How to Keep Customers and Recover Revenue for Your SaaS-based Business
Subscriptions are at the heart of any SaaS commercial model.
It appears to be an excellent idea. The customer signs up for your product, and every month, they pay to retain access to the product. 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. Involuntary churn makes up 7.2 percent of all churn in all sectors, and 7.5 percent of all churns in the SaaS sector.
Let's take a look at ways to put these techniques into your personal enterprise.
The reason for involuntary and failed payment customer churn can go hand in hand
One of the factors that supports each of these aspects is providing your customers with a stellar customer experience. If you've put the right processes in place, it is possible to keep your customers happy and keep generating revenue--at the simultaneously.
Before getting too far into the ways to keep your revenue flowing, it's essential to explore what involuntary churn means. Picture a typical payment cycle that you've established for your customers:
- They sign up for 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 then sends your customer an email informing them that their purchase is not valid and that they could lose access to your product If they do not take immediate action.
- The consumer doesn't do anything in the first attempt, and their next try at charging their card for payment also fails
- If you fail on the third attempt to take payment, your system then deactivates their subscription and either switch them to the free version or even cancels their account completely.
But what this report does not reveal are the numerous causes that may be behind the failed payment collections.
This is the reason that planning for churn involuntary is crucial to revenue recovery. Planning can take many forms including:
- Setting up a series of "dunning" emails, which will send out a series of payment reminders for customers to alter their credit card details or payment processing options
- 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?
- Make sure your payment processing is free of security issues at the gateway, and also stops fraud transactions.
Three steps that you can follow to collect profits and prevent involuntary churn from your customers.
There are three ways to collect revenue
1. Give your customers a seamless process for collecting payment
We just entered into 2020 and we are living in a time where people don't expect you to collect the payment on a regular basis; they want them to.
If you're sending out invoices and asking customers to pay their subscriptions manually It's not just a way to increase the friction in the process and can lead to payment delays. Invoices get lost, and even if it's not intentional the customers could overlook paying them and put their subscription in danger.
One of the easiest ways to prevent this is to provide your customers a seamless, automatized experience for making their subscription payment. The payment page you create should not only provide customers with a smooth experience while they are signing up for their subscription. It should also be effortless for them when they want to update their payment details.
Here are a few ways you can make your customer's subscription payments a seamless experience:
- Create a separate portal or page for customers to change their personal information: A customer should be able to update their payment details at any time they require, not only if the payment fails. You should make sure this option is available for your customers all the time.
- Security first: When a client inputs the details of their credit card the information should be entered so in an encrypted space. Keeping your customer's credit information is secure when they enter their card is essential to keeping them around. What person would want to work with a company that doesn't provide a safe payment method?
- Make it easy--even when they're using a mobile: Your customers are active individuals. Check that your website or payment gateway can be responsive, regardless of what kind of device they're making use of. If they can update their payment details, whether they're in the office or commuting and the greater chance they are to do it.
- Make sure everything is working in the right way: As great as technology is, we all are aware that there are times when it's not always working. Check on your payment cycle as well as update page to make sure they're working as they should be. Otherwise, you might find that your customers are trying to correct their details on their payments, but just haven't been able to.
Using , you can collect the payment for subscriptions on autopilot. It manages subscriptions through multiple payment gateways and supports all major payment methods, currencies, and languages.
2. Give them breathing room if they fail to make their first payment.
The possibility of payment failure can occur. This is a normal aspect of subscription games.
So when a customer's card isn't working, allow them time to figure out why it happened. With technology like card updaters coming onto the scene, information about cards tend to be updated automatically. There are however situations where the information on their card won't stay up to date which is why email dunning comes into play.
The dunning email shouldn't harass customers about missing payment. Instead, it can serve to keep in touch with the customer to ensure that everything is ok, and give customers the chance to change the information on their payments, like this dunning email from Hulu:
- Let your clients know that your product is worth it: Don't demand payment from the beginning. Instead, frame the email in a way to remind your clients why they signed up to your service to begin with. In the Hulu example this email reminds users that they are able to continue watching their preferred programs if they renew the subscription.
- Keep it short and sweet: Don't send a lengthy email in the same way as the length of a novel. Limit it to a couple of paragraphs, and ensure that each serves a specific goal. The purpose could be to remind the client of the benefits your product offers and then be followed up with a brief explanation of the failed payment. Do not make the email solely about the failed payment however, be clear that if the user isn't proactive this will revoke the subscription.
- Provide a clear CTA Similar to what Hulu did in the email above. Instead of incorporating the "pay immediately" button instead, they've informed the user that it's simple to "reactivate" their account. Add a clear CTA to ensure that your client is aware of what they have to do in order to maintain their subscription.
Also, try to make the updating process as seamless as is possible. The CTA will direct customers to a payment update webpage that responds to whatever device the customer is reading the dunning email from. Remember--the more simple it is for clients to change their account information, the more likely they are to make the change.
3. Always give your customers the chance to win.
Give your clients the benefit of the doubt about why their payment bounced, and work together with them to provide other options for their subscription.
For example, when their payments fail, don't immediately cancel their account and take them off your database. Instead, reach out to them to ask what you can do to assist them.
You might offer to:
- Make sure their subscription is active and on a lower level that they are able to afford.
- Transfer them to a trial version of your product for at least a while
- Shut down the account
When it comes to SaaS, especially if you're selling an expensive product and you don't want to let your customers off as soon when their first payment fails. Perhaps they have hit an economic downturn that they aren't able to renew their subscription just now. If that's the case you can offer to transfer them to a free-tier of your service, or temporarily pause their subscription until they are ready.
Naturally, ensuring that you treat your customers well in the event of issues with payment keeps them content. They'd like to know you can handle the fluctuating peaks and troughs associated managing 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.
You'll win, as will your customers.
The process of recovering failed payments is the key to reducing churn involuntary
In the event that they fail in the event of a failure, it is essential to put in the right process to not only recover your revenue but to keep your customers too. It's vital that, if a customer's payment fails to be processed, the first interaction with them should not be to get their money back. It is important to follow up with your customers, inquire if they have any issues or issues, and then try to resolve the issue together.
Customers are the heartbeat of your business, and getting them back on track doesn't mean they're likely to leave. In the opposite direction, if you do it right, it can have a positive effect on the customers you serve and also for your business.
