How to avoid involuntary churn with Dunning Management
In any subscription business, reducing customer churn is key for protecting revenue and developing your business to a higher level. Companies must employ tactics to maintain customer relationships and prevent payment failures to decrease churn rates. It is super essential for a business to look after the churn rates, most effectively to reduce involuntary churn.
Involuntary churn eats up the business gradually resulting in the downfall of the brand by losing its customers.
We are here to help you sort out this issue. In this article, you will get to know the key answers to avoid such cases of involuntary churn.
What is Involuntary churn?
Involuntary churn occurs when a customer is no longer able to use a service, due to payment failure. For example, when a payment fails due to outdated credit card information on an account, a server error, or other factors that are out of the control of the customer.
About 20-40% of churn is usually from involuntary churn.
Why does involuntary churn occur and what makes it happen?
Let's get to know the causes of involuntary churn.
Causes of Involuntary churn
Involuntary churn occurs when customers undergo a payment failure which leads to their cancellation of the subscription. This not only makes a business lose its customers but also a major part of its recurring revenue, and your company's goodwill which may lead to unhealthy exposure for a business among other competitors.
Involuntary churns could hit you up for the following reasons.
- Update failure
When customers fail to update their subscription billing information or card details.
- Soft declines
When the card has maxed out its limit or expired cards.
- Hard declines
When a card is lost or stolen.
- Banking error
When the bank declines the payment for some other reason. For example insufficient funds.
How does involuntary churn affect the business?
Involuntary churn occurs behind the scenes, and there are multiple touch points where payments can go wrong, from payment gateways and processors to card networks
"80% of your profits come from 20% of your customer base" - Martin Norbury
For every company, there is a regular and loyal band of customers who make a major part of your company's profits.
In case, one of your valuable customers gets their subscription canceled involuntarily then you may lose a major part of your recurring revenue. That would hit your business and its growth harder, isn't it?
It also leads to a point where your customer's satisfaction gradually wears off. And your company's customer retention is at risk.
In this case, involuntary churn throws away all of the time and investment spent on acquiring new customers. For this reason, every SaaS company needs to stop involuntary churns in its tracks to ensure a good run for the company.
Dunning management is the one-stop and instant solution for reducing involuntary churn.
It is the perfect feature that helps businesses handle these payment failures easily and more promptly.
Dunning management is powerful when it comes to curbing involuntary churn and increasing customer retention. It helps the SaaS business to use strategies like automated billing reminders, professional email messaging to your clients, and automated payment retry messages if a payment gets failed so that your customers don't get panic about what has to be done. And the most important part is, it is easy to manage with one click so that you can reduce involuntary churn and drive your customers and business toward success.
A subscription billing platform offering dunning management would put your payment failure dilemmas at rest and lift your burden of reducing involuntary churn.
MYFUNDBOX is a subscription billing platform to help businesses handle recurring billing and revenue management operations integrated with payment processing decacorns like Stripe, GoCardless, and Mollie.
It was started to help SaaS companies focus on their growth while we make sure they get paid securely and on time.
In partnership with Google Cloud, MYFUNDBOX provides a single platform to enable customer-preferred payments globally.
MYFUNDBOX's dunning management helps SaaS businesses reduce customer churn by providing automated reminders with payment retries to their customers in case of payment failures. Your customers will also be notified through emails giving them chance to reattempt their payments so that you don’t lose your loyal customer base.
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