How to Retain Customers and increase Revenue for your SaaS Business
Subscriptions are at the heart of any SaaS company model.
On the surface, it's an excellent design. The customer signs up for 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 unconsciously. Involuntary churn makes up 7.2% of total churn across all industries, and 7.5% of all churn in the SaaS sector.
Let's look at the ways you can implement these processes into play in your enterprise.
What causes failed payments? Involuntary customer churn go hand in hand
One of the factors that supports each of these aspects is providing your clients with an exceptional customer experience. If you've got the proper methods in place, then you will be able to keep your clients content and continue to generate income at the simultaneously.
Before we go too deep into the ways to keep your revenues flowing, it's essential to examine what involuntary churn is. Picture a typical payment cycle that you've established for your customers:
- Sign up to the product you offer
- They are scheduled to pay on the 28th day of the month.
- The first charge of their card in their file is not successful.
- The system will then send your customer an email informing them that their purchase is not valid and that they may lose access to your product If they do not take immediate action.
- The client doesn't take action when they try again, and the subsequent attempt at charging their card for payment also fails
- If you fail on the third attempt at taking payment, your system then removes their account and switch them to a freemium version 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.
These are the reasons that planning for involuntary churn is crucial to revenue recovery. It can be done in a variety of ways, such as:
- The process of setting up a set of "dunning" emails to will send out a series of payment reminders for customers to update their payment card information or processing options
- Look at how card details are updated internal to the system. If a customer updates their personal information, are they transferring to your payments system properly?
- Check that your payment processing is free of problems with your gateway and prevents fraudulent activities.
Here are three steps you can follow to collect revenue and limit involuntary churn from your customers.
Three ways you can attempt to recover revenue payments
1. Make sure your customers have a seamless experience when collecting payments
The year 2020 is just beginning and now we live in an age when customers do not expect to receive the payment on a regular basis; they want that you do.
If you're still sending invoices, and ask customers to pay for their subscriptions manually It's not just a way to add a layer of friction to the process however, it could also cause payments to be delayed. Invoices get lost, and while not on purpose, some customers might not pay for them, or inadvertently place their subscription at risk.
The best way to stop the problem is to offer your customers a seamless, automated experience while making their subscription payment. The payment page you create should not just provide the customer with a seamless experience when they're signing up for their subscription. It should also be effortless for them when they need to change their details for payment.
Here are a few ways you can make your customer's subscription payments a seamless experience:
- Set up a specific portal or webpage where customers can update their personal information: A customer should be able to update the details of their payments whenever they need, and not only if the payment fails. You should make sure this option is accessible to your clients at all times.
- Safety first Any time a customer inputs their payment details they should do so in an encrypted space. Making sure your customer's card details secure is an essential part of making sure they are safe. What person would want to work with a company that doesn't use a secured payment system?
- Make it easy--even in the event that they're browsing on mobile: 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 update their payment details no matter if they're in working or traveling to work, the more likely they are to do it.
- Verify that all is functioning according to the way it should: As great as technology may be, we know that sometimes, it's not always working. Make sure you check up on your payment cycle as well as update page to make sure that they're functioning as they should be. If not, it could be that customers have been trying to update their payment information--they just haven't been able to.
With a subscription service, you are able to collect subscription payments on autopilot. It manages subscriptions through various payment gateways, and it accepts all payment options, currencies and language.
2. Allow them to breathe if their first payment fails
The possibility of payment failure can occur. It's a natural element of subscriptions.
When a customer's credit card does not work, they should give them time to determine why it happened. Thanks to technology such as card updaters coming onto the scene, details of cards are now more likely to be updated in a timely manner. There are however instances where a customer's card information won't be current, and this is where email dunning comes into play.
Now, a dunning email should not be used to harass your customer about a missed payment. It should instead 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:
- Make sure your customers know why the product you offer is worthwhile: Don't demand payment right off the bat. Instead, structure the email in a manner that reminds your customers why they signed up to your service initially. In the Hulu instance above the email is a reminder to customers that they will be able to keep watching their favorite shows if they renew the subscription.
- Keep it short and short: Don't send a lengthy email in the same way as the length of a novel. Reduce it to just only a few paragraphs and make sure each one is geared towards a particular purpose. One might be to remind the customer of your product's value which is then followed by a short explanation about the paid-for transaction that failed. Make sure that the message isn't all about the payment that failed however, be clear that if the customer doesn't take action, it will impact the subscription.
- Make a clear CTA: Just like Hulu did in their email mentioned above. Instead of adding in a "pay immediately" button, they've reminded the customer that it's easy to "reactivate" the subscription. Include a straightforward CTA to ensure that your client knows exactly what they need to do in order to ensure their subscription is still active.
Finally, make the card update process as smooth as possible. The CTA should link directly to a payment update page that can be responsive to whatever device the customer is reading the dunning email on. The more simple it is for customers to update their account information and update their card information, the more likely they are to do it.
3. Always give your customers the chance to win.
Always give your customers the benefit of the doubt about why their payment bounced, and collaborate in partnership with them to suggest alternatives to their subscription package.
If, for instance, their failure to pay, you shouldn't close their account or remove them from your customer database. Instead, call them to ask what you can do for them.
Consider offering to:
- Keep their subscription active however, on a lesser tier that they can afford
- Transfer them to a trial version of the product the time being
- Shut down the account
If you're in the business of SaaS and especially when you're selling an expensive product, you mustn't cut your customers loose as soon the first time their payment is rejected. Perhaps they have hit an economic downturn that they aren't able to renew their subscription just this moment. If so then offer to switch their subscription to a no-cost tier of your subscription, or temporarily pause their subscription until they are ready.
It is a given that treating your clients well even when they face issues with payment keeps them content. They'd like to know you are aware of the fluctuations and troughs associated the running of a business. By putting their account on hold, instead of removing it will save you from needing to go through the process of onboarding again after they have reactivated their subscription.
It's a win-win for you--and your clients.
Rectifying failed payments is essential to reducing churn involuntary
In case they fail, you need to implement the correct process in order to not just recover the revenue, but also to retain your customers as well. It's vital that, if your customer's payments fail the first contact you make with them isn't just to come back with revenue. The goal should be to check in with your customers, ask them whether they're experiencing any issues or issues, and then try to work with them.
Your customers are the lifeblood for your company. recovering revenue doesn't mean that you're going to lose them. However If you manage it right, it can be a positive outcome--for both your clients and for your company.
