Merchant Retention
Merchant retention measures the percentage of MCA merchants taking renewal advances — the critical economics metric since renewal advances have dramatically lower acquisition cost and proven credit performance compared to new merchant acquisition.
Why This Matters
Merchant retention dynamics: renewal advances have minimal acquisition cost (existing merchant relationship), proven credit performance (existing merchant has demonstrated repayment behavior), faster underwriting (existing data and history), and higher conversion (engaged existing relationship). Strong MCA operations achieve 50-65% renewal rates; weak operations achieve 20-35%. Drivers of retention: positive merchant experience during initial advance, proactive renewal outreach (typically at 50-70% paydown), competitive renewal pricing, and ongoing relationship management between advances. Retention economics often determine sustainable funder competitiveness.
Frequently Asked Questions
Frequently Asked Questions
What's a healthy merchant retention rate?
50-65% retention through renewal common at strong funders. Top operators achieve 70%+ retention through superior experience and proactive renewal management. Weak operators below 30% retention struggle with new acquisition cost burden.
When should funders pursue renewal conversations?
Typically at 50-70% paydown of existing advance. Earlier outreach captures merchants before competitor conversations; later outreach risks merchant having already engaged competitors. Sweet spot varies by paydown velocity.