background, and I’m not from a culture or group that takes big risks.

I ended up here because of the favor of lots of different people who recognized some of my talents over at Microsoft and were able to spotlight me. Moving into Dropbox was a function of a very serendipitous meeting that I was able to take; lots of very different meetings and interactions led to starting this company. Getting acquainted with JD Ross, who was the founder of OpenDoor, who I didn’t have contact with, but who a friend of a friend introduced me to—we had a very similar conversation to the one you and I are having right now, Robbie—where he just kind of picked my brain on all of these things that I knew about payment failure and said, “Holy crap! I think you should start this company.” That resulted in me saying no for a month or 2 before deciding what I was actually going to do. Of course since then things have taken off, we’ve built an amazing product in the market, solved a real need, and are growing like wildfire. Now I never would change anything for the world.

So I would say, it has manifested a role in my life that these serendipitous meetings and these favors that people have done to acknowledge things that I’ve delivered have resulted in me being able to have this platform and the stage. And so for me, that’s very important as well to continue to give others opportunities who may come from more non-traditional entrepreneurship backgrounds, but may have a lot to offer. They may literally know more about a certain space, domain, or niche or have something to offer the world and maybe they’re not thinking, “Well maybe I’m the person to do it” and “why not me?” So I think everyone should just embrace that mentality a little bit more and if in a position of power be able to have those conversations with people so they can start to challenge themselves, starting thinking instead “I should be the one to go run that and do that.” And so that has played a huge part of my life, and that’s why I’m a believer in it.

Robbie Baxter: Appreciate that. That’s such wise counsel, and the idea of recognizing talent and others who might not see it yet and opportunity for them is one of the most generous acts I think that you can commit.

This has been a wonderful, wonderful conversation. Vijay. Thank you so much, I hope to have you back on the show sometime soon, and appreciate you taking the time and being so thoughtful with our listeners today.

Vijay Menon: I likewise appreciate it, and thank you so much for having me and hope we were able to share a couple of gems that get people thinking happy to have anyone contact me, and easy to find me at [email protected].

Robbie Baxter: We’ll put it in the show notes and thanks again, Vijay!

Vijay Menon: Thank you very much.

That was Vijay Menon, the founder and CEO at Butter Payments. For more about Vijay and Butter, go to For more about Subscription Stories, as well as a transcript of my conversation with Vijay, go to

Also, I have a favor to ask. If you like what you heard, please take a minute to go over to Apple Podcasts or Apple iTunes and leave a review. Mention Vijay and this episode if you especially enjoyed it. Reviews are how listeners find our podcast. And we appreciate each one. Thanks for your support. And thanks for listening to Subscription Stories.

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About Vijay Menon

Vijay Menon is the founder/CEO of Butter Payments – where churn ends.

A decade ago, Microsoft, Dropbox, and Scribd were all losing millions a year to subscriptions that were being “accidentally” canceled. Vijay’s work shoring up the financial backend helped his previous employers retain millions they otherwise would have lost. In the process of solving this problem, he developed the world’s leading core technology around payment authorization and recovery. On this premise, Menon started Butter Payments.

Butter is a payments platform laser-focused on ensuring that legitimate payments don’t accidentally fail, rescuing the 5% of total subscribers that silently churn every year. This delivers millions of dollars in found revenue every year for our customers and ensures their end-users continue to get the products and services they want.

Vijay is also a TED Speaker and author of A Brown Man in Russia.


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