Preparing for Payment Failure
Late and missed payments can be problematic for a business. Without the right processes in place, companies only collect a fraction of their account receivables each month. Likely, you won’t avoid payment failure altogether, but it is possible to prevent a high rate of involuntary churn.
In the following sections, we’ll provide several preventative measures to reduce failure instances and boost the number of payments you collect each month.
Payment Due Notifications
It’s easy to forget that customers are human, too. Sometimes, they forget about upcoming payment deadlines and aren’t prepared to complete transactions when the time arrives. Sending a simple payment due reminder with customized Salesforce email templates can have a substantial positive effect on your churn and retention rates.
Using a solution like Chargent, notification emails can be automated and implemented in a matter of minutes. Use friendly language to remind customers of upcoming due dates. Include a call-to-action, so they are clear on what steps to take. Finally, send it with enough advance, so they have ample time to prepare.
Credit Card Updates
Customers may request changes and updates to their payment details. Eventually, their card will expire, they will want to include another payment method, or they will want to update their personal information.
Make it easy for your customers to revise their credit card information, quickly and immediately. If they are required to contact a representative to change their card details, chances are that they won’t do so until it is too late. By this point, payment failure may have already occurred. Streamlining every process throughout the sales cycle may take time, but it pays off with higher payment collections each month.
Lastly, send notifications that prompt users to update credit details when their credit or debit card is nearing expiration. In the message, explain what steps they need to take to change their information before the end of the payment cycle.
How to Deal With Payment Failure
Preventative measures can considerably minimize the number of failed payments you experience each month. However, it is unlikely that you will ever reach a zero percent failure rate. Even the most prepared businesses face this situation at some point. Ultimately, how you deal with failed payment recovery will determine how large of an impact churn will have on your bottom line.
It is easier and cheaper to keep an existing customer than it is to acquire a new one. With the right steps in place, you can successfully recover failed payments and ensure customer longevity.
As the top payment solution on the Salesforce AppExchange, we know a thing or two about recovering payments. Here are three proven methods for dealing with payment failures effectively.
1) Communicate the Failure
Customers may not be aware that their payment failed. While some issuing banks and systems automatically inform them of payment issues, this isn’t always the case.
After the first rejected payment, send a notification to make them aware of the issue. Include a call-to-action that immediately directs them to a page where they can resolve their account.
Keep your payment failed message friendly and non-threatening, but state the next steps clearly. Provide customers with ample time to submit payment before taking definite actions like canceling their accounts or adding late fees (if applicable).
2) Establish Dunning Email Automation
Dunning is the process of communicating with customers as you attempt to collect on accounts receivable. Usually, dunning is a significant inconvenience for everyone involved. It requires businesses to make additional effort to retrieve the payment, and it can seem intimidating to customers.
Fortunately, dunning doesn’t have to be a negative experience. With the right processes in place, dunning can result in positive customer experiences and lead to higher client retention.
Consider setting up an automated dunning system. After the initial notification, schedule periodic emails to remind customers that their payment is late. Offer assistance if it is needed and update them on what actions will occur if they don’t resolve the issue.
Chargent’s Automated Collections makes the dunning process effortless. The system allows businesses to set up effective emails that are automatically sent to past-due customers on a defined schedule. With customizable settings, Chargent users can select a specific email template and choose exactly when each email will be sent.
Deliver a positive message when reaching out to collect payment. Dunning is certainly focused on collecting revenue, but it also provides the opportunity to retain more customers, communicate with them, and build their trust.
If customers don’t complete payment by the end of the dunning cycle, reach out again for their feedback. If you can identify why they failed to pay, you may be able to offer alternative options to keep them as active clients. In addition, their suggestions may help you create a better customer experience.
3) Schedule Payment Retry Cycles
Customers may be expecting a direct deposit or transfer to their account on the same day that their payment is processed. Sometimes, the transaction will process before their funds are available, resulting in a failed attempt.
Maximize collections by implementing automatic payment retries over a specified period (such as three retries over two weeks). This process makes collection simple for the customer – the only step required is making the funds available in their account.
Solutions like Chargent offer a major advantage – automatic retry cycles. If a payment fails, Chargent will retry the payment a number of times and over several days, based on your specified schedule.
Be transparent about your cycle and let customers know when they can expect a repeat charge. Establishing hard deadlines will encourage them to resolve issues quickly and allow you to clear your account receivables each month.
Maximizing Your Failed Payment Recovery Process
Payment recovery is an essential part of growing a SaaS or membership-based business. By implementing preventative measures, establishing a frictionless payment system, and adopting effective payment recovery strategies, you can turn failed payments into significant opportunities.
Want more control managing payments in Salesforce? Contact us today and find out how we can help you collect payments faster with both one-time and recurring billing.