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CASE STUDY
How Edward’s eBooks Achieves Maximum Profitability with Kount
Edward’s Educational eBooks* sells online training materials to help people live their best lives possible. Edward’s books cover everything from how to improve study habits to best anti-aging techniques.
73%
decrease in monthly chargebacks
18%
increase in conversion rate
THE PROBLEM
Too many chargebacks and a declining sales model.
For Edward’s Educational eBooks, managing risk and growth was an ongoing challenge. Often, that meant choosing one over the other.
The company made profits through a straight sale (one-time) billing model. And it had been moderately successful for a while. However, chargebacks were eating away at profits. Plus, there wasn’t a lot of repeat business.
When Edward’s eBooks started digging into the issue, they came across several online reviews suggesting that the products were priced too high. Through this feedback, they determined that customers didn't feel they were receiving enough value for their money, which led to disputes.
The company knew they needed to make a change, but didn’t know exactly what to do. And that’s where Kount came into play.
THE SOLUTION
Analytics that identify the root issue.
Edward’s eBooks decided to run a split test to see if lower prices resulted in greater customer satisfaction and fewer chargebacks. Kount made it incredibly easy to collect data from the split test and evaluate the results.
The test revealed two options that the company had to consider:
1. Keep ebook prices the same and continue generating revenue with high chargeback risks.
Or
2. Lower prices and make less revenue.
The first option was incredibly risky. Chargebacks would likely get out of control, putting the company in violation of chargeback threshold limits. The associated fees and fines alone would cost much more than the additional revenue his current price point would generate.
The second option meant less gross revenue and tighter margins. However, the chargeback risks were much lower. And if the company reduced chargeback expenses altogether, the margins wouldn’t be as tight.
In the end, Edward’s eBooks realized that selling merchandise at a lower price point would be more profitable. Though the company would earn less gross revenue from products, the combination of fewer chargebacks, less fees, and more repeat customers would actually increase net profits.
THE RESULTS
Fewer chargebacks. Higher conversion rates.
Using Kount’s data analysis tools, Edward’s eBooks was able to test a variety of scenarios to figure out the best solution for the business. Within four months of lowering prices on all ebooks, the business experienced an impressive turn-around.
Monthly chargebacks decreased by 73%.
Customers found greater value in Edward’s eBooks, were more loyal to the company, and refrained from engaging in friendly fraud.
Conversion rates increased 18%.
The lower price point enticed more new customers. Also, customer satisfaction increased and shoppers became repeat buyers.
Margins stayed the same.
Edward’s eBooks cut gross revenue by 20%, yet the profit margin stayed the same without having to worry about chargeback fines.
The company had been focusing too intently on revenue. When they took a holistic view of the situation, it actually made sense to reduce their gross revenue in order to optimize profitability.
Kount's detailed analytics made it easy to identify areas that needed improvement, recognize a better solution, and monitor results.
Do You Want Access to Chargeback-Preventing Data Too?
At Kount, we believe the challenge of running a business should be delivering great products or services, not managing payment risk. Kount has helped Edward’s Educational eBooks and countless other businesses remove the complexity of payment disputes so they could get back to business.
If you would like a simplified approach to preventing chargebacks and stopping unnecessary revenue loss, Kount can help you too. Sign up for a demo today.
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* Our customer asked that their name be anonymous.