Taking simple measures to retain your recurring billing customers can dramatically improve your bottom line.
And when we say simple, we mean it.
From contacting a customer at the end of their trial period, to allowing customers to pause their payments, most of the tactics described below can be automated or achieved quickly.
That said, for the sake of retaining your attention, let’s jump in.
Contact Customers Near the End of Their Trial Period
Use your payment management software to filter for customers whose trial periods are coming up.
Then, send them emails asking about their experiences so far with your service. It’s a friendly gesture, but it’s also a key way to maximize retention.
Hopefully, the majority of your customers will say everything is great, and mean it. But you’re not sending these emails to fish for compliments. You’re actually fishing for issues.
When a customer responds to your email with some problems they’re having with your service, that’s a sign that they might be about to churn.
But it’s better to know now than when they submit their cancellation request. If you know now, you can overcome their objections.
Or, you can offer them a package or service that will stop their issue and make them value your business on a whole new level.
For example, if a customer who pays annually says they’re strapped for cash at the moment, you could offer them the option to switch to a payment plan that spreads the payments over shorter intervals. That way, they won’t have to pay in bulk.
Or, if they’re still on the fence about buying your service, you can offer them an extension of the trial.
If you’re in SaaS, you might want to send extension emails preemptively to customers who haven’t really used the platform, provided you have that usage data.
Regardless of industry, sending these emails out manually can be a bit of a hassle. So, if your recurring billing tool has an email automation feature, use it for this.
You can probably set up a trigger-based email to go out whenever a customer is a few weeks away from the end of their trial period.
This ensures that every trial user gets a check-in email at the right time, no matter what.
In sum, knowledge is power. The truth allows you to take actions that lead to customer retention.
Living in the dark and assuming every customer is happy might be more pleasant, but it will inevitably hurt your bottom line.
Implement Measures to Reduce Involuntary Churn
Involuntary churn is when a customer’s subscription is canceled due to accidental non-payment.
The main cause of this type of churn is problems with their payment method, from an outdated credit card number on file to insufficient funds in their selected bank account.
Usually, what happens is your recurring billing system tries to charge them but fails to, and as a result, they lose their subscription.
There are various measures you can implement to prevent this from happening. Some of them work by alerting the customer to the issue so they can fix it on their end.
This might be a phone call or a series of automated late payment emails that go out to a customer 1 day, 3 days, and 2 weeks after a failed payment.
But there are other methods that don’t involve the customer, which they certainly appreciate. No one wants to spend time dealing with bills if they can help it.
The best method is dunning management, which is where the payment gateway will auto-retry the customer’s selected payment method various times before considering canceling the service.
This ensures that it wasn’t a technical or network error that caused the failure.
You can also imagine a paycheck entering the customer’s low bank account, thus filling it with enough money to now successfully pay for your service.
Regpack, an automated billing software solution, uses BlueSnap as its payment gateway for recurring billing.
BlueSnap’s dunning management feature will auto-retry the charge 5, 10, and 14 days after the initial payment failure.
It also allows you to specify when to cancel the subscription:
BlueSnap also comes with an account updater feature. This tool helps you ensure that the credit and debit card information you have on file for your customers is accurate and up to date.
In sum, to prevent involuntary churn, you should use automated late payment reminders, dunning management, and account updaters.
Offer Occasional Discounts to Your Customers
Customers often respond to occasional discounts with immediate gratitude and long-term loyalty.
Of course, you want to avoid offering discounts at random. You’re not a parade volunteer in a float tossing candy out willy-nilly to children.
You’re a business owner who knows that every time you offer a discount, you’re selling your service for less than its value.
So, be wise in your selection. Choose to offer discounts to customers who seem like they might be on the way out, or who you want to become more entangled with your business.
For instance, you might want a specific high-value customer to start using a second of your services so as to make them even more reliant on your business.
Or, you might identify a few customers who have recently abandoned their carts and decide to offer them the services they desired at a small discount, communicated via email.
The right automated payment solution will make this easy. You’ll be able to easily create discounts for certain products and services, and then offer them to specific customers:
The right tool will also automatically apply discounts to customer accounts when they take a defined action, like submitting a specified coupon code at checkout.
Overall, a discount can be the nudge a customer needs to go further into a relationship with your business.
Consider Extending Your Grace Period When Needed
A smart, if not also compassionate, landlord doesn’t stomp into a resident’s apartment unit and start tossing their clothes out the window the second a rent check is late. Nor do they start charging late fees.
Instead, they offer their renters a grace period, a specified duration of time that the renter has to make the payment before it’s considered overdue.
Most service-based businesses should do the same, even going as far as to extend that grace period when it makes sense.
Otherwise, you risk losing otherwise great customers due to a simple financial hiccup or billing issue.
Provided that the customer’s history of payment is solid, and their reason for the delay is sound, there’s no reason to deny giving them a few more days to make the payment.
We’re not saying to let them take advantage of you. Late payments can become nasty interruptions to your cash flow if they get out of hand.
But the occasional extension is going to help your business, not harm it. Those on the receiving end will become even more loyal. It’s essentially receiving a gift.
Now, giving extensions and tracking them can sometimes be tough for technical reasons. That’s why we recommend using an automated billing tool that will allow you to easily extend payment due dates, specifically for recurring payment customers.
In sum, when you offer an extension, you’re helping a customer help your business. You’re making it easier for them to stick around and keep paying for your service.
That said, if you’re constantly extending a grace period for a customer, it’s probably time to have a talk and adjust the payment schedule.
Allow Your Customers to Pause Their Payments
When a crisis strikes, be it economic like the crash of 2008, or natural like the recent pandemic, many customers change their budgets and service needs.
Many start to cut back on luxury items to prioritize and stay afloat through the rough times.
When the pandemic struck, many gyms and other brick-and-mortar subscription services had to close their doors.
But they didn’t cancel all of their members’ subscriptions. Instead, they offered their customers the ability to put their recurring payments on pause.
Allowing your customers to put their accounts on hold, instead of watching them churn in massive numbers, heightens the chances that they resume their subscriptions once things return to normal.
Why’s that?
Psychologically, resuming the payment of a service you’re still technically involved with is much easier than signing up for the service all over again once you’ve already canceled.
Make It Easy for Your Customers to Contact You
Chargebacks can really mess up your recurring billing strategy.
They occur when a customer disputes your charge on their bank account’s billing statement.
Often, when this occurs, the credit card company sides with the consumer, and it’s on the business to pay them back or go through the time-consuming process of challenging the decisions.
Chargebacks happen for various reasons. Sometimes they’re fair, like when a business accidentally overcharges a customer.
Often, though, a chargeback is simply the result of confusion. A customer fails to recognize the business’s descriptor on their bank statement, can’t figure out how to get in touch with the business, and thus assumes it was identity theft.
The best defense against all types of chargebacks, both reasonable and accidental, is to make it easy for customers to contact your business.
That way your customer service team can fix the overcharge, remind them of the payment, or settle whatever dispute the customer has without involving the bank or card networks.
To make your business accessible, create a contact page where you specify and list the best way to get in touch, whether that’s email, phone, live chat, or some combination.
Also, be sure to put your contact information on your billing descriptor — the short message that shows up on the customer’s bank statement next to the amount charged.
This will allow customers to quickly get in touch if they’re confused with a payment, and prevent many would-be chargebacks.
Conclusion
Whether it’s white teeth, a front lawn, or a positive outlook on life, retaining anything requires regular activity on your end.
The good news is that when it comes to recurring billing customers, a lot of the work that goes into retaining them can be streamlined with automated billing software.
With the right tool, discounts are applied automatically, late-stage customers are emailed without your doing, grace periods are extended with the click of a button, and more.
For more on this topic, check out our ultimate guide on recurring billing, where you’ll learn to master the art of this fruitful billing strategy.