The subscription economy is booming. With a value of billions of dollars, it’s clear that it’s an ever-growing industry that’s here to stay. Popular with those of all ages, with the advancements of technology, it’s evident that there’s no better time than now to start a subscription service.
As a subscription company, you’re constantly finding ways to improve the service that you’re offering your customers. But along with these improvements, you need to ensure that you are effectively recovering the revenue that they owe you. In order to reduce churn and simplify the dunning process, your business needs to find a way/s to improve your revenue recovery efforts.
No matter what the size of your business and what products or services you are offering your customers, you need to understand the balancing act that comes with recovering the revenue. Every tactic that you can implement to do this is geared towards planning the future of your subscription business, so it’s important that you choose the right recovery method that works for you.
To get you started, here are five key techniques that you can use within your organization:
1. Utilize a management strategy for declined credit or debit cards
In order for your business to have a healthy income, you need to minimize the amount of churn that occurs – whether it’s voluntary or involuntary. Once you notice that your customer’s payments are failing, you need to take the appropriate actions right away – which is where a declined management strategy comes in.
Most subscription services require a debit or credit card payment every week, month or year. Although it’s considered as a convenient way of paying online, there are many issues that can occur due to this payment method. Credit cards can be declined due to several different reasons, including that:
The customer’s credit card information needs to be updated
Their debit or credit card has been stolen/ they have lost it
They have insufficient funds within their bank
When their card is declined, it’s essential that you approach the situation in the right way. Reacting wrongly to this might convince them to go elsewhere for the services – so you need to ensure that you are hitting the right tone every time so that your customers don’t feel as though they are being fear mongered into paying.
Within this strategy, you can email them to inform them that their card was declined, have a feature within the billing information that shows them that their credit/debit card is outdated or utilize automatic card updaters. Whichever way you choose, it’s an essential step that you can take throughout the recovery process.
2. In-app notifications
If it’s coming up to their billing date or it’s just passed, an in-app notification can help to recover the revenue. A message that comes up on their screen when they open the app, it will draw their attention to the fact that they need to pay your subscription service in a way that’s less threatening.
These in-app notifications don’t need to be complex or have lots of text within them – in fact, the more simple they are, the more likely customers are to follow through with the payment.
3. Personalized emails
Following on from the first point, personalized emails are an efficient way of recovering the revenue that your customers owe you. An integral step that needs to be conducted correctly, if you do this is the right way, you can preserve the user experience throughout the process.
When your customer’s free trial comes to an end or they have missed a payment, send out a personalized email to them informing them. These bespoke emails, detailing their name and other information will show that you’ve taken the time to email them ‘directly’ and that it isn’t a chain email that everyone gets.
4. Invest in subscription billing software
When you have recurring payments, subscription billing software can be invaluable for your SaaS business. Having an automated strategy in place, you will be able to save time that you would have spent on acquiring the lost revenue yourself. Offering you multiple payment gateways, it will target customers that are required to pay whilst offering them a convenient payment method that suits them.
Automatically invoicing your customers on a regular basis, it will effectively and safely collect the payments before it’s over the due date. A flexible system, it will provide each of your customers with a seamless experience.
5. Temporarily deactivate their account
If you have already used some of the above methods and you still haven’t received payment from your customers, a method that you could use is temporarily deactivating their account. Although this might sound harsh, it will reiterate to them that they have missed a payment and the steps in which they need to take.
The balance to retain these valuable customers is essential. Which is why it’s a good idea to pause the subscription instead of canceling it. This way, you are giving your customers the benefit of the doubt and showing them that they can reactivate their account after paying what they owe you. Plus, if you deactivate their account completely, it will be a long process for them and you to create a new one.
So there you go! Those are five key methods that you could use to recover revenue more effectively within your subscription business. The methods that you choose will depend on your business model and billing software that you already have in place – but they are great places to start if you have become unstuck as to what you should do next.
In order for your company to thrive, you need to obtain regular payment from your customers. So it’s important that you don’t ignore these missed payments – plan in advance as to which techniques you will use and ensure that these won’t scare off your customers. Have empathy and understanding – whilst putting yourselves in their position. From doing this, it will become clear as to which methods are suitable for you.