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How to stop losing your most valuable asset

Research by Recurly, a leading recurring payment specialist, shows that overall, subscription businesses risk losing some 7% of subscribers each month due to involuntary churn. The main reasons for non-payment are quite mundane: insufficient funds, temporary hold, restricted card and invalid card number. Reasons for credit card declines may vary, but if the decline is not prevented or remediated, the result is the same: significant subscriber loss. So Decline Management efficiency is a vital skill in running recurring payment programmes.

Decline Management impact and skills

Recurly use a range of techniques to combat declines and have found that collecting declined payments for the larger payments of $250+, particularly those from the SaaS companies and for business services they have had 70%+ success rate.

The revenue lift of a decline management programme can be significant, raising monthly income by, on average, some 12%, see below:

Source & Copyright©2018 - Recurly

Past Due Recovery

Preventing recurring invoices going past due date, is not always possible. When this happens Recurly recommend:

  • dynamic retry logic and dunning strategies which should be used concurrently to maximize the likelihood of recovering past-due invoices and retaining subscribers
  • since every transaction decline is unique, one-size-fits-all retries are less effective. Dynamic retries, based on historical data and machine learning models, that can be tailored to each invoice and result in higher success rates
  • B2B companies could usefully invest additional resources in personal collection efforts, using staff resources to augment technology-based approaches to collection.  

Minimize Churn and Maximize Revenue

The two keys to having a productive recurring payment programme are, according to Recurly minimizing churn and maximising revenue - see.

Churn

There are two types of churn:

  • Voluntary churn occurs when a subscriber actively cancels their subscription, whether due to dissatisfaction or changed circumstances
  • Involuntary churn occurs as a result of a failed recurring payment rather than a deliberate action by the subscriber  

In both cases, Recurly believe that, “When subscribers leave, your business loses not just current revenue but that subscriber’s future recurring revenue, their goodwill, and their ability to share positive wordof-mouth.” Loss of a subscriber is an important loss as each subscriber is a key asset for the company because, in the age of ‘end-of-ownership’, eventually subscribers will be the only asset that companies have. 

Recurly believe that, “the value proposition is related less to a single purchase decision and far more to the ‘promise’ of a value proposition which holds up across the TIME continuum.”

Managing declines and involuntary churn 

Vital techniques for minimising declines and increasing transaction success icnlude

  • use machine learning for dynamic retries
  • employ effective dunnings strategies and understand your progress:
    • Source & Copyright©2018 - Recurly

CTMfile take: Remember that your long term customers are your most valuable asset, particularly the ones that are on a subscription programme.


This item appears in the following sections:
Payments - Bill Collection
Collecting Direct Debit Bill Payments
Collecting Payments on the Internet
Collecting Payments via Mobile

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