How to Keep Customers and recoup revenue for your SaaS Company
Subscriptions are the lifeblood of every SaaS commercial model.
In the beginning, it's a perfect idea. A customer subscribes to your service, and each month, they are charged 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. This is when a customer does not realize that they are doing it, or against their wishes. Involuntary churn makes up 7.2 percent of all overall churn as well as 7.5 percent of all churn in the SaaS sector.
Let's examine ways to put these practices into your own company.
What causes failed payments? Involuntary customer churn goes in tandem
One of the factors that supports each of these aspects is providing your clients with an excellent user experience. If you've put the right methods in place, then it is possible to keep your customers content and continue to generate income at the same time.
Before we go too deep in the process of keeping your revenue running, you must examine what involuntary churn is. Think of a typical cycle you've set up for your customers:
- They sign up for your service
- Their payment is scheduled for the 28th of that month
- The first charge of their card on file fails
- 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 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 the payment is also unsuccessful.
- Following the third unsuccessful attempt to make payment, your system then deactivates their subscription and either switch them to a freemium version of the product or completely cancels their subscription
However, what this cycle does not reveal are the numerous factors that might be responsible for failures in collection collections.
It's because of these reasons the reason that planning for churn involuntary is vital to ensuring revenue recovery. The planning process can be diverse, such as:
- The process of setting up a set of "dunning" emails that create a cycle of payment reminders for your customers to change their card details/payment processing options
- Check how your card's details are changed internal to the system. If your customer changes their information, is it being transferred to your payment system properly?
- Be sure that your processing is free of problems with your gateway and prevents fraudulent transactions.
Three steps that you can take to recover profits and prevent the rate of involuntary churn among your customers.
Three methods you could try to collect on revenue
1. Make sure your customers have a seamless experience for collecting payment
The year 2020 is just beginning and are now living in an age where customers aren't hoping you will collect payments automatically. They expect that you do.
If you're still sending invoices, and ask customers to pay their subscriptions in person It's not just a way to add a layer of friction in the process however, it could also cause payment delays. It is possible that invoices will be lost. while not on purpose the customers could not pay for them, and put their subscription at risk.
The easiest way to avoid this is to provide your customers a seamless, automatic experience when collecting their subscription payments. The payment page you create should not just provide the customer with a seamless experience when they're signing up for their subscription, but make it simple for them to access it whenever they need to change their payment details.
Here are a few ways you can help your customers make their subscription payments a seamless experience:
- Set up a specific portal or webpage for customers to change their details: A customer should have the ability to change their payment details at any time they require, not only if the payment does not go through. You should make sure this option is readily available to customers all the time.
- Safety first Any time a client inputs the details of their credit card, it should be done so in an encrypted space. Making sure your customer's information is secure when they enter their card is a crucial part of maintaining them. What person would want to work with a firm that does not have a secure payment system?
- Make it easy--even when they're using a mobile: Customers are engaged individuals. Be sure that your payment page is responsive regardless of the kind of device they're employing. If they're able to change their account information, whether they're in working or traveling to work, the more likely they'll do it.
- Verify that everything is working according to the way it should: As great as technology may be, we are aware that there are times when it fails. Check on your payments cycle and update pages to be sure the pages are functioning as they ought to be. In the event of a glitch, you may find clients have tried to update their payment information--they aren't able to.
With a subscription service, you are able to collect subscription payments on autopilot. It manages subscriptions through various payment gateways, and it can handle all the major payment options, currencies and language.
2. Give them breathing room if they fail to make their first payment.
The possibility of payment failure can occur. This is a normal part of the subscription game.
When a customer's credit card does not work, they should give them time to determine what caused it. Since technology like cards that update themselves coming on to the scene, card details are now more likely to get updated on file immediately. However, there are some circumstances where customers' card information won't be current This is when the dunning emails are a factor.
A dunning email should not be used to harass your client about an unpaid payment. It should instead be used to communicate with your customer to confirm that all is ok, and give customers the chance to change their payment details, like this dunning email from Hulu:
- Remind your customers why the product you offer is worthwhile: Don't demand payment right off the bat. Instead, compose your email in a manner that reminds your customers what they paid to your service initially. In the Hulu example above the email is a reminder to customers that they will be able to watch their favourite programs if they choose to renew their subscription.
- Make it brief and simple: Don't send a lengthy email in the same way as an entire novel. Limit it to two or three paragraphs and be sure that every one has a goal. The purpose could be to remind the customer of your product's value and then be followed up by a short explanation about the paid-for transaction that failed. Do not make the email solely about the payment that failed, but emphasize that if the user doesn't take action the issue will affect their membership.
- Make a clear CTA: Like Hulu did in their email below. Instead of adding in the "pay now" button instead, they've informed the user that it is easy to "reactivate" their account. Add a clear CTA, so your customer 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 you can. The CTA must direct the user to a card payment update webpage that responds to any device your customer is reading the dunning email on. Keep in mind that the simpler it is for your clients to change their account information more likely they will complete the process.
3. Don't be afraid to give them a second chance.
Be sure to give your clients advantage of doubt as to reasons for the bounce, and collaborate together with them to provide other options for their subscription.
For example, when their payment fails, don't automatically delete their account, or even eliminate them from your database. Instead, reach out to them and ask them what you can do to help.
It is possible to offer:
- Make sure their subscription is active and on a lower cost that they can manage.
- Change them to a no-cost version of your product for at least a while
- 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. It could be that they've experienced an economic downturn or are unable to keep their subscription now. If so you can offer to transfer them to a free-tier of your service or suspend them for a short period of time subscription until they're ready.
Naturally, ensuring that you treat your customers well when they are having issues with payment keeps them content. They want to know that you can handle the fluctuating peaks and troughs that go along managing an enterprise. However, putting off their subscription instead of cancellation, saves you needing to go through the onboarding process again after they have reactivated the subscription.
It's a win-win for you--and your customers.
The process of recovering failed payments is the key to reducing churn involuntary
If they don't work, you need to implement the correct process to not only recover your revenue but to keep your customers too. If the payment of a client fails, your first communication with them shouldn't be just to get their money back. The goal should be to check in with your customers, inquire whether they're experiencing any issues or concerns, and try to resolve the issue with them.
Customers are the heartbeat of your company, and the fact that you're able to make money doesn't mean they're likely to leave. On the flip side, if you do the right thing, it could have a positive effect on your customers and your business.
