How to Keep Customers and Recover Revenue for Your SaaS Business
Subscriptions are vital to every SaaS commercial model.
It appears to be a perfect design. A customer subscribes to your product, and every 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 churns without them realizing or unconsciously. The involuntary churn is 7.2 percent of the total churn across all industries as well as 7.5% of all churn in the SaaS sector.
Let's take a look at how you can put these practices into your business.
Why failed payments and involuntary customer churn go together
Another aspect that is at the heart of both of these factors is providing your customers with a stellar user experience. If you've got the proper processes in place, you will be able to keep your clients content and continue to generate income at the at the same time.
Before we go too deep into the ways to keep your income flowing, it's essential to examine what involuntary churn is. Imagine a payment process that you may have set up for your customers:
- You sign them up to receive your service
- Their payment is scheduled for the 28th of this month.
- The first charge of their credit card that is on file does not succeed.
- Your system then sends your client an email informing them that their charge has failed and that they may be denied access to your service if they don't take action
- The consumer doesn't do anything in the first attempt, and their next try to charge their card for the payment is also unsuccessful.
- Following the third unsuccessful attempt at taking payment, your system suspends the subscription, and then move them back to a freemium version or even cancels their account completely.
However, what this cycle doesn't show are the many reasons that could be causing failures in collection collections.
These are the reasons why planning for involuntary churn is essential to recouping revenue. The planning process can be diverse, such as:
- Set up a sequence of "dunning" emails to will send out a series of payment reminders for customers to update their payment card information or processing choices
- Examine how the card information are updated internally. If your customer changes their information, is it being transferred to your payment system properly?
- Be sure that your processing is not impacted by gateway issues and stops fraudulent activities.
There are three steps you can take to recover profits and prevent customer churn that is involuntary.
There are three ways to collect on revenue
1. Provide your customers with a smooth experience for collecting payment
The year 2020 is just beginning and are now living in an age where customers do not expect to receive the payment on a regular basis; they want you to.
If you're still sending out invoices, and ask customers to pay their subscriptions in person It's not just a way to add a layer of friction on the way, but it can cause delay in payment. It is possible that invoices will be lost. even if it's not intentional certain customers may not pay for them, and inadvertently put their subscription at risk.
One of the easiest ways to prevent the problem is to offer your customers an effortless, automatized experience for paying their subscription. Your payment page shouldn't just provide the customer with a seamless experience when they sign up for a subscription, but make it simple for them to access it whenever they'd like to edit the details of their payments.
There are several methods to ensure that your customers' subscription payments are an effortless experience
- Set up a specific portal or webpage that allows customers to update their details: A customer should be able to update their payment details at any time they require, not just if a payment fails. You should make sure this option is readily available to clients at all times.
- Safety first When a customer inputs their payment details, it should be done using a secure channel. Making sure that your customers' payment details are secure is an essential part of keeping them around. What person would want to work with a company that doesn't have a secure payment system?
- It's easy to use even if they're on a mobile: Customers are engaged people. Check that your website or payment gateway is responsive no matter what kind of device they're making use of. If they're able update their payment details no matter if they're in the office or commuting to work, the more likely they are to do it.
- Make sure all is functioning in the right way: As great as technology is, we all know that sometimes, it fails. Check on your payments cycle and update pages to make sure they're working as they should be. In the event of a glitch, you may find that customers have been trying to update their payment information--they aren't able to.
Using , you can collect automatic payments for your subscriptions. It manages subscriptions through different payment gateways. It also accepts all payments, currencies, and languages.
2. Let them breathe in the event that they fail to make their first payment.
Payment failures happen. It's element of subscriptions.
When a customer's credit card does not work, they should give them time to determine the reason for it. With technology like card updaters coming onto the scene, details of cards are now more likely to be updated in a timely manner. But, there are circumstances where customers' card details won't be kept up-to-date This is when dunning emails come into play.
The dunning email shouldn't harass your customer about a missed payment. Instead, it should be used to check in with the customer to ensure that everything is in order, and offer them the opportunity to edit the information on their payments, like this dunning email from Hulu:
- Let your clients know that your product is valuable: Don't demand payment right off the bat. Instead, frame your email in a manner which reminds customers of why they signed up to your service initially. For example, in the Hulu example, the dunning email reminds customers that they will be able to watch their favourite programs if they renew the subscription.
- Be brief and sweet: Don't send a dunning email that's as long as the length of a novel. Limit it to only a few paragraphs and ensure that each serves a specific purpose. It could be to remind the customer of the benefits your product offers which is then followed with a quick explanation of the payment that was not successful. Do not make the email solely about the failed transaction However, you should make it clear that if the client isn't proactive the issue will affect their subscription.
- Give a simple CTA Just like Hulu did in their email below. Instead of including the "pay now" button, they've reminded the customer that it's simple to "reactivate" their account. Make sure to include a simple CTA to ensure that your client is aware of what they have to do in order 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 page that is responsive to any device your customer is reading the dunning email from. Remember--the more simple it is for clients to make changes to their credit details on their card and update their card information, the more likely they will do it.
3. Always give your customers the chance to win.
Always give your customers the advantage of doubt as to why their payment bounced, and work in partnership with them to suggest alternative options to their subscription.
In the event that a failure to pay, you shouldn't delete their account, or even remove them from your customer database. Instead, reach out to them and ask them what you can do to assist them.
Consider offering to:
- Make sure their subscription is active, but on a lower level that they are able to afford.
- Transfer them to a trial version of your product for the time being
- Stop their account
When it comes to 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. Maybe they've hit the financial cliff or are unable to keep their subscription now. If so you can offer to transfer the customer to a lower-cost version of your service or suspend them for a short period of time subscription until they're able to.
Of course, treating your customers with respect in the event of payment difficulties keeps them happy. They'd like to know you are aware of the fluctuations and troughs associated the running of a business. But pausing their account, instead of removing it is a better option than the hassle of having them go through the process of re-onboarding when they renew the subscription.
This is a win-win situation for both you and your clients.
The process of recovering failed payments is the key to cutting involuntary churn
In case they fail in the event of a failure, it is essential to set up the proper system in place in order to not just recover your revenue but to keep your customers too. If a customer's payment fails, your first communication with them should not be to recover revenue. Your focus should be to follow up with your customers, inquire whether they're experiencing any issues or issues, and then try to work 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 they're likely to leave. On the flip side when you approach the right thing, it could have a positive effect on both your clients and for your company.
