From expired credit cards to a change in address, there are a number of reasons a customer’s payment may not go through. Most subscriptions are charged automatically, and many missed payments are completely unintentional:
What that means is that most of the time a simple follow up is all that is needed to recapture that customer.
The challenge is that credit cards expire every few years, people move frequently and if left unchecked, delinquent payments can quickly and unnecessarily cost a subscription business a substantial amount of revenue. For businesses with a recurring revenue business model customer retention is just as important as acquisition, if not more so at times, and this retention can be costly when the problem lies with missed payments because a lot of follow up can be costly and time-consuming. In fact, merchants can see failure rates of 5-35%
That’s why many subscription businesses turn to a process called dunning management to automate efforts to save failed payments and, ultimately, maximize customer lifetime value. There is good news though; with effective dunning management...
Here are the top four reasons your subscription business should be using a recurring billing service with dunning management capabilities.
Dunning management maintains your revenue by making sure your existing customers keep their payment details current. Customers are alerted if their credit card or subscription is about to expire, eliminating a disruption in service or payment and, ultimately, improving customer retention and reducing churn.
Reviewing and tracking unpaid accounts and reaching out to these customers manually is tedious and prone to human error. Thanks to its automated process, dunning management instantly recognizes when to send out notifications to customers, saving valuable time that can be better spent on core business operations and less on payment management.
Reaching out to customers with delinquent accounts can be a frustrating and awkward task. Doing this task manually, especially when in a rush, can also result in inconsistencies as well as an unprofessional look and tone which can lower customer confidence in your brand. A dunning management process automates customer notifications to ensure your customers are receiving friendly and consistent messaging.
From data on declined charges to stats on churn, dunning management provides insights which can help inform overall strategies to help retain customers and even target new ones.
Subscription businesses need a recurring billing service built to facilitate data-driven decisions. As you look to grow and scale it's crucial to consider the following:
View our video for more (1:15).
If you are looking for some expert help on your options in terms of an ecommerce provider for your subscription business, just ask. Or checkout how we've helped optimize the ecommerce performance of other subscription businesses like Adidas Avenue A.