How to Retain Customers and Recover Revenue for Your SaaS Company
Subscriptions are the lifeblood of any SaaS company model.
It appears to be a perfect idea. 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. Involuntary churn occurs when a client is churning without realizing it or unconsciously. The involuntary churn is 7.2 percent of all overall churn as well as 7.5 percent of all churns in the SaaS area.
Let's examine the ways you can implement these practices into your personal enterprise.
What causes failed payments? Involuntary customer churn go together
And one aspect that underpins both of these factors is providing your clients with an excellent customer experience. If you've got the proper processes in place, you can keep your customers satisfied and generate revenue at the at the same time.
Before diving too deeply into the ways to keep your revenues flowing, it's essential to consider what a churn that is involuntary. Imagine a payment process you've established for your customers:
- You sign them up to receive your product
- The payment date is set for the 28th of this month.
- The charge that they make on the first credit card that is on file does not succeed.
- Your system then sends your client an email informing them that their charge is not valid and that they will be denied access to your service in the event that they fail to take action.
- The client doesn't take action in the first attempt, and their next try at charging their card for the payment is also unsuccessful.
- After the third failed attempt to make payment, your system then suspends the subscription, and then switch them to a freemium version or completely cancels their subscription
However, what this cycle doesn't show are the many factors that might be responsible for the failed payment collections.
This is that 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, which create a cycle of payment reminders for customers to change their card details/payment processing choices
- Look at how card details are updated internally. If a customer updates their personal information, are they carrying across to your payment system in a timely manner?
- Make sure your payment processing is secure and free of security issues at the gateway, and also stops fraud activity.
Here are three steps you can follow to collect revenue and limit customer churn that is involuntary.
Three methods you could try to recover revenue payments
1. Give your customers a seamless experience when collecting payments
Just entered 2020 and are now living in an age where customers don't expect you to collect payment automatically; they expect you to.
If you're still sending invoices and asking customers to pay for subscriptions by hand It's not just a way to increase the friction in the process, but it can cause delay in payment. The invoices are lost and although not intentionally certain customers may not pay for them, and put their subscription in danger.
One of the easiest ways to prevent the problem is to offer your customers an effortless, automated experience while making their subscription payment. The payment page you create should not only provide customers with an easy experience while they sign up for a subscription. It should also be easy for them whenever they want to update their details for payment.
Below are some ways you can ensure that your customers' subscription payments are a seamless experience:
- Have a dedicated portal/page where customers can update their details: A customer should be able to update their payment details at any time they require, not just if a payment fails. Be sure that this feature is readily available to clients at all times.
- Safety first Every time that a customer inputs their payment details they should do by entering them into a secure space. Making sure that your customers' card details secure is an essential part of keeping them around. Are you willing to do business with a company that doesn't have a secure payment system?
- It's easy to use even in the event that they're browsing on mobile: Customers are busy individuals. Make sure your payment portal/page is responsive no matter what kind of device they're using. If they're able change their account information regardless of whether they're at the office or commuting, the more likely they are to do it.
- Verify that all is functioning in the right way: As great as technology is, we all recognize that it can happen when it's not perfect. Make sure you check up on your payment cycles and update pages to be sure they're working as they should be. In the event of a glitch, you may find that customers have been trying to change their information regarding payment, but aren't able to.
Using , you can collect automatic payments for your subscriptions. manages subscriptions using various payment gateways, and it accepts all payment options, currencies and languages.
2. Allow them to breathe if their first payment fails
Payment failures happen. It's part of the subscription game.
If a card of a client does not work, they should give them time to figure out the reason for it. Since technology like cards that update themselves coming on to the scene, details of cards tend to be updated automatically. However, there are some situations where the card information won't be current, and this is where the dunning emails are a factor.
A dunning email should not be used to harass 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 right off the bat. Instead, compose the email in a way to remind your clients what they paid for your product in the first place. For example, in the Hulu example the email is a reminder to customers that they will be able to continue watching their preferred programs if they decide to renew the subscription.
- Be brief and simple: Don't send a dunning email that's as long as an entire novel. Keep it to two or three paragraphs and ensure that each is geared towards a particular reason for it. One might be to remind the client about the value of your service which is then followed with a quick explanation of the payment that was not successful. Do not make the email solely about the failed payment however, be clear that if the user does not take action the issue will affect the subscription.
- Make a clear CTA: Just like Hulu did in the email above. Instead of incorporating a "pay today" button instead, they've informed the user that it's easy to "reactivate" the account. Include a straightforward CTA for your customers, so that they is aware of what they have to do to keep their subscription alive.
Then, you should make the updating process as seamless as possible. The CTA must direct the user to a card payment update page that can be responsive to any device your customer is viewing the email from. The simpler it is for your clients to make changes to their credit account information, the more likely they will do it.
3. Give your customers a chance--always
Always give your customers the possibility of knowing reasons for the bounce, and work in partnership with them to suggest alternatives to their subscription package.
If, for instance, their payment fails, don't automatically delete their account, or even eliminate them from your database. Instead, reach out to them to ask what you can do to help.
It is possible to offer:
- Maintain their subscription and on a lower tier that they can afford
- Transfer them to a trial version of your product for the time being
- Pause your account
In the case of SaaS particularly if you're selling a pricey product and you don't want to let your customers loose as soon when their first payment fails. It could be that they've experienced an economic downturn that they aren't able to pay for their subscription right now. If that's the case then offer to switch the customer to a lower-cost version of your subscription or suspend them for a short period of time subscription until they're ready.
It is a given that treating your customers with respect even when they face payment difficulties keeps them happy. They would like to know you can handle the fluctuating peaks and troughs that go along managing a business. By putting their account on hold, instead of cancellation, saves you needing to go through the process of re-onboarding after they have reactivated their subscription.
This is a win-win situation for both you and your customers.
Recovering failed payments is key to reducing churn involuntary
In the event that they fail If they fail, you must put in the right procedure to not only recover your profits, but also keep your clients as well. It's vital that, if your customer's payments fail the first contact you make with them should not be to get their money back. Your focus should be to check in with your customers, inquire whether they're having any problems or issues, and then try to work in a coordinated manner.
Customers are the heartbeat of your company, and recovering revenue doesn't mean that you're going to lose them. However when you approach things right, there will result in a positive experience for your customers and your business.
