Since I wrote the Klixxx article I can actually post it here for you now
 

Since I wrote the Klixxx article I can actually post it here for you now. Clearly the other thread got the point lost.

Anyway, here was the article:

Chargebacks

You don?t have to be unethical to have chargeback problems. Sparse content and aggressive marketing methods are only two potential causes of chargebacks. The bottom line is that any program doing significant joins has to deal with the issue. There are a number of factors that can cause you to go above the 1% chargeback ratio that Visa allows, including natural attrition, your members? area, webmaster fraud, support issues, cross sells and your price point to consumers. If you want to stay below the 1% mark, you?ll need to deal with every one of these points.

The other day I was reading the Terms and Conditions for processing through Jettis and I noticed a clause in their contract that required you to phase out processing over a 6 month period if you wanted to leave them as a client. This is because people rarely get notified each month when they are billed. It is quite common for a customer to notice that they have been getting billed recurrently only after some time has passed. If you don?t send new charges through the same IPSP account over and over, natural attrition of your customer base will put you over 1%. I know of one very high volume and well-known sponsor program that processed through Jettis for years and then switched to Epoch for various reasons. Recently that sponsor has had to start sending charges through Jettis again because they went over 1% by not sending them new joins. Now they will need to go back to Epoch for new joins because they will have the same problem there. What?s the solution? Get your own merchant account and run all of your primary processing through it or rotate two separate IPSPs so you don?t put all your eggs in one basket.

Technically, customers aren?t supposed to chargeback fees just because they don?t like the product. However, in reality this happens all the time. Having a great members? area will not only decrease chargebacks but will also increase your total billing! At CJ Bucks, we do everything we can to keep the customers happy including separate members? areas for each of our sites and tons of well-organized content.

This may come as a surprise, but there are many fraudulent webmasters! All program owners regularly cancel webmasters for pushing through fraudulent transactions. The frauds want to get a check from you before you?ve noticed so the key is to notice and catch them before you send the check. Most IPSPs will inform you of fraudulent webmasters, but you can always catch more than the processor by taking ownership of the issue yourself. Some methods are easier than others. One easy way to catch the crook is to look at their conversion ratios. If you have a webmaster pushing through joins at 1:3, the odds are that they are frauding you. If you show me a traffic source that converts at 1 in 3 I?ll buy all of the traffic for sale because such a thing just doesn?t exist. A much more difficult technique would be to build a system that checks to see if members login to their members? areas. If a webmaster sends five joins to you and none of those joins login to the sites, odds are that its fraudulent. The bottom line is that you must have a system in place to protect yourself against fraud. At CJ Bucks, we have many, so most crooks look for an easier target.

Your support systems can make a huge difference. When a pay site member needs support or chooses to cancel, they have two choices: go to your site and look for support channels or go to the emails they received when they joined the program. Those emails most likely came from your IPSP and contain email addresses, links and/or phone numbers. Your IPSP couldn?t possibly answer questions about your members? area or the encoding of your videos. I know of at least three sponsors who have asked their IPSP to change the information on those emails so that all requests funnel through the sponsor who actually sold the membership.

Cross sells are often blamed for the chargeback problem. Again, it?s how you use the cross sells that counts most. Some programs bury in their terms and conditions that the end user is joining more than one site while others use check boxes or even pre-checked boxes on their join page. Clearly there is a middle ground here -- your job, as a program owner, is to find that balance. I prefer the pre-checked boxes, but I leave the recurring monthly price for those memberships at 24.95 or less. I think that hooking someone up with two separate 39.95 a month memberships is just a bit too much, and, besides, the CEO of a major IPSP assures me that many banks won?t chargeback charges of less than 25 dollars.

Chargebacks are obviously an important concern of everyone involved in a sponsor program, but the issue isn?t as cut-and-dry as simply offering better content. Of course, when selling an intangible product, it never hurts to deliver above and beyond your customers? expectations, but unless you efficiently shore-up all points of potential chargeback leakage, you still might find yourself running aground with the 1% policy.


--------------------

Note: I wrote this months ago and the magazine just got mailed. I've learned a lot myself since this writing and will be posting more thoughts in a minute.

Thanks for posting that :thumbsup

very nice read. good job!

Great article :thumbsup

Well put! That is a well thought out, timely and informative article. Rick, nice job!!

What have you found is the balance between membership price and cross sell prices that work to maximize the join without exposure?

Good read, thx for posting it. :glugglug

Excellent question. Clearly there are many people on the board that would be better qualified to answer that question. As for us, we are now rotating join pages and agressivley pricing some but not all click throughs. A wise man once told me that his goal is to do 1,000,000 chargebacks a month because that meant he had to do 99 millioin and 1 that don't. The real art is to stay as close to 1% as possible without going over it, as you so aluded.

great read

rick, i need to shoot down there and talk to you in a week or so about something else signup4cash has in mind.

whens a good time to come down and where is a nice place to stay?

IS THIS TRUE???? major news if it that works.

I like this article, especially the part about sponsor changing the info in the welcome email... " I know of at least three sponsors who have asked their IPSP to change the information on those emails so that all requests funnel through the sponsor who actually sold the membership."

You and I had a long conversation about this in Curacao and you know my views and ideas on this issue.

BTW I still think my idea would do great in this industry and would love to be able to run a test with you anytime you would be willing to... don't need much to run a test you know :winkwink:

I trust the source but I'm not the source.

There are many chargebacks for $1. Maybe SOME banks dont, but most do.

nice stufff Rick,

comprehensive overview on the issue, lots of nice points in there:thumbsup

Thanks, Rick - now I don't have to look at nekkid wimmins to read it :)

Awesome article!! :thumbsup

Is this really true that a lot of banks won't issue CB's for < $25 charges? If so, what's to stop a paysite from changing their model bi-monthly recurring at $20 each versus one $40 charge? Just throwing in some ideas...

WG

That seems to be the hot point of the article. I've emailed the original source asking for him to post. I'll let you guys know.

:thumbsup

:thumbsup

rick u rock

we will be coming out with a new price point no one has tried, we will launch it with the new pornkings this month. I will keep you posted. had to get Paycom to agree:winkwink:

Always need to think one step ahead our Porn4abuck keeps us out of any chargeback issue's. Knock on wood

stay tuned for new and exciting things


Good read Rick

great read :thumbsup

I have a bunch of 8.00 cb's

im sure quite a few people do.

Also, jettis isnt the only one that wants someone to phase out processing if they leave..thats no big secret. Every processor will do that.

Thanks for posting!

you never stop amazing me how smart you are.

Great read Rick......well written, well laid out and lots of food for thought......looks like you inspired a lot of people to rethink their pricing structure and strategy......nice contribution!

There were some good points in that article. I think everyone should read it even if they don't run paysites. :2 cents:

great article Rick :thumbsup

Excellent read!

I must agree a good read!!

Rick is a genuis

:thumbsup

I can live with $19.95 a month!
Per member:)

But wooo nelli them webmasters gonna be pinched!

Kiss good buy them 50 dollar payouts!
:1orglaugh

good article Rick :thumbsup

With your own merchant you have the freedom of a little more creativity .. however, be prepared for the "reserve" shakedown from the merchant bank .. any where from 30-50% of your monthly billing. Meaning, if you're billing $100k/month, they'll hold onto 15-20% off the top until you've got $30-50K sitting in the bank which cannot be touched for 10 months .. give or take.

CSI was infamous for saying "oh, congrats, you're growing! In order for us to continue to process for you we're going to hold onto 100% of your deposits until we have $10K. Once we have $10k, we'll release 80% of your net earnings twice a week. We don't care that you have webmasters, bills, etc. to pay, we don't trust you because you're adult. Oh, you've had another account with us for years? Fuck you, we don't care."

He was telling me that "some or many" banks won't initiate a chargeback if all charges related were at 25 dollars or less.

Also, I agree that Jettis isn't the only one. It was just their TOS that got me thinking.

No shit? You've got my curiosity running for sure.

i hear the atlanta jail has nice accomodations....haha

seriously, if you wanna be right by their office stay at the Omni, it is right next door...well, almost

hit me up when you come though, stay an extra day and we will woop it up again, i promise no jail this time....

Just let me know when you are coming. I'll be here throughout most of the month.

Great read. thanks :thumbsup

:thumbsup

thanks jace, and yea man u know ill defently get up with ya once im down. :thumbsup

Chargebacks occur at FDR (First Data) for less than $25.00. First data currently does the large bulk of all IPSP business, although that is set to change here very soon. CCBill does not run their charges through FDR but they too have chargebacks for less than $25.00

Upselling, whenever there will be multiple charges from the same source on a credit card gets extra scrutiny from the consumer and the banks. Be it cross-selling, or upselling within the member's area the level of chargebacks is always higher with these products. You have to have a strong product behind them backed with good customer service or you will quickly butt up againt 1% if you push any real volume.

I have been told in the past by a few different folks high up in the IPSP chain of command that chargebacks increase incrementally by the raise in pricing point. With the exact same product you will see higher chargebacks the higher your price point. Many IPSPs will not take charges over $50 as they have found that consumers "see" those charges alot more than usual and the visibility results in significantly higher chargebacks.

That was a very informative read Rick, too bad instead of reading it yesterday we instead had to take that 5 hr detour through mudfields to get here. GFY needs it drama I guess.

good read :thumbsup

This is correct information based upon a statistical analysis of chargebacks.

Nice article Rick!

Rick, interesting article. I have seen many strong tough individuals brought to their knees by chargebacks. Chargebacks are not new to the porn industry or the internet. Many of those who got their start in the *900* phone business went out of business due to excessive chargebacks.

I have never heard of one bank who didn't issue chargebacks simply because the membership fee was low. In fact, I know webmasters who got into chargeback hell charging only $9.95 a month. There are too many wimps and crooks who want to get something for nothing, even if it means calling their banks and lying through their teeth.

Are you suggesting the answer is to use your own personal merchant's account? How many people do you know who have the kind of credit necessary to do this? Why would anyone want to use their own account when dealing with dishonest porn webmasters and scuzzy members (mostly young white men) who have no intention of paying a membership fee?

Thanks Rick , I actually read the magazine last nite:thumbsup :thumbsup

There you have it, folks.

Chris & Rick, where does one find this statistical information about bank chargebacks? I would like for it to be true, but that has not been my experience. I think a valid reference regarding this information would be valuable to all of us. Right now, it is just a casual comment coming from a webmaster.

I think the point is that the percentage drops drastically, if the price point is at that or lower. The more you charge, the more you are at risk.

"I think the point is that the percentage drops drastically, if the price point is at that or lower. The more you charge, the more you are at risk."

Rick, wouldn't you think that webmasters would have realized that charging outlandish fees like $39.95 for a monthly membership was way out of line? I stopped joining sites when the price went over $14.95. Nothing is worth it. I'm not that familiar with you and your websites, but didn't you charge those same high fees? Show me one webmaster who really cares about his members. Everyone is out for a buck no matter who gets hurt.

The porn industry needs to be shaken up. There are far too many lowlife idiots who don't give a damn.

No, we don't charge those fees and never have. However, we send traffic to programs that charge those fees so I'm by no means innocent. And my company and many other companies care deeply about the consumer. Read my other articles about running your buisness like an entertainment company rather than a processing company. My partners and I own some of the biggest "brands" in adult and you can't do that by scamming or bullshitting your way through the consumer pool.

that's a great read rick thanks! you always bring good buisness oriented posts here. a rarity, but not an un-appreciated one.

thanks! :thumbsup