Failed payments are a silent killer for Australian SMEs relying on recurring revenue. It’s not that customers *want* to cancel – their payment simply doesn’t go through. This ‘involuntary churn’ is frustratingly preventable, and addressing it directly impacts your customer lifetime value and predictable revenue streams. We see too many businesses accepting a high churn rate as ‘just part of doing business’, but a proactive approach can significantly reduce these losses.
The good news is, reducing involuntary churn isn’t about complex marketing campaigns. It’s about anticipating payment failures and making it easy for customers to update their details. Here’s what we recommend:
- Implement dunning management: This is the automated process of reaching out to customers when a payment fails. A simple email sequence – a friendly reminder, then a request to update details, and finally a notification of potential service interruption – can recover a significant percentage of these payments. Don’t just send one email and give up.
- Offer multiple payment options: Australians are increasingly comfortable with diverse payment methods. Beyond credit cards, consider offering options like direct debit (via BPAY or similar), PayPal, and even ‘buy now, pay later’ services where appropriate. More choices mean fewer roadblocks to successful payments.
- Account Updater services: Many payment gateways offer ‘Account Updater’ functionality. This automatically detects expired or changed card details and updates them in your system, often without customer intervention. It’s a powerful, passive way to reduce failures.
- Proactive expiry reminders: Don’t wait for the payment to fail. Send customers a reminder a month before their card expires, prompting them to update their details. This demonstrates good customer service and prevents disruption.
We often find businesses underestimate the cost of acquiring new customers compared to retaining existing ones. Reducing involuntary churn isn’t just about recovering lost revenue; it’s about protecting the investment you’ve already made in acquiring and onboarding those customers. By focusing on payment recovery, you’re essentially getting a higher return on your existing marketing spend.
The first step is to analyse your current churn rate specifically from failed payments. Most payment gateways provide this data. Once you understand the scale of the problem, you can prioritise implementing these strategies. Don’t delay – even a small reduction in involuntary churn can have a substantial positive impact on your bottom line.
