How to Retain Customers and Recover Revenue for Your SaaS Business
Subscriptions are the lifeblood of every SaaS business model.
It appears to be a perfect idea. The customer signs up for your service and, each month, they are charged to keep their access to it. 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 does not realize that they are doing it, or unconsciously. The involuntary churn is 7.2 percent of the overall churn as well as 7.5 percent of churn within the SaaS area.
Let's look at the ways you can implement these processes into play in your own company.
Why failed payments and involuntary customer churn goes hand in hand
And one aspect that underpins all of them is providing your clients with an exceptional customer experience. If you have the right procedures in place, you will be able to keep your clients satisfied and generate revenue at the simultaneously.
Before we go too deep into how to keep your revenues in the flow, it's important to examine what involuntary churn is. Imagine a payment process that you've established for your customers:
- Sign up to your service
- Their payment is scheduled for the 28th of this month.
- The initial charge on their card in their file is not successful.
- Your system sends your customer an email informing them that their purchase was not successful and they may lose access to your products in the event that they fail to take action.
- The consumer doesn't do anything when they try again, and the subsequent attempt at using their credit card to make payment also fails
- Following the third unsuccessful attempt to take payment, the system suspends the subscription, and then return them to a no-cost version of the software or cancels their account altogether
But what this report does not reveal are the numerous reasons that could be causing the collection of payments to stop.
This is why planning for involuntary churn is essential to recouping revenue. It can be done in a variety of ways including:
- Setting up a series of "dunning" emails that make a loop of reminders for customers to alter their credit card details or payment processing choices
- Examine how the card information are updated within the internal system. When a client updates their information, is it transferring to your payments system properly?
- Be sure that your processing is not impacted by gateway issues and stops fraudulent transactions.
Three steps that you can follow to collect revenue and limit involuntary churn from your customers.
Three methods you could try to collect revenue
1. Give your customers a seamless experience for collecting payment
We just entered into 2020 and now we live in an age when customers do not expect to receive payment automatically; they expect you to.
If you're still sending invoices to customers and requiring them to pay for their subscriptions manually It's not just a way to increase the friction to the process however, it could also cause payments to be delayed. It is possible that invoices will be lost. while not on purpose certain customers may forget to pay them or inadvertently place their subscription at risk.
The best way to stop 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 an easy experience while they sign up for a subscription, but also make it easy for them whenever they want to update the details of their payments.
Here are a few options to help you help your customers make their subscription payments smooth and seamless:
- Create a separate portal or page where customers can update their information: A customer should be able to modify the details of their payments anytime they want, not just if a payment does not go through. Make sure this option is available for your customers at all times.
- First, security: Any time a user inputs payment information, it should be done by entering them into a secure space. Making sure your customer's card details secure is essential to maintaining them. Who wants to deal with a firm that does not provide a safe payment method?
- Make it easy--even in the event that they're browsing on mobile: Your clients are very active individuals. Make sure your payment portal/page is responsive no matter what kind of device it is that they're employing. If they're able change their account information no matter if they're in the office or commuting and the greater chance they will do so.
- Verify that everything is working according to the way it should: As great as technology may be, we recognize that it can happen when it fails. Make sure you check up on your payment cycles as well as update page to ensure the pages are functioning as they ought to be. If not, it could be that your customers are trying to correct their details on their payments, but just haven't been able to.
By using iPayment, you can receive subscription payments on autopilot. Manages subscriptions with multiple payment gateways and supports all major payments, currencies, as well as languages.
2. Allow them to breathe if their first payment fails
Failures to pay can happen. It's aspect of subscription games.
If a card of a client fails, give them some time to understand what caused it. With technology like card updaters coming onto the scene, information about cards tend to be updated in a timely manner. However, there are some instances where a customer's information on their card won't stay up-to-date This is when the dunning emails are a factor.
Now, a dunning email shouldn't harass customers about missing payment. Instead, it can be used to check in with the customer to make sure everything is in order, and offer them the opportunity to edit their payment details, like this dunning email by Hulu:
- Remind your customers why your product is valuable: Don't demand payment from the beginning. Instead, structure the email in a way which reminds customers of what they paid to your service to begin with. In the Hulu example above the email is a reminder to users that they are able to continue watching their preferred shows if they decide to renew their subscription.
- Keep it short and short: Don't send a spam email that's as long as an entire novel. Keep it to a couple of paragraphs, and be sure that every one has a 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. Make sure that the message isn't all about the payment that failed however, emphasize that if the client doesn't take action, it will impact their membership.
- Make a clear CTA Like Hulu did in the email mentioned above. Instead of adding in the "pay now" button and reminding the customer that it's simple to "reactivate" their account. Add a clear CTA for your customers, so that they knows exactly what they need to do to ensure their subscription is still active.
Finally, make the card changing process as easy as possible. The CTA will direct customers to a payment update page that can be responsive to the device that the user is reading the dunning email on. Remember--the simpler it is for your clients to make changes to their credit details on their card, the more likely they will do it.
3. Give your customers a chance--always
Give your clients the possibility of knowing reasons for the bounce, and work in partnership with them to suggest alternative options to their subscription.
For example, when their payment fails, don't automatically delete their account, or even remove them from your customer database. Instead, reach out to them and ask them what you can do for them.
It is possible to offer:
- Keep their subscription active and on a lower tier that they can afford
- Change them to a no-cost version of your software for the time being
- Stop your account
In the case of SaaS, especially if you're selling expensive products 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 renew their subscription just now. If so, offer to move their subscription to a no-cost tier of your service, or temporarily pause their subscription until they're ready.
Naturally, ensuring that you treat your clients well when they are having problems with their payments will keep them satisfied. They'd like to know you can handle the fluctuating peaks and troughs that go along the running of an enterprise. By putting their account on hold, instead of removing it, saves you needing to go through the process of re-onboarding when they renew their subscription.
You'll win, as will your clients.
Recovering failed payments is key to cutting involuntary churn
If they don't work in the event of a failure, it is essential to set up the proper process to not only recover your profits, but also keep your customers too. It's vital that, if the payment of a client fails, your first communication with them shouldn't be just to come back with revenue. It is important to check in with your customers, ask them whether they're having any problems or questions, and attempt to work with them.
Your customers are the lifeblood for your company. the fact that you're able to make money doesn't mean they're likely to leave. In the opposite direction If you manage it right, it can result in a positive experience for your customers and your business.
