Gravy Secures $4.5 Million to Tackle Subscription Payment Failures

Gravy, a company focused on assisting businesses with subscription models, has successfully completed a Series A funding round, raising $4.5 million. This capital infusion will be utilized to enhance their unique approach – a blend of advanced technology and a dedicated human workforce – designed to reclaim customers impacted by “involuntary churn.” Involuntary churn refers to subscription cancellations not initiated by the customer, but rather due to failed payment attempts.

A Novel Approach to Payment Recovery

Many subscription businesses typically rely on automated systems, such as automated emails, to address failed payments. However, Gravy has pioneered a different strategy. They combine a team of U.S.-based retention specialists with technology that promptly identifies payment failures.

This integrated system is then offered to clients as a comprehensive solution, effectively functioning as an extension of their existing teams.

Funding Details and Origins

The funding round was spearheaded by Arlington Family Partners, a family office based in Birmingham. This investment holds a personal significance for Gravy’s co-founders, CEO Casey Graham and Chief of Staff Renee Weber, as Arlington Family Partners previously managed their proceeds from a prior business sale.

Gravy’s roots trace back to The Rocket Company, a coaching and resource provider for churches, which was acquired by Ministry Brands, a private equity group.

The Genesis of Gravy’s Solution

Graham highlights that during their time at The Rocket Company, they spent two years resolving the issue of failed payments. They developed a tech-enabled solution utilizing human intervention to recover lost subscription revenue. This effort resulted in a sale offer five times greater than the initial valuation, directly attributable to their success in addressing failed payments.

Initially, Graham assumed this practice was widespread, but discovered that many companies relied solely on automation, achieving only a 15% to 20% recovery rate.

Why Human Interaction Matters

Automated solutions often prove ineffective as customers frequently disregard automated emails. However, personalized outreach consistently yields better results. Many rapidly expanding businesses, prioritizing growth and scalability, find it challenging to afford dedicated in-house teams for this purpose.

Gravy provides a viable alternative, bridging the gap between full automation and the expense of internal hiring.

Gravy’s Pricing and Integration

Clients subscribe to Gravy’s services on a tiered basis, with fees ranging from $997 to $8,000, determined by transaction volume. Gravy seamlessly integrates with a client’s existing payment processors, subscription management platforms, and other relevant tools, including Stripe, Braintree, Recurly, Keap (Infusionsoft), and more.

Furthermore, Gravy establishes a dedicated channel within the client’s Slack workspace to facilitate clear and consistent communication.

A Seamless Extension of the Client’s Team

The ultimate goal is for Gravy’s team to function as an integral part of the client’s business, rather than a detached external service.

Personalized Recovery Strategies

Once integrated, Gravy’s specialists utilize email and text messaging, based on client preferences, to contact customers with failed payments and update their payment information. Leveraging their close collaboration with clients, they can also offer incentives, such as “stay bonuses,” to encourage customers to reinstate their subscriptions.

During the COVID-19 pandemic, Gravy further expanded its offerings, providing options like temporary subscription pauses and other customized solutions to address individual customer needs.

“We develop empathetic scripts with three different approaches during client onboarding, providing opportunities to negotiate and win back customers,” Graham explains. He emphasizes the importance of the human element, noting that individuals recognize and respond positively to interactions with real people, unlike automated systems.

Gravy’s Growth and Client Base

Since its inception in 2017, Gravy has onboarded over 300 clients, ranging from businesses with $200,000 to $250,000 in annual revenue to those generating $100 million or more from subscriptions. These clients operate in both the B2B (business-to-business) and B2C (business-to-consumer) sectors.

Gravy is particularly popular among “box” subscription services and B2C education and online course providers.

Impressive Results and Future Goals

To date, Gravy has processed over 6 million failed payments and successfully recovered $175 million in lost subscription revenue. The company aims to return $1 billion in failed payments by 2023 and anticipates exceeding $1 million in Monthly Recurring Revenue (MRR) this year.

A Commitment to Employees

Gravy’s retention specialists are full-time employees with benefits, not gig workers or contractors. The company also embraces remote work, allowing employees to be located anywhere in the United States, which Graham considers a significant competitive advantage.

Location and Recruitment Strategy

Despite being considered an Atlanta-area startup, Graham and Weber reside 50 miles north of downtown Atlanta.

“We initially believed our location outside the Atlanta tech hub would be a disadvantage. However, it proved to be beneficial, as our strategy focuses on recruiting top talent from smaller towns across the U.S. Furthermore, Slack serves as our primary headquarters,” Graham states.

Supporting Military Families

This recruitment strategy has also enabled Gravy to employ numerous military family members, who often face challenges finding consistent employment due to frequent relocations, leading them to rely on gig work.

Prioritizing Employee Well-being

“The gig economy often lacks commitment to its workers. Gravy, however, is dedicated to providing our team with salaries, benefits, and a stable work environment – something we are incredibly proud of,” Graham emphasizes. Starting salaries at Gravy begin at $55,000.

Future Expansion and Vision

With the new funding, Gravy plans to expand its team from 83 to approximately 150 by the end of the year, accelerate client acquisition, and further invest in product development. Looking ahead, Graham envisions Gravy expanding its services to address voluntary churn, customer service, and customer success initiatives.