Minneapolis firm creates software — for other software companies — that prevents customer churn

It's a software solution — for other software solution companies.

That's essentially the product Twin Cities entrepreneurs and technologists Tony Sternberg and Graham Floyd brought to market last June through their company ProsperStack, which develops a customer cancellation flow software that helps other tech companies retain subscribers.

The software integrates with a company's billing system, and automates the retention process as customers go through digital cancellation. Through the platform, ProsperStack acts on behalf of companies, presenting special offers and alternatives tailored to the specific reasons customers say they are leaving.

The company's software can't save every customer, Sternberg admits, which is why ProsperStack delivers analytical reports based on surveys taken by customers going through cancellation. A digital dashboard displays how much revenue a company is losing through canceled subscriptions, broken down by the specific reasons behind the cancellation, such as not realizing the value of the product, if it's too expensive, if they experienced a billing issue, were not satisfied with service or features, or no longer needed the product.

That data helps companies strategize how to retain subscribers.

"They can take that data, download it, and once they implement those features or cover gaps they were missing, now they have data that says, 'I lost this many customers because of this reason,' now let's intelligently remarket to them, and not in such a generic way," Sternberg said.

For a decade, Sternberg and Floyd worked together at an area software-as-a-service company, where they came up with the idea for ProsperStack.

"We never really knew why our customers were churning and never really did anything to prevent them from churning," said Sternberg, the company's CEO.

Customer retention is nearly five times cheaper than acquiring new customers, with new customer acquisition costs up about 60% over the last five years, Sternberg said. Those costs include marketing, lead generation and advertising spend, he said.

Less than a year after launching, about a dozen software companies across the U.S. are using ProsperStack, Sternberg said.

Sternberg and Floyd plan to expand sales to digital content companies like Netflix and box subscription companies. Ideal users are companies charging at moderate price points with large numbers of customers, making automation critical for their retention process, Sternberg said.

The two founders recently closed their first fundraising round for ProsperStack, which includes investments from Minnesota fund Groove Capital and Ohio fund Comeback Capital, said Sternberg, who declined to disclose the funding amount. They also have received a grant of just under $30,000 from Launch Minnesota, an initiative through Minnesota's Department of Employment and Economic Development that supports the state's early-stage businesses.

The fresh capital will be used for sale, marketing and talent acquisition, Sternberg said. By the end of 2021, he expects the company to perform at $30,000 in monthly recurring revenue, with between 50 to 60 customers.