How to Keep Customers and recoup Revenue for Your SaaS-based Business
Subscriptions are vital to any SaaS business model.
It appears to be a perfect model. A customer subscribes to your service, and each month, they pay to maintain their subscription. Simple, right?
Incorrect payment details can lead to one of the unspoken reasons behind customer losses in the SaaS industry--involuntary churn. It is when a user is churning without realizing it or against their will. The involuntary churn is 7.2 percent of all total churn across all industries, and 7.5 percent of churn within the SaaS space.
Let's examine the ways you can implement these techniques into your own enterprise.
What causes failed payments? Involuntary customer churn goes hand in hand
One of the factors that supports all of them is providing your customers with an excellent user experience. If you've got the proper procedures in place, it is possible to keep your customers content and continue to generate income at the same time.
Before diving too deeply in the process of keeping your income running, you must examine what involuntary churn is. Imagine a payment process that you've established for your customers:
- You sign them up to receive the product you offer
- Their payment is scheduled for the 28th of this month.
- The initial charge on their credit card that is on file does not succeed.
- The system will then send the customer an email advising them that their charge was not successful and they could lose access to your products in the event that they fail to take action.
- The client doesn't take action in the first attempt, and their next try at using their credit card to make the payment is also unsuccessful.
- Following the third unsuccessful attempt to take payment, the system deactivates their subscription and either move them back to a freemium version of the product or cancels their account altogether
But what this report isn't able to show are the various factors that might be responsible for the failed payment collections.
It's because of these reasons the reason that planning for churn involuntary is vital to ensuring revenue recovery. It can be done in a variety of ways like:
- Setting up a series of "dunning" emails, which will send out a series of payment reminders to your clients to alter their credit card details or payment processing choices
- Check how your card's details are updated within the internal system. If your customer changes their personal information, are they being transferred to your payment system correctly?
- Be sure that your processing is secure and free of problems with your gateway and prevents fraudulent transactions.
Here are three steps you can take to recover profits and prevent customer churn that is involuntary.
Three methods you could try to recover revenue payments
1. Provide your customers with a smooth process for collecting payment
Just entered 2020 and now we live in a time where people do not expect to receive the payment on a regular basis; they want that you do.
If you're sending out invoices to customers and requiring them to pay for subscriptions by hand This doesn't just add a layer of friction to the process however, it could also cause payment delays. Invoices get lost, and even if it's not intentional the customers could forget to pay them or inadvertently place their subscription in danger.
The easiest way to avoid the problem is to offer your customers an effortless, automatic experience when making their subscription payment. The payment page you create should not simply provide your customer with a smooth experience while they are signing up for their subscription, but make it simple for them to access it whenever they need to change the details of their payments.
Here are a few methods to ensure that your customers' subscription payments are an effortless experience
- Create a separate portal or page that allows customers to update their details: A customer should have the ability to change their payment details whenever they need, and not just if a payment is not successful. Be sure that this feature is accessible to your customers at all times.
- First, security: Any time a customer inputs their payment details they should do by entering them into a secure space. Making sure your customer's card details secure is an essential part of making sure they are safe. Are you willing to do business with a business that doesn't have a secure payment system?
- It's easy to use even if they're on a mobile: Your clients are very busy users. Check that your website or payment gateway can be responsive, regardless of what type of device they're using. If they're able change their account information, whether they're in working or traveling and the greater chance they are to do it.
- Verify that everything works in the right way: As great as technology may be, we are aware that there are times when it's not perfect. Check on your payment cycles and update pages to ensure they're working as they should be. Otherwise, you might find clients have tried to update their payment information--they just haven't been able to.
By using iPayment, you can receive automatic payments for your subscriptions. manages subscriptions using multiple payment gateways and can handle all the major payment options, currencies as well as languages.
2. Let them breathe in the event that the first installment fails
The possibility of payment failure can occur. It's a natural part of the subscription game.
So when a customer's card isn't working, allow them time to figure out the reason for it. Thanks to technology such as card updaters coming onto the scene, information about cards are now more likely to be updated immediately. But, there are situations where the card details won't be kept up-to-date This is when email dunning comes into play.
A dunning email is not a way to nag customers about missing payment. Instead, it should be used to check in with the client to ensure that everything is ok, and give them the opportunity to edit the information on their payments, like this dunning email from Hulu:
- Make sure your customers know why your product is valuable: Don't demand payment from the beginning. Instead, frame the email in a way which reminds customers of what they paid to your service in the first place. For example, in the Hulu instance above the email is a reminder to users that they are able to continue watching their preferred shows when they choose to renew the subscription.
- Keep it short and short: Don't send a dunning email that's as long as an entire novel. Limit it to a couple of paragraphs, and be sure that every one is geared towards a particular goal. The purpose could be to remind the customer of the benefits your product offers to them, followed with a brief explanation of the payment that was not successful. Don't make the email all about the failed payment However, you should emphasize that if the customer doesn't take action, it will impact their membership.
- Provide a clear CTA Like Hulu did in the email below. Instead of including a "pay now" button instead, they've informed the user that it is easy to "reactivate" the account. Include a straightforward CTA, so your customer knows exactly what they need to do to keep their subscription alive.
Finally, make the card update process as smooth as possible. The CTA must direct the user to an update for your card webpage that responds to whatever device the customer is viewing the email on. The easier it is for your clients to make changes to their credit card information and update their card information, the more likely they are to complete the process.
3. Don't be afraid to give them a second chance.
Be sure to give your clients advantage of doubt as to reasons for the bounce, and work with them to offer up alternatives to their subscription package.
In the event that a payments fail, don't immediately close their account or eliminate them from your database. Instead, contact them and ask them what you can do to help.
Consider offering to:
- Keep their subscription active, but on a lower tier that they can afford
- Transfer them to a trial version of the product at least a while
- Stop the account
In the case of SaaS and especially when you're selling expensive products, you mustn't cut your customers off as soon as their first payment bounces. Maybe they've hit a rough financial patch, and they can't afford to pay for their subscription now. If that's the case you can offer to transfer the customer to a lower-cost version of your product or suspend them for a short period of time subscription until they're ready.
Naturally, ensuring that you treat your clients well even when they face issues with payment keeps them content. They would like to know you understand the peaks and troughs associated with running an enterprise. By putting their account on hold, instead of removing it will save you from having to put them through the process of re-onboarding once they reactivate the subscription.
This is a win-win situation for both you and your customers.
Recovering failed payments is key to reducing churn involuntary
In case they fail in the event of a failure, it is essential to implement the correct system in place in order to not just recover your revenue but to keep your clients as well. In the event of a customer's payment fails the first contact you make with them shouldn't be just to get their money back. The goal should be to contact your clients, asking them whether they're having any problems or concerns, and try to move forward with them.
Your customers are the lifeblood of your company, and recovering revenue doesn't mean that you're going to lose them. On the flip side, if you do things right, there will result in a positive experience for both your clients and for your company.
