How to Retain Customers and Recover Revenue for Your SaaS Business
Subscriptions are the lifeblood of any SaaS commercial model.
It appears to be an ideal 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% of total churn across all industries in all sectors, and 7.5 percent of all churn in the SaaS sector.
Let's take a look at the ways you can implement these techniques into your business.
What causes failed payments? Involuntary customer churn goes in tandem
Another aspect that is at the heart of both of these factors is providing your customers with an exceptional user experience. If you've got the proper methods in place, then it is possible to keep your customers content and continue to generate income at the same time.
Before diving too deeply into how to keep your revenues in the flow, it's important to explore what involuntary churn means. Imagine a payment process you've set up for your customers:
- They sign up for your service
- They are scheduled to pay on the 28th of that month
- The initial charge on their card on file fails
- Your system then sends your customer an email informing them that their purchase is not valid and that they will be denied access to your service If they do not take immediate action.
- The customer doesn't act, and the next attempt to charge their card for payment fails too.
- If you fail on the third attempt to take payment, your system removes their account and return them to the free version of the software or cancels their account altogether
However, what this cycle doesn't show are the many reasons that could be causing the collection of payments to stop.
This is why planning for involuntary churn is essential to recouping revenue. Planning can take many forms, such as:
- The process of setting up a set of "dunning" emails that make a loop of reminders to your clients to alter their credit card details or payment processing options
- Check how your card's details are updated within the internal system. If a customer updates their information, is it carrying across to your payment system properly?
- Be sure that your processing is secure and free of security issues at the gateway, and also stops fraud activities.
Here are three steps you can use to increase profits and prevent customer churn that is involuntary.
Three methods you could try to recover revenue payments
1. Make sure your customers have a seamless experience for collecting payment
The year 2020 is just beginning and now we live in a time where people do not expect to receive payment automatically; they expect them to.
If you're still sending out invoices, and ask customers to pay for their subscriptions in person It's not just a way to increase the friction to the process however, it could also cause delay in payment. It is possible that invoices will be lost. even if it's not intentional, some customers might forget to pay them and inadvertently put their subscription in danger.
The easiest way to avoid this is to give your clients a seamless automatized experience for collecting their subscription payments. Your payment page shouldn't simply provide your customer with a seamless experience when they're signing up for their subscription, but make it easy for them whenever they want to update their payment details.
Below are some ways you can make your customer's subscription payments a seamless experience:
- Have a dedicated portal/page for customers to change their personal information: A customer should be able to modify the details of their payments whenever they need, and not only if the payment is not successful. You should make sure this option is readily available to clients at all times.
- Security first: When a user inputs payment information they should do by entering them into a secure space. Making sure that your customers' payment details are secure is an essential part of maintaining them. Who wants to deal with a firm that does not have a secure payment system?
- It's easy to use even if they're on a mobile device: Customers are engaged individuals. Make sure your payment portal/page is responsive no matter what type of device they're making use of. If they can modify their details for payment regardless of whether they're at working or traveling and the greater chance they are to do it.
- Check that everything works 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 cycle or update webpages to ensure that they're functioning as they should be. Otherwise, you might find that your customers are trying to change their information regarding payment, but aren't able to.
With a subscription service, you are able to collect subscription payments on autopilot. Manages subscriptions with multiple payment gateways and supports all major payment options, currencies and languages.
2. Give them breathing room if their first payment fails
The possibility of payment failure can occur. This is a normal aspect of subscription games.
So when a customer's card fails, give them some time to figure out what caused it. With technology like card updaters surfacing on the scene, details of cards tend to be updated in a timely manner. However, there are some instances where a customer's card information won't be current, and this is where dunning emails come into play.
The dunning email shouldn't harass your client about an unpaid payment. Instead, it can be used to check in with the customer to confirm that all is ok, and give them the option to update the information on their payments, like this dunning email by Hulu:
- Let your clients know that your product is worth it: Don't demand payment immediately. Instead, frame the email in a manner to remind your clients the reason they chose to sign up for your product in the first place. For example, in the Hulu instance above this email reminds customers that they will be able to keep watching their favorite shows when they renew their subscription.
- Keep it short and sweet: Don't send a spam email that's as long as the length of a novel. Limit it to two or three paragraphs and be sure that every one serves a specific goal. One might be to remind the customer of the benefits your product offers to them, followed by a short explanation about the payment that was not successful. Don't make the email all about the payment that failed However, you should emphasize that if the user doesn't take action, it will impact their membership.
- Provide a clear CTA Similar to what Hulu did in the email below. Instead of incorporating an "pay immediately" button instead, they've informed the user 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 ensure their subscription is still active.
Also, try to make the updating process as seamless as possible. The CTA will direct customers to an update for your card page that is responsive to whatever device the customer is browsing the dunning email on. Keep in mind that the simpler it is for your clients to make changes to their credit account information and update their card information, the more likely they are to complete the process.
3. Give your customers a chance--always
Always give your customers the advantage of doubt as to why their payment bounced, and work with them to offer up alternatives to their subscription package.
If, for instance, their payments fail, don't immediately close their account or take them off your database. Instead, call them to ask what you can do to help.
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 product for at least a while
- Pause the account
If you're in the business of SaaS, especially if you're selling a pricey product, you mustn't cut your customers off as soon the first time their payment is rejected. Perhaps they have hit a rough financial patch that they aren't able to keep their subscription this moment. If this is the case then offer to switch the customer to a lower-cost version of your service, or temporarily pause their subscription until they are ready.
It is a given that treating your clients well in the event of payment difficulties keeps them happy. They would like to know you can handle the fluctuating peaks and troughs that go along with running the business. By putting their account on hold, instead of removing it, saves you needing to go through the process of onboarding again when they renew their subscription.
It's a win-win for you--and your customers.
The process of recovering failed payments is the key to cutting involuntary churn
In the event that they fail, you need to set up the proper process in order to not just recover your profits, but also keep your clients as well. In the event of a customer's payment fails to be processed, the first interaction with them isn't just to get their money back. Your focus should be to contact your clients, asking them whether they're experiencing any issues or issues, and then try to move forward with them.
Your customers are the lifeblood of your company, and recovering revenue doesn't mean that they're likely to leave. In the opposite direction when you approach things right, there will be a positive outcome--for the customers you serve and also for your business.
