Introduction
The subscription companies have definitely taken the world by storm, especially with their total market cap being roughly around $14 Trillion. And while these companies differ from each other when it comes to the subscription services offered, something they do have in common is the need for failed payment solutions.
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When it comes to subscription service models, their payment setup is fairly simple, mostly. Users subscribe to the presented pricing models relevant to the services they require and the subscription company bills them on a frequent basis such as weekly, monthly or annually. Yet, there are times when these transactions do not go through as intended so much so that an estimated loss of $129 billion is expected to hit these subscription companies through failed subscription payment in 2025. Such estimated projections as part of failed payment solutions have led subscription companies to change their subscription collection strategies by incorporating ways of handling failed subscription payments as well as.
And as for companies that are either facing such failed payments or are on the look for failed payment solutions, collaborate with CollectCo today to start working on your failed payment solution and Then, join us at Sub Summit 2024 where we’ll be showcasing CollectCo’s recovery models and subscription collection strategies that can prove vital in reducing payment failures in subscription collections.
Why Do Subscription Payments Fail?
Failed subscription payments, also known as involuntary churn, is something every subscription has either faced or will face somewhere down the line. Such financial loss can occur due to multiple reasons that ultimately results in cash flow restraints and more resource allocation as around 60% of firms agree that failed payments are expensive to track and resolve. 60% firms agree that failed payments are expensive to track and resolve. And while failed payment solutions can help mitigate risks of such financial leaks occurring over time, it is still necessary to conceptualize why subscription companies actually experience failed payments to formulate better subscription collection strategies. Failed payments, if not taken care of can severely hinder the company’s growth as well as increase subscriber churn as reports suggest that payment failure is responsible for 20-40% of the subscriber churn in subscription companies. For optimal failed payment solutions, here are some key aspects you should avoid:
- Insufficient Funds
- Incorrect Payment Methods
- Technical Issues
- Expired Credit Card
- Exceeded Limit
Failed Payment Solutions For Better Subscription Collections
As part of their subscription collection strategies, subscription businesses pay close attention to their failed payments to ensure such instances don’t occur more frequently. The reason for such caution is that absence of failed payment solutions can have devastating effects on the company’s monetary aspects such as revenue loss, customer dissatisfaction, higher operational costs along with financial instability across all channels.
Although the subscription companies may not always be at fault for failed payments occurring, they still are on the receiving end of handling failed subscription payments. From automated reminders to live check-ins with the clients themselves, subscription companies can take extra measures as part of their failed payment solutions to not only facilitate themselves in improving subscription collections but also help prevent such instances from taking place in the first place.
Automated Payment Retries for Reducing Payment Failures
The recent age of AI and automation have truly revolutionized the way subscription companies take proactive actions in hopes of providing better failed payment solutions to help sustain customer retention as well as recurring revenue. Such automation is not only being used by such companies to streamline their payment operations but also in reducing payment failures through automated payment retries.
As part of improving subscription collections, companies integrate automated payment retries instead of manually addressing each failed payment which helps in better resource management along with lowering operational costs. Such failed payment solutions that incorporate automation result in a decrease in involuntary churn making use of machine learning and data analytics.
Automated retries for reducing payment failures is spread across multiple steps. Initially, when the payment fails for any known or unknown reason, the system deploys the automated retry protocol instead of cancelling the payment deduction. These automated retries are set to work over a specified period of time depending on the user’s payment history as well as general date and time logistics. This not only helps in improving subscription collections, but such automated failed payment solutions lead towards higher subscription revenue along with reducing payment failures.
How Multiple Payment Options Help in Reducing Payment Failures
The great thing about having failed payment solutions is the flexibility of having multiple solutions for the same problem, that being failed subscription payments. A similar philosophy can be used in the case of payment options.
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Meaning, instead of having a single set payment method for customers, providing multiple payment methods along with flexible pricing options as well as payment flexibility not only provides ease to the customers but also allows for subscription companies to better facilitate their customers.
Customer Communication in Subscription Revenue Recovery
Thorough communication during subscription collections is a great way to implement failed payments solutions that ensure customers get proactive solutions for reducing payment failures.
Understanding the customer’s needs and requirements at times of failed payment recovery can readily speed up the process. Such collaborative efforts instill trust in the users allowing them to discuss their queries more freely. This can be done more efficiently through omnichannel communications such as emails, customer chats, telephonic communication, social media forums and much more. Omnichannel communications are a vital resource for failed payment solutions as collectors can target multiple avenues for improving subscription collections.
Use Subscription Management Software for Handling Failed Subscription Payments
Subscription Management Software is an e-commerce focused tool that enables subscription businesses to streamline their subscription payments through automation. This involves managing subscriptions, collections and well as service revenue that can be used as part of failed payment solutions to optimize subscription revenue.
In cases of failed subscription payments, subscription companies make use of subscription management software to regulate a large number of accounts for better subscription revenue recovery. Each failed payment has a decline code attached to it which when used for failed payment solutions can help regulate such cases more efficiently.
This software has the flexibility to further add additional payment processing tools made specifically for reducing payment failures. By keeping track of the subscribers through subscription management software, collectors can better facilitate their customers with failed payment solutions without any delays to increase customer satisfaction and retention.
In-App Reminders and Subscription Collection Strategies
When a subscription payment has failed to process, the first course of action is to notify the user regarding this update. Failure to do so will result in payment delays as well as inconsistent customer communication. In-app notifications presented as failed payment solutions not only prevent any payment delays but also communicate the said information to the customers to reduce involuntary.
Such automated reminders can also be used before said failed payments to ensure correct payment details, right pricing selection as well as updating any user information as inconsistencies in either one of these in the failed payment solutions will eventually lead to more recurring failed subscription payments.
How Analytics and Monitoring Provide Failed Payment Solutions
Collection analytics in subscription collections facilitate failed payment solutions by providing an extensive overview of the payment trends occurring within the monetary structure of the subscription company.
Through proper monitoring and analytical assessment of the users, subscription companies can identify high-risk customers that in turn can allows the subscription companies to keep an eye on them and send frequent automated reminders for optimal failed payment solutions as well as reducing payment failures. Subscription companies can use debt analysis models along with payment monitoring to concentrate their resources on the right accounts to formulate better subscription collections strategies and implement efficient payment recovery techniques.
Customer Segmentation For Improving Subscription Collections
All subscribers have different subscription needs and portray a different consumer behavior. Therefore, they respond differently to the collection efforts made. Instead of spending a large number of resources to cater failed payment solutions individually to each of these consumers, customer segmentation allows for a more holistic view over the payment trends which can help evaluate more user centric subscription collections strategies.
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Such failed payment solutions segmentation can be carried out based on a number of factors through collection analysis and monitoring such as demographic, consumer behavior as well as socio-economic segmentation for a concise and efficient subscription dunning management.
Grace Periods and Service Continuity
As discussed before, failed payments can occur for a number of reasons whether related to the user or not. Therefore, instead of cutting off the subscription services in case of failed subsection payments, failed payment solutions such as grace periods are granted to the users that enable customers to explore different subscription debt resolution as well as allows subscription companies to formulate user-focused subscription collections strategies.
Granting service continuity as failed payment solutions provides a safety net to the users and develops a sense of urgency for timely payments. This fosters positive relations with the customers ensuring that the subscription company understands their concerns and is willing to help them out wherever they can. Such empathetic collections are a great way for improving subscription collections across all industries.
Subscription companies are dependent on timely recurring payments for their business model’s sustainability along with constantly providing quality subscription services. While handling failed subscription payments can be a time taking process that consumes many in-house resources, many subscription companies are now leading towards collaborating with collection agencies such as CollectCo. Through CollectCo’s first-party collections and flexible payment plans, subscription companies can greatly bolster their subscription revenue recovery through our industry leading failed payment solutions.