If your process for handling customer failed payments in your MRR business is flawed, or worse, you don’t have a process for this at all, you’re leaving money on the table! Failed payments are a top contributor to company churn and it’s totally preventable. We’re going to take a look at some reasons for failed payments in an MRR business, why you should care, and what you can do about it.
Why do customer payments fail in an MRR business?
A straight forward answer to this would be that we’re simply all human. We’re all living busy lives and sometimes, blockers crop up which stop a payment processing for your customer.
On a slightly more in depth level, a failed payment might look like the following:
A bank could block your customers monthly payment for a number of reasons, and any of the following are pretty common:
- The customer has incorrectly entered their pin multiple times and blocked their card
- The customer has exceeded their maximum spend and so the bank has blocked the payment
- The charge is considered unusual by the issuing bank or is for a larger amount than usual
For any of the above problems, the customer would need to contact their bank.
The card the customer usually uses has insufficient funds.
Other reasons for a failed subscription payment could include:
- Card expired
- Card reported lost or stolen
- The address provided to the company doesn’t match that of the card, and so an authorization check may fail
Whatever the reason, failed payments present a risk of churn if they aren’t picked up on as soon as possible. According to Profit Well, failed payments could contribute to company churn by as much as 40%. That’s a huge amount of lost profit which could be completely preventable.
If you do nothing, you are relying on your customer to contact you to fix the problem, which is a very passive way of working and leaves you with a huge risk of churn. The solution is to put automation in place which aims to get your customer’s subscription back on track.
How to handle failed payments in your WordPress MRR business
The best solution to getting a handle on failed payments is to use an automatic system that sends out a message to your client as soon as their payment fails – and follows up for you after.
Putting automation in to solve this problem is a smart move because it saves you tons of time following up on failed payments and it lets your customer know that there’s a problem with their subscription right away. Including a link in your automated emails for your customer to update their card information puts another level of automation in and can help reactivate their subscription quicker.
To stop failed payments contributing 20 – 40% of your company churn, let’s look at some systems you could use to help automate this process.
Profit Well Retain
ProfitWell Retain is a system that “leverages millions of data points” to help you win back your customers. They’ve been studying MRR Businesses for years, and they promise to have what it takes to give you your time back by fully managing failed payments for you. Their system is fully white-labeled, so your customers get a streamlined branding experience.
Stunning hooks into Stripe so that it can catch failed payments and immediately get to work on winning back your customers. They’ve been around for more than 8 years and they know what it takes to save failed payments. As well as helping you save payments, Stunning goes a step further and helps you set up automated emails to let your customers know of important events such as a trial ending, charges that are due for renewal, yearly subscription charges, and more.
“Recover provides a combination of tools to help you combat failed payments with customizable email campaigns, in-app reminders and paywalls, credit card capture forms, and in-depth analytics to track everything along the way”.
Having used Baremetrics Recover myself, I can vouch for its ease of use and it’s great to have the ability to know when a customer has opened a dunning email. Recover can send automated drip sequence emails at the right time for you and if your customer updates their credit card information, that input box can be completely branded as you so that your customers have a great experience getting back up and running.
Track the data
Using an automated system like this will help you to reduce churn from day one. These systems will show you how much money you’ve been able to save/recover and most actually promise you an ROI. Most (if not all) of these systems can also help you track MRR, user churn, revenue churn, upgrades, and more, so you’ll not only be able to see the difference that automating a failed payment process is making, you’ll also be able to fully manage other aspects of your business growth, too.
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