Design for Lifetime Value like a Visa PMM

0:02Hi friends, welcome to Product Marketing Adventures, the only show that takes you beyond theory and into the real execution of product marketing. My name is Elle Grossenbacher, your trusted guide and host of this show. In each episode, I bring in expert product marketers to co-host two segments of this show. First, a case study example of their work, followed by a messaging critique for companies we admire. So if you're a PMM looking for practical guidance and inspiration, you're in the right place. Are you ready? Let's go.

0:42Let's talk about one of the most underrated metrics in product marketing, customer lifetime value. So most PMMs I know don't even track it, but we should. Okay, hear me out on this one, guys. When you understand customer lifetime value, every trade-off a PMM needs to make becomes crystal clear. That's because you know and you actually know the payoff. So imagine what you could do as a PMM when you know exactly how much your biggest customers are going to bring in when they fall in love with the value that your product offers. You could reposition the product around what truly retains customers.

1:25You could focus your go-to-market efforts on the segments that deliver long-term value. And you could help shape the product roadmap around features high lifetime value customers actually use. You guys, we are going to unpack all of this stuff today. I am so excited to bring you a case study on how Visa built a lifecycle marketing practice completely from scratch, moving beyond one-time use to drive repeat engagement and increase customer value over time. Joining me today to walk through this is one of the sharpest, most creative minds in the game, Terry Seitz. Terry is the kind of leader that product marketers love working with.

2:05He's strategic and customer obsessed. He spent over 20 years building and fixing go-to-market engines for brands like Coca-Cola, HBO, Hasbro, and for the last 12 years at Visa. At Visa, he's done everything from launching campaigns with NFL stars and Olympians to founding an in-house agency ad hoc. At HBO, he built strategies for TV hits like Game of Thrones and True Blood. And you guys, his personal resume is super impressive with roles like my true dream job, PTA president. And he was a pro soccer team mascot. Yes, wearing the funny costume and all. And get this, he quote unquote survived time in a Bolivian prison.

2:54Not actually, though. More so just visited. Terry, welcome to the show. Thank you so much. Well, a retrospective of my career and life. It's a very colorful and arguably checkered past. So this is going to be an amazing discussion. And thank you for the journey thus far, because it's been a lot of fun. Yes, I am so tempted to ditch the topic that we had today and just talk about your mascotting days or maybe your experience in the Bolivian prison. Maybe I need to do a spinoff series just to get to know all the interesting and to your words, colorful. It's amazing how we come into the marketing discipline, like where we came from.

3:33Oh, yeah. And how it's shaped what we have to offer. I love it. Okay. Let's dive right in. I can't imagine anyone would not know this, but just to keep it crystal clear, let's bring our listeners up to speed. Tell us about Visa and maybe which products or services your team was responsible for. Yeah. So first and foremost, and I didn't realize this until I interviewed with them 13 years ago, we're not a credit card company. I know that sounds incredible and bizarre, but we're not. We are a payment technology company, which is a lot of words basically to say, we're the rails, the digital rails by which transactions and payments happen.

4:12Despite us being on the front of every card, we are not a credit card. We don't set interest rates. We don't actually issue cards. We're the technology that facilitates those transactions. We do that in a four-party model. There's buyers and sellers. And subsequently, there's issuer banks and acquiring banks. And we sort of sit in the middle and we make sure that the payments and the transactions go through. That started in 1958 in Fresno, where back then it was very pen, check, right? You had to go down to the branch, et cetera. So we, in some respects, were the original fintech, and we'll get into the case study later that gives rise to sort of the new version of that.

4:52But yeah, we were arguably the original fintech, you know, 60, 65 years ago. Today, we have over 5 billion cards or credentials in the marketplace. We process about 316 billion transactions on an annual basis, which is worth an estimated$16 trillion. We do so in over 160 different currencies, 200 countries, 150 million merchants, and about 15 ,000 banks. So just to talk about sort of the scale. But again, we're not a credit card company. That's the scale of the payments ecosystem that we help power. Yeah, I never even imagined that. Yeah. Yeah, like we were amazing. Incidentally, we started out being owned by a consortium of banks.

5:39We IPO'd in 2008. So we sort of broke off, which is why we are the visa today not attached from an ownership structural standpoint to a particular bank. What my team did and does is a couple of things. One is we own the digital products, the marketing of digital products. At the time of the case that we're going to be talking about, it was largely around sort of security benefits and features attached to things like zero liability, which is you don't pay for fraudulent transactions, should they occur, etc. The other remit of my team was brand. And so it was about driving brand equity, we called it brand health, among different segments of the cardholder population.

6:18Right. Yeah. It's so, I feel silly because I never even imagined, I never even thought about, I should say, how Visa is not a credit card. But after you mentioned it on my credit card, it has like, my bank is distributing me the credit card and they're the ones setting the credit rates. And as you mentioned, so very interesting and helpful to understand Visa's role in that ecosystem. So for the first segment of our show, we are going to talk about Visa's case study around lifecycle marketing and increasing customer value over time. So tell us more about what was going on at Visa when you realized that leaning into lifecycle marketing or the practice of lifecycle marketing needed to be maybe more strongly established.

7:04Yeah, great question. So going back to our foundations in Fresno in 58, we launch about a product every 20 years. So this is not something that we are cranking on or had been cranking on a continual basis. We launched a credit card. And then we launched a debit card. And then internationally, we launched, which now is somewhat ubiquitous in the US, what we called contactless cards, right, where you just go to the terminal, payment terminal, and you just tap, right, you just tap your thing. We didn't, at the time, launch a great deal of products. But what was happening was there was a revolution taking place in the consumer markets about how and where people were buying stuff.

7:44This is going to sound like, no kidding, Captain Obvious, but back in 2015, 2016, e-commerce was still somewhat nascent. Estimates are it was about a$28 billion business. Fast forward to today, it's a$1.5 trillion business. But back then, it was pretty new. And PayPal had jumped on top of that rise in e-commerce and foreshadowing where the growth was coming. And they were the first ones to develop and deploy a digital wallet, which made all the sense in the world. We had not. MasterCard had not. American Express had not. So we woke up somewhat nine years late to the game. They had actually developed DigitalWalt back in 98, or the company was founded in 98.

8:28And so we decided to go out and try and establish a beachhead on our own to capture e-commerce transactions. Again, we're not a credit card. We believe that anywhere and in any form that someone is trying to make a transaction and payment, we should be there. We should power that transaction. That goes back to how we make money, the economics of how we make money. But it also goes back to, I think, why we exist as a company, which we'll come back to when we talk about lifecycle marketing, which is back in 58 in Fresno, Dehawk, the founder, believed that if we could digitize transactions and payments, that would open up opportunities for progress for individuals, for small businesses, and for society writ large.

9:16And so Visa Checkout, which is our digital wallet, or at the time was our digital wallet, is a manifestation of why we exist. It's the how to progress. It was within that context that we launched Checkout, Visa Checkout, which, by the way, was a precursor to the fintech revolution that we all see, particularly here in the Bay Area, in terms of what's happening with Venmo and Apple Pay and Chime and Buy Now, Pay Later, and the proliferation of the ways in which people pay digitally. Really started in 98 with PayPal. And then with us, MasterCard, et cetera, Amex in 2015 and 16. Got it. Okay. So you are seeing this change in human behavior.

10:01And I love what you said about sticking to the mission of why do we exist as a company? And if there's transactions that are happening outside of where the physical card is present, you need to be there. So tell me more about maybe like, what was the task at hand then with a creation of Visa Checkout? Yeah, excellent. So again, go back in time, though it still exists a little bit in what we call guest checkout. Back then, you had to punch out your 16 account number, your address, your CCV, your expiration date. It was annoying. It was annoying. Checkout or digital wallet, right, is this notion that like you've preloaded your credentials one time and then anywhere you transact across the internet so the Visa Checkout platform exists, it became two steps or one step.

10:49As we think about the future, it's going to be sort of fingerprints and eyeballs, right? And it's going to, you know, but back then it was fairly cumbersome. So our remit in launching Visa Checkout was threefold. First and foremost, it was signing deals with merchants. Going back to our four-party model, we only exist in sort of the middle where there's a buyer and a seller, an issuer bank, and an acquiring bank, we facilitate those transactions. But first and foremost, we need to get merchants to accept and integrate the Visa checkout product. Yep. You can't go and transact if the merchant doesn't create the space to do it.

11:26Yeah. If there's no, what we call acceptance, if it doesn't exist, then we can't drive. So then the second remit or the second charge for us was driving awareness and understanding of the product and then ultimately enrollments among consumers, right? So if we think about the McKinsey funnel, that's sort of the top part of the funnel, assuming we're talking about the funnel vertically versus horizontally and that's a whole other conversation. And then once we had driven awareness and understanding and ultimately enrollments, and this is where you rightly point out, we really needed to drive lifecycle or bottom funnel, what we call repeat usage and loyalty, right?

12:04The sustainability of a product post-launch. So those three charges were an incredibly set of new muscles at Visa that we had to flex because at that time, we sort of existed like many other brands, particularly big brands, in this like Henry Ford, like one team does X, then they hand it off to Y, and then it gets handed off to Z, right? And then the car gets shipped or the product gets shipped and you declare victory and you move on to something else. This new approach to getting deals signed with merchants, right? So that's the B2B part of our existence. And then the B2C part of driving awareness, understanding enrollments, and then ultimately repeat usage required us to rewire and rethink our total marketing function.

12:51Yeah, that sounds incredibly complex, because you're seeing this change in behavior in your own customers and in the marketplace. But now you have to do that change in behavior in your own organization. And so it sounds like you had a two-sided market with merchants and consumers. How did you manage that from an execution standpoint? How did you rewire the org to support that? We created a startup within the walls of Visa knowing that we had that three-charge remit in front of us. And it was due to solving a bunch of problems, which is often the case, right? You sort of don't know where you're going until you somewhat get to a series of forks in the road.

13:29The first challenge we had was signing merchant deals. The way that Visa has historically worked is and been incredibly successful is we underwrite a bunch of deals, right? There's dollars in the pot to get an issuer or a merchant to sign up with us for the products that we provide. But when we were pitching Visa checkout, we weren't signing deals. We weren't signing deals from a quantity standpoint, from a quality standpoint, from a size standpoint, and from a speed standpoint. That must have been disappointing. To have built this exciting new startup, right, during a time when there's a big shift in the world and deals aren't flowing the way you want them to.

14:12Yeah. And what we found, and this is a lesson that we'll talk about later, was we found that the reasons why we weren't signing deals was, A, as much as we like to think that our children are all beautiful and smart and wonderful, there was a little bit of point of parity in what we were launching with. Two is what we were finding was the sell-in process was not only through the sales team, through the IT folks on the merchant side, which is the traditional case. We actually, because there was the B2C side, had to sell in to the marketing departments at all of these different merchants, at Nike, at Williams-Sonoma, at Pizza Hut, Dunkin' Donuts, and Starbucks, and a whole slew of others.

14:55And so that created an interesting challenge for us, which is like you had multiple stakeholders that had different objectives on their end. How do we go sell in checkout, Visa checkout, to ensure that these deals are getting done at the speed and the size in which we needed to? And this was critically important because one of the things that we had struggled with at the outset was something called mitigating the cart abandonment grade, which is you and I go online. we're going to go buy a pair of Nike Bear Jordans, but we don't finish the transaction. Oh, yeah. I am a repeat offender of cart abandonment to this day.

15:33Like globally, like 65, 70 % of purchases are actually abandoned. And so for the IT folks on the merchant side of the sales equation, they were like, how are you mitigating? How is checkout going to mitigate this when theoretically you're asking me to integrate this platform into our checkout process. So we had to figure out a way to develop better sales enabled and cases to go do that. And then subsequently, it's like we had to use marketing dollars and the marketing team on the other side to say, we're going to drive the upper level funnel to get more people into the checkout process, just that when we're able to consolidate the steps, which is the benefit of use of checkout, you'll see increased conversion, lower card abandon rate, average ticket size, et cetera, go on.

16:19The second challenge that we had was, again, once we had driven those deals, we had to then drive the consumer part of this, which was awareness and understanding enrollments, and then repeat usage. And did so through the creation of models and segments using our first-perfect data. We're Visa. We sit on a ton of data through something called VisaNet. And then obviously, our customer, our merchant data, and built out go-to-market plans accordingly. I should say, just to take it one step back, the solution to challenge one, e.g., how are we signing the deals, was we erased the lines between the different marketing teams and went to our potential merchants as one.

16:59And that one was, here's a better set of sales enablement materials and cases. Number two is, we're going to come to you with more or less fully baked co-marketing plans. So here's the creative, here's the content, here's the media plan attached to the deal dollars that we were pitching them with. So that we were talking to their IT teams and marketing teams all at once. It was a, basically, we just need you to sign on the dotted line and make some approvals. We'll take care of the full end-to-end process. And our marketing teams served sort of both gods and decision makers at the same time. Bringing the two-sided market together.

17:39the B2C and the B2B marketers to help reduce and lower that cart abandonment rate with Visa Checkout. That's so cool. Okay. And then what did you do about the second challenge that you mentioned? Did you have a solution for that? Well, yeah. So the second challenge was, so first you get the deals done, right? We got to get those over the line. We get the acceptance. We get what we call the button, the Visa Checkout button on merchants' websites. And then it was like, how are we driving awareness and understanding enrollments and ultimately repeat usage? That challenge of the repeat usage was really fundamentally important because we at the time were like, well, we're going to declare victory.

18:18We've done all of this stuff. But it was like, but wait, wait, wait, you now have to prove out the sustainability of a product. And so we developed a series of models and segments using first party data. Yes. Okay. This was the Visa net, the plethora of data that you were sitting on plus the merchant data, ooh, you're so lucky. It's so just a product marketer's dream to have that kind of data. It's interesting. Yes, we were lucky, but we had to be incredibly careful, right? We're a heavily regulated industry. So the use of PII is carefully sort of monitored and executed against. But what we did have and what was so crucial to that lower funnel repeat usage lifecycle part was, you know, So we're able to identify where people purchased, where they are likely to purchase again, be it on that merchant website or cross-selling to a different website, ticket size, price sensitivity to what was purchased.

19:15And then really, really, really important for us was what we called recency, which was you had made a purchase. If you didn't make a purchase within 90 days, you became cost prohibitive to retarget because it was as if you were a new customer or a new consumer. again. So we had about 90 days to make sure that we had achieved what we would call escape velocity, which was you transacting five or six times over a defined set of time. And then we didn't have to target you again. It became more of a habitual use. You were transacting, right? And that was important because, again, we go back to launching this product for Visa.

19:57You're often sort of paying merchants to put the button into your checkout experience, then you're goosing trial through offers. And then you're somewhat goosing repeat usage through some offers, right? But that investment hit needed to be decreased, right? We had to take down our CPAs and what we were calling our CPUs, right? Our cost per usage, right? And then ensure that ultimately those levels of investment, and this goes back to the beginning, we're all part of establishing a lifetime value or a customer value, right? If we think about the sort of crude definitions, right? Like the lifetime value is the value of a sale times the number of transactions over the lifespan of your relationship with that customer or consumer, right?

20:43And then you drill it down into, okay, well, the customer lifetime value is you take that lifetime value and then you times it by your profit margin. And that's how valuable a particular customer is to you at the time. So for us, it was like weaving that measurement story and that investment story, both for us who are making the investments and then the merchants to say, hey, the customer lifetime value is X for you or Y from a lifetime value perspective. And that became a critical story point for us through the launch. I love that. And just for listeners, FYI, heads up, I'm going to make sure that that formula, Terry, that you just mentioned, shows up in the show notes so that our listeners can go and snag it and use it in their marketing strategies.

21:28Okay. So wrap us up with what was the result of all of this goodness that you were doing with Visa Checkout? What kind of impacts to Visa did you see? Yeah, great question. So this two-chapter story of going into a merchant to get deal signed and showing them sort of the end-to-end process, the lifetime value, and then how product and consumer marketing integrated into one another. We were able to capture about 50 % of what we call the TAPD, the total addressable payment volume, which is, again, as Visa, we want to process every transaction where we can. And that's about understanding where the payment volume exists and then going and try and capture that.

22:09And that sounds really high to me. Do you consider that really high? Because it sounds like a really good metric. Yeah, it was the number of merchants, not the addressable payment volume. We didn't capture $6 trillion in volume. We didn't process that. It was like we had signed deals where their potential volume on their websites or across our platforms totaled 50 % of our target. So that was a big deal. As we then moved into sort of, okay, well, charge number two was enrollments. Over the course of the product's life, we generated 35 million enrollments. Big investment, big expectations, 35 million enrollments.

22:46Like that was huge. And then the last one was repeat usage and loyalty, right? The notion of a lifecycle metric. And we drove a 23 % repeat usage rate, which depending on where you're looking is 23 % a lot or a little. We gave ourselves an incredibly high hurdle to overcome, which was you had to be an active user. You had to make two transactions over a rolling 12 months. And that became the proof of sustainability. It wasn't like you signed up once and we never saw you again, but we got to count. It's like, no, you needed to be active. So reaching almost a quarter repeat usage rate was important.

23:23And that goes to this notion of trying to mitigate the leaky buckets that we and every other product launch are faced with. Yeah, I appreciate the boundaries that you put on even how you're going to track KPIs and metrics for this entire endeavor, right? Like it's who you are as a marketer and a leader is that chasing truths, right? So you're not even going to let data sway you. You're going to make sure to put parameters around that data, right? Like you're to your point about like finding truly active users versus just someone who just signs up once. It really speaks to how genuine the success of Visa Checkout was.

24:00So really helpful. I just I love this story overall because it's such a great example of how product marketers can move beyond messaging and actually influence growth strategy. And it sounds like you connected lifecycle marketing to real business outcomes. And your team proved to merchants that Visa checkout was worth investing in long term. And then you use that repeat usage as a signal for product viability. And then you built programs for consumers to help drive behavior. I don't even know. Maybe I'm saying it like as and then as if they happened one after the other. But some of this happened concurrently in parallel.

24:43Is that more accurate to say probably? Yeah, that's exactly right. We're all imperfect, fallible human beings and marketers. And what was happening was in sort of like Neo real time, uncovering where we needed to go to as a product marketing team and evolve ourselves according to where the challenges were and where the business opportunity and KPIs sat. Yep. Yep. I love this. It's the kind of work that directly impacts customer lifetime value. There's so much we can learn here. So I'm really excited to dig into this next part. Let's just zoom out for a bit and say, I'm an inspired product marketer listening to this story, and I'm trying to build a lifecycle program or get serious about driving customer lifetime value.

25:30Where do I start? What would step one be? Yeah. Step one is understanding the market driving dynamics, like where growth, revenue, your next dollar is coming from and will likely come from. And then really being honest and go, is the company, is the product that we are attaching to those dynamics really well positioned to go do that, right? So for us, very simply going back to the beginning and in full deference to somebody like PayPal, we all saw the rise of purchases offline, brick and mortar stores to starting and forever moving online. So checkout and PayPal, et cetera, now the Venmos of the world, Apple Pay are now doing.

26:14But for us, it was like the market dynamics were changing. And as a product marketer, that was salivating to go, oh, my gosh, there's a new space that we have to go play in. The other thing that was sort of a step 1A was, OK, you understand the market driving dynamics. How do you then size it? We talked about TAM before. And for us, given our scale, we couldn't go market and do co-marketing and deals with the tens of thousands, now hundreds of thousands of merchants online. What we had to do was prove that we could get the top, try and get most of the top 40, because then you have scale, right?

26:53If you can get most big merchants to take Visa checkout, everyone else will follow. So we very much prioritized those big guys versus what we would call sort of the long tail merchants. And then thirdly, and this goes back to your earlier very good point, step 1B or 1C is this notion of like, we really should be aligning on KPIs cross-functionally and up with the C-suite before we launch. And I know, again, kept an obvious statement. But at first, it was like, we need to go sign deals. Okay, well, that was the sales team's job. Well, that wasn't really happening. Then it was like, okay, well, now we have to go drive enrollment.

27:30But now we have to then prove LTV and usage. And this was a huge learning for us that it was like, if we're going to think about a five-year plan for a product and a product launch, we should be thinking about this from the totality of a lifecycle, not just in tranches of deal sign, rollman, and then lifecycle, you know, repeat usage. So those three things I call sort of the – step one is like understanding the numbers, the North Star, and where you're going. Yeah. Yeah. I really appreciate how you put a timeline to it too. So you're not just looking at the here and now. So like, to your point, understanding the context of your market, but also looking to the future and how that market will continue to evolve.