How ServiceTitan drove growth with embedded payments

From the initial wave of businesses collecting payments through e-commerce sites to the current approach to embed payments into software platforms, if you’re leading a Vertical Software as a Service business (VSaaS), there’s no doubt you’ve started to think about the role payments play across your entire business lifecycle.  In fact, I was in the same shoes in 2015 when I began exploring payments for ServiceTitan.

In 2015, ServiceTitan, an all in-one-platform for home contractors, referred their customers seeking payments to a large payments processor.  This integration required customers  to onboard through the third party payment processor - leaving a disjointed customer experience in which the customer would bounce from the ServiceTitan app to the payment provider.

In addition, the ServiceTitan customer teams were focused on leading the software implementation, not the payment integration.  This led to onboarding bottlenecks for customers using the payment integration. Most of the customers did not have team members dedicated to payments and they struggled to understand why certain documentation, especially sensitive financial statements from contractors, was necessary.  This back and forth could lead to 2-3 month gaps in the onboarding - with little visibility between ServiceTitan and the payments provider.

While only 10-20% of ServiceTitan customers were using the payments integration, I believed that more customers would leverage payments—especially if the payments experience looked a little different. When surveying customers about their experience with the integration, they shared frustrations with the sales and onboarding process. Additionally, the approach to sales, which emphasized "match or beat your pricing," often resulted in lower take rates for ServiceTitan, even though the product was delivering significant value that exceeded the quoted pricing as a VSaaS business, I knew it was critical to streamline business operations for our customers—and addressing the friction in our payments integration strategy was a key opportunity. By exploring different levers in payments—such as fully embedding payments into our platform and structuring pricing to align better with customer needs—embedded payments could become just as critical to our software and as much of a revenue driver as other core platform features. Allowing home service contractors to take payments directly through a web or mobile app would deliver a significant value add.

In review of the business case with ServiceTitan’s co-founders, head of finance, head of operations and developers, three primary benefits for why to embed payments came to the forefront:

1. Improved customer experience - Our customers, home and commercial contractors, would be able to accept their customers payments via a web or mobile app, reconcile invoices & payments, view data/analytics via reporting, and more – allowing payments to be a fully integrated experience through the ServiceTitan platform. Not only would the  ‘all in one solution’ provide a better experience for the customer, but also a great opportunity to reduce onboarding time and friction as well as improve retention for our product.
2. Simplified end customer experience - We understood that if the end customer (a homeowner, for example) experiences a great payment experience (i.e., tapping your phone via Apple Pay, taking a picture of a check via a mobile phone, etc.), it reflects well on the business (contractor) and in the end, reflects well on the software that business is using. Bringing delight throughout the entire process would increase utilization and satisfaction.
3. Revenue expansion - Taking on more of the work to sell, onboard and support customers via our own integration with a payments partner, we could take a larger revenue share and offer flexible pricing structures that meet customers’ business models.

By 2017, we launched ServiceTitan Payments and it provided a meaningful impact to the company from a revenue and retention perspective.  Within three years, the vast majority of ServiceTitan customers were using the embedded payments offering.

It should be no surprise that other major VSaaS platforms like Mindbody and Toast have also launched embedded payments. There are also so many features that a VSaaS business could benefit from in addition to embedded payments like storing credit cards on file for recurring billing, ability to process a refund in the app, eliminating manual reconciliation, to help their customers streamline their operations.  To increase product stickiness and long term growth, embedded payments is a great starting point.

With support from Payabli I'm going to write a series of articles to help other vSaaS operators to think strategically to optimize their Payments business and avoid many of the pitfalls I encountered along my journey in building ServiceTitan Payments. Stay tuned for more content on driving payments adoption, maximizing payments margin potential, bundling additional fintech products and more.