Spotify case study video: Freemium to premium subscriptions

How does a fast-growing subscription-based business such as Spotify approach payments?

At Spotify we see payments as enabling us to sell the right product for the right duration at the right price point. To help us achieve this, the payments team sits in the business team and is focused on growth and optimization.

That means we are involved in and connected to the product team for thepayment experience, the finance team for operation and costs, and the customer service team to ensure that people are delighted by our payment experience.

"Seeing payments as a driver and enabler of growth has really helped us reach the fifty million plus paying subscribers that we have today."

This is different from some companies in which payments sits in the finance function because they’re heavily focused on costs, and in other businesses in which payments sits in the product organization because they’re heavily focused on the user experience and how you go through the checkout.

Seeing payments as a driver and enabler of growth has really helped us reach the fifty million plus paying subscribers that we have today.

How do you see the role of customer experience in relation to payments?

Customer experience is key. When somebody comes to your website to buy a product from you, you need to ensure it is super clear and delivers a great experience – as well as being able to convert through the checkout.

Optimizing the checkout flow with Adyen has been a big focus for us – for example, we went from a two-page checkout to a one-page checkout because we were able to leverage some of the technologies Adyen has while still outsourcing most requirements related to PCI compliance. In fact, we solved quite a few things around the customer experience with the Adyen integration.

Another interesting example of improving the customer experience is when we recently launched in Indonesia with cash-based, ATM, and bank transferpayment methods. This was really important since the market is still primarily cash-based, card penetration is low, and people aren’t used to recurring subscriptions. This was the first time where the payment experience was actually a key part of the launch story for much of the local media.

"We’ve seen significant improvements in our overall authorization rates on recurring subscriptions ..."

What is a key difference between subscription payments and one-off transactions?

It’s super important for us as a subscription business to make sure that recurring payments are successful. So we need to minimize involuntary churn – that is to say, churn that happens due to payment failure.

"... with Adyen, we’ve been able to significantly increase those authorization rates."

We do this in a couple of different ways – one is by having rules in place to retry transactions that fail and then retry specific transaction failure reasons, and the other is by relying quite heavily on Adyen’s internal retry logic to maximize our retry success rates. We’ve seen significant improvements in our overall authorization rates on recurring subscriptions through that combined approach.

What are some of the ways you have used data to drive conversion?

A good example of how we are using data to drive growth is in Mexico. Previously, we were processing payments cross-border, which resulted in relatively low authorization rates. But by having local acquiring and processing with Adyen, we’ve been able to significantly increase those authorization rates.

This means that check out conversion is higher and ultimately we grow faster in the market. Currently, we use Adyen for domestic acquiring in markets including the US, Spain, France, and Australia.

We partner with Spotify for payments processing across one hundred and eighty two countries.

5 insights from Andy Wiggan, head of payments, Spotify

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