How to Retain Customers and Recover Revenue for Your SaaS Company
Subscriptions are at the heart of any SaaS business model.
It appears to be a perfect design. The customer signs up for your service and, each month, they have to pay for 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. Involuntary churn occurs when a client churns without them realizing or unconsciously. The involuntary churn is 7.2% of churn in all sectors in all sectors, and 7.5% of all churn in the SaaS space.
Let's look at how you can put these practices into your own enterprise.
Why failed payments and involuntary customer churn go hand in hand
Another aspect that is at the heart of both of these factors is providing your clients with a stellar user experience. If you have the right methods in place, then you will be able to keep your clients satisfied and generate revenue at the at the same time.
Before we go too deep into the ways to keep your revenue in the flow, it's important to explore what involuntary churn means. Think of a typical cycle that you may have set up for your customers:
- Sign up to the product you offer
- Their payment is scheduled for the 28th of that month
- The initial charge on their card on file fails
- The system will then send your customer an email informing them that their charge has failed and that they could lose access to your products If they do not take immediate action.
- The consumer doesn't do anything, and the next attempt at charging their card for payment also fails
- Following the third unsuccessful attempt to take payment, the system suspends the subscription, and then move them back to a no-cost version of the product or even cancels their account completely.
But what this report isn't able to show are the various factors that might be responsible for the collection of payments to stop.
It's because of these reasons why planning for involuntary churn is vital to ensuring revenue recovery. It can be done in a variety of ways, such as:
- Setting up a series of "dunning" emails to create a cycle of payment reminders for your customers to change their card details/payment processing options
- Look at how card details change internal to the system. If a customer updates their information, is it being transferred to your payment system properly?
- Make sure your payment processing is free of security issues at the gateway, and also stops fraud activity.
Three steps that you can use to increase revenue and limit customer churn that is involuntary.
Three methods you could try to collect revenue
1. Make sure your customers have a seamless experience when collecting payments
We just entered into 2020 and now we live in an age where customers aren't hoping you will collect the payment on a regular basis; they want you to.
If you're sending out invoices and asking customers to pay for their subscriptions in person, not only does this increase the friction to the process, but it can cause payment delays. The invoices are lost and although not intentionally the customers could not pay for them, and put their subscription at risk.
The easiest way to avoid this is to provide your clients a seamless automatic experience when paying their subscription. The payment page you create should not just provide the customer with an easy experience while they are signing up for their subscription. It should also be effortless for them when they'd like to edit their payment details.
There are several options to help you make your customer's subscription payments an effortless experience
- Create a separate portal or page where customers can update their personal information: A customer should have the ability to change their payment details at any time they require, not only if the payment is not successful. Be sure that this feature is available for your customers at all times.
- First, security: Every time that a user inputs payment information the information should be entered by entering them into a secure space. Keeping your customer's credit payment details are secure is an essential part of maintaining them. Who wants to deal with a business that doesn't use a secured payment system?
- It's easy to use even in the event that they're browsing on smartphone: Your customers are active users. Check that your website or payment gateway is responsive regardless of the type of device they're making use of. If they're able modify their details for payment, whether they're in an office or on a commute and the greater chance they are to do it.
- Verify that everything works in the right way: As great as technology can be, we know that sometimes, it's not perfect. Be sure to check on your payments cycle or update webpages to ensure that they're functioning as they should be. In the event of a glitch, you may find clients have tried to correct their details on their payments, but just haven't been able to.
With a subscription service, you are able to collect the payment for subscriptions on autopilot. manages subscriptions using various payment gateways, and it supports all major payment methods, currencies, and languages.
2. Give them breathing room if their first payment fails
Payment failures happen. It's element of subscriptions.
When a customer's credit card fails, give them some time to figure out what caused it. Since technology like card updaters coming onto the scene, information about cards are now more likely to be updated automatically. However, there are some situations where the card information won't be up to date, and this is where dunning emails come into play.
Now, a dunning email shouldn't harass your customer about a missed payment. It should instead be used to communicate with the client to ensure that everything is okay, and provide customers the chance to change the information on their payments, like this dunning email from Hulu:
- Remind your customers why your product is worth it: Don't demand payment right off the bat. Instead, structure the email in a manner to remind your clients why they signed up for your product to begin with. In the Hulu example, the dunning email reminds the customer that they can continue watching their preferred shows when they decide to renew the subscription.
- Be brief and short: Don't send a spam email that's as long as a novel. Keep it to only a few paragraphs and ensure that each is geared towards a particular purpose. It could be to remind a customer about the value of your service to them, followed with a brief explanation of the payment that was not successful. Make sure that the message isn't all about the failed transaction, but emphasize that if the customer isn't proactive the issue will affect their subscription.
- Provide a clear CTA: Similar to what Hulu did in their email above. Instead of adding in the "pay now" button and reminding the customer that it's simple to "reactivate" their account. Make sure to include a simple CTA for your customers, so that they knows exactly what they need to do in order to maintain their subscription.
Finally, make the card changing process as easy as possible. The CTA should link directly to a card payment update page that is responsive to the device that the user is reading the dunning email on. The simpler it is for your clients to make changes to their credit details on their card and update their card information, the more likely they will complete the process.
3. Give your customers a chance--always
Always give your customers the possibility of knowing why their payment bounced, and collaborate with them to offer up other options for their subscription.
For example, when their payments fail, don't immediately cancel their account and take them off your database. Instead, call the person and ask how you can do to assist them.
You might offer to:
- Maintain their subscription, but on a lower cost that they can manage.
- Change them to a no-cost version of the product the moment
- Pause their account
When it comes to SaaS and especially when you're selling a pricey product it is important to not let your customers loose as soon the first time their payment is rejected. Perhaps they have hit a rough financial patch or are unable to renew their subscription just right now. If so, offer to move them to a free-tier of your service and/or temporarily suspend their subscription until they're able to.
Of course, treating your customers well in the event of payment difficulties keeps them happy. They want to know that you can handle the fluctuating peaks and valleys that come with running an enterprise. However, putting off their subscription instead of removing it is a better option than needing to go through the onboarding process again 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
If they don't work If they fail, you must put in the right system in place to not only recover your revenue but to keep your customers too. If a customer's payment fails, your first communication with them shouldn't be just to get their money back. It is important to contact your customers, ask them whether they're experiencing any issues or issues, and then try to resolve the issue in a coordinated manner.
Your customers are the vitality of your business, and the fact that you're able to make money doesn't mean you'll lose them. However If you manage things right, there will result in a positive experience for the customers you serve and also for your business.
