Automate dunning to reduce churn and boost revenue in your subscription business

Imagine this: you wake up to a notification – a customer you rely on for recurring revenue just churned. The reason? A simple expired credit card. This scenario, known as involuntary churn, is a silent revenue killer for subscription businesses.  

The good news? An effective dunning management system can be your superhero, recovering payments, slashing churn, and boosting your bottom line. In this blog post, we'll delve into the technical aspects of automating your dunning process, with real-world examples and stats to turn your dunning strategy into a revenue powerhouse.  

Why Automate Dunning? The Numbers Don't Lie  

Manual dunning is a time-consuming black hole. Studies show that 60% of failed payments could be recovered with a proactive dunning strategy. But who has the time to chase down every declined credit card? Automation offers superpowers for your business:  

·         Lightning-fast recovery: Catch payment failures within hours, before frustration leads to churn. According to a report automating dunning emails can recover up to 20% more failed payments compared to manual methods.  

·         Superhuman Scalability: Imagine effortlessly handling thousands of customer accounts without breaking a sweat. Automation lets you scale your dunning efforts without sacrificing efficiency.  

·         Infallible Consistency: Deliver a professional and consistent communication experience across your entire customer base. Automated dunning ensures every customer receives the same clear message at the right time.  

·         Data-driven Decisions: Track and analyze dunning performance metrics like open rates, click-through rates, and recovery success rates. Use these insights to fine-tune your strategy for even better results.  

Building Your Automated Dunning Dream Team!  

Here's your roadmap to dunning automation domination:  

·         Assemble your Avengers  

·         Craft Your Dunning Strategy  

·         Automate the Workflow  

·         Measure Your Success  

1.       Assemble your Avengers: Many subscription billing platforms (like MYFUNDBOX) offer built-in dunning features. These features can save you time and effort by automating the communication process, and can help reduce involuntary churn by reminding customers about past-due payments.  

2.       Craft Your Dunning Strategy:  

·     The Perfect Timing: Sequence your dunning emails strategically. A friendly reminder 24 hours after a failed payment followed by a stronger nudge 3 days later, works wonders. Avoid bombarding customers – aim for 3-4 emails max.  

·     The Words that Convert: Write clear, concise, and professional dunning emails. Inform customers about the issue, offer solutions (updating payment methods, etc.), and maintain a friendly tone.  

·     Multiple Payment Options: Be a payment gateway hero! Offer multiple payment methods during recovery (credit card, PayPal, etc.) for maximum customer convenience.  

OR  

Integrate with a payment orchestration platform that is supported by multiple payment gateways thus yielding you a double bonanza!  

3.      Automate the Workflow: Let the machines do the legwork!  

·       Connect your dunning system with your payment gateway to automatically detect failed payments.  

·       Configure automated email campaigns with a sequence of dunning emails triggered by payment failures.  

·       Set up automatic retries for failed charges based on pre-defined rules (e.g., retry after 24 hours for insufficient funds).  

4.      Measure Your Success: Knowledge is power!  

·       Track key metrics like dunning email open rates, click-through rates, and payment recovery success rates.  

·       Use these insights to refine your dunning strategy and messaging for better performance.  

Don't Forget the Human Touch  

While automation is your dunning sidekick, a dash of personalization can go a long way:  

·         A Name is Worth a Thousand Dunnings: Consider adding a personal touch to your dunning emails. Include the customer's name and specific details about the failed payment for a more human connection.  

·         Self-Service is Superpower: Offer a self-service option within your dunning emails. Allow customers to update their payment information quickly and easily, getting them back on track in no time.  

·         Stay on the Right Side of the Law: Ensure your dunning practices comply with relevant regulations. Research communication frequency limitations and debt collection laws in your region.  

By implementing an automated dunning system, you can transform your dunning process from a black hole into a revenue-generating machine. Remember, a well-designed dunning strategy isn't just about collecting payments; it's about retaining valuable customers.  

Case Study: Subscription Box Service "Curl Up with a Crate"  

Curl Up with a Crate is a monthly subscription box service delivering curated books and cozy treats. They faced a growing problem with involuntary churn due to failed payments. Manually chasing down declined cards was a time-consuming hassle, and their churn rate was steadily climbing.  

The Solution: Automated Dunning  

Curl Up with a Crate implemented an automated dunning system with the following features:  

·         Sequence of Dunning Emails: A friendly reminder email 24 hours after a failed payment, followed by a stronger nudge with account update options 3 days later. A final email with a discount offer was sent as a last resort 7 days after the initial failure.  

·         Clear and Concise Messaging: The emails used a friendly and informative tone, explaining the issue and offering easy solutions for updating payment information.  

·         Self-Service Payment Update: Dunning emails included a secure link allowing customers to update their payment methods directly.

The Results: Revenue Rescue  

The impact was significant:  

·         Reduced Churn by 15%: Automating dunning emails helped Curl Up with a Crate recover payments and retain valuable customers.  

·         20% Increase in Payment Recovery: The prompt and targeted communication encouraged customers to address payment issues quickly.  

·         Improved Customer Satisfaction: The convenient self-service option and friendly dunning approach kept customers happy.  

Curl Up with a Crate's story is a testament to the power of automated dunning. By streamlining the recovery process and focusing on customer experience, they saved money and strengthened customer relationships.  

In conclusion, automating your dunning process is an investment that pays off in spades. By recovering failed payments, reducing churn, and boosting revenue, you can ensure the long-term success of your subscription business. So, ditch the manual dunning struggle and embrace the power of automation to watch your subscription business soar!  

Here are some additional tips to supercharge your dunning efforts:  

·         A/B Test Your Way to Success: Don't be afraid to experiment with different dunning email subject lines, content, and sending times. A/B testing helps you identify what resonates best with your customers, leading to higher recovery rates.  

·         Offer Incentives for Early Action: Consider providing a small discount or bonus to customers who update their payment information promptly. This encourages swift action and reduces the risk of churn.  

·         Win Back Lost Customers: Don't give up on customers who churn due to involuntary churn. Targeted win-back campaigns with special offers can bring lapsed subscribers back into the fold.  

Introducing MYFUNDBOX  

MYFUNDBOX is a subscription billing and payment orchestration platform that tackles more than involuntary churn. It automates dunning to efficiently recover payments, reducing churn and boosting revenue. Beyond that, MYFUNDBOX offers features like subscription management, payment gateway integrations, and data analytics, streamlining your entire subscription billing process. This can improve efficiency, cash flow, and customer experience.