Unlocking revenue potential: The role of dunning in subscription-based businesses
In the ever-evolving landscape of subscription-based businesses, minimizing churn is crucial for sustainable growth. There is a powerful tool at your disposal however, that can help reduce involuntary churn: the dunning process.
In this blog, we’ll discuss the dunning process and how it can be used to eradicate involuntary churn.
Understanding the dunning process
Dunning is the process of communicating with customers, typically through email, to collect overdue payments. This process holds the key to reducing involuntary churn when payment failures occur that customers are unaware of. By optimizing the dunning process, businesses can have a substantial impact on their bottom line by keeping more customers onboard.
The mechanics of the dunning process
Subscription management software plays a pivotal role in reducing involuntary churn through three primary mechanisms: updating account details, employing "smart" retries, and implementing effective dunning strategies.
The first step involves updating account details to prevent payment information expirations and cancellations that can lead to hard payment declines. By proactively managing this aspect, recurring billing software ensures smoother transactions.
If account details are not the root cause of declined transactions, other factors like insufficient funds, card restrictions, or technical issues might be to blame. A subscription billing system employs a data-driven approach to schedule transaction retries strategically, maximizing the chances of successful payment processing.
However, if the previous attempts prove unsuccessful, personalized communication becomes crucial. This is where the dunning process comes into play.
The five steps of the dunning process
1. Unpaid invoice: A customer's invoice remains unpaid by the due date.
2. Declined payment alert: The subscription billing system sends an email notifying the customer that they have an unpaid invoice in their account. It includes instructions on how to update payment information and retry the payment.
3. Reminder emails: Optional reminder emails are sent based on a customized schedule determined by the business.
4. Failed invoice: If dunning emails and other revenue recovery strategies fail, the invoice remains unpaid. At this point, the business may choose to cancel the subscription to prevent its automatic renewal, and even write-off the invoice.
5. Cancellation notification: An email is sent to the customer, informing them that their subscription has been canceled. The email may also include a link for the customer to pay the invoice and reactivate their subscription, should their circumstances change.
Unlocking the full potential of dunning with billsby
The return on investment (ROI) of the dunning process can vary significantly across different subscription billing platforms. Billsby, with its experience in recurring billing across various industries, has developed a customizable dunning process that delivers remarkable results.
So, how does billsby assist businesses in recovering revenue that would have otherwise been lost?
Customized communications:
Every business is unique, requiring a tailored approach to the dunning process. Billsby understands this, offering a subscription billing platform that caters to different industries and their specific needs.
Separation of dunning and retries:
Billsby recognizes that not all subscribers respond in the same way to dunning emails, and that not all payment declines are the same. Therefore, they separate the dunning and retry process, enabling businesses to optimize their approach and determine the best time to retry payments for their specific audience.
Continual advancements in dunning at billsby
Billsby remains committed to improving the dunning process continually. By leveraging new dunning features, businesses can further refine their approach and enhance their results. Some of the notable features offered by billsby include:
Length and email optimization by decline type:
Tailoring dunning lengths and emails based on different decline types helps businesses deliver more personalized and effective communications.
Integration with marketing automation platforms via webhooks:
Managing dunning with marketing automation platforms reduces the burden on staff and enables the reallocation of resources to higher-value tasks.
Insights into dunning performance:
Accessing comprehensive data on dunning performance empowers businesses to make data-driven decisions, leading to continuous improvement and better results.
Conclusion
The dunning process is a vital component for reducing involuntary churn and maximizing revenue for subscription businesses. By understanding its intricacies and leveraging the capabilities of platforms like Billsby, businesses can optimize their dunning strategies, achieve higher recovery rates, and ensure the long-term success of their subscription-based models.
Embracing dunning as an integral part of your revenue management toolkit allows you to safeguard your business's growth and provide a seamless experience to your valued customers.