In the subscription model, customer satisfaction is key to driving revenue. Happy customers stick around, leading to sustained profits. However, a failed credit card payment can disrupt the subscription customer experience (CX) and potentially cause churn. Addressing this challenge requires a strategic approach to maintain an optimal journey for customers facing payment issues. Here are the best practices you can implement today to improve your subscription CX.
The Impact of Failed Payments on Customer Experience
A failed payment can interrupt the smooth journey you've crafted for your subscribers, tarnishing their overall experience. You've invested in effective acquisition strategies, retention campaigns, and support programs, only to see them falter when a payment doesn't go through. Treating customers as risks due to payment failures can worsen the situation, leading to assumptions about their ability or willingness to pay.
Instead, view failed payments as a distinct part of the customer journey and an integral component of your CX strategy. Subscription companies must recognize that payment systems, designed for in-person transactions, often reject legitimate payments in automated recurring billing scenarios. These failures are not necessarily the customer's fault and do not diminish their value.
Smart companies that focus on the customer journey post-failed payment gain a strategic edge in retention and profitability. Collaboration across all departments is crucial to minimize the cost of failed payments. Rather than isolated efforts from retention marketing, client success, tech, and finance teams, a unified approach centered on customer experience can deliver a seamless and consistent journey.
Key Takeaways for Subscriber Customer Experience
- Avoid Blaming Customers: Failed payments are often beyond the customer's control.
- Strategic Approach: Develop a strategic plan for customers affected by failed payments, rather than relying solely on tactical solutions.
- Enhance Profitability: Successfully recovering customers after a failed payment boosts both immediate revenue and future lifetime value.
The Risks of Over-Reliance on Outreach
Subscribers expect a smooth payment experience as an implicit brand promise. Research from 2021 shows that 27% of account holders cancel their subscriptions upon being notified of a failed payment. While 68% update their payment information, 35% report decreased satisfaction, increasing the likelihood of future churn.
Minimize customer visibility to failed payments whenever possible to protect satisfaction levels. When customer intervention is necessary, carefully craft the tone and approach to maintain a positive brand experience. Subscription professionals must recognize the critical role of seamless payment experiences in maximizing customer lifetime value. According to a 2022 PYMNTS study, only 44% of subscription professionals believed customers valued a seamless payment experience, indicating a potential underestimation of its importance.
The Ideal Payment Recovery Process
Invisible payment recovery processes that do not disrupt the customer journey yield the best results. Using the most effective method first, while the decline is fresh, can significantly improve recovery rates. Our AI-powered solution recovers 45% more failed payments than simple in-house solutions, achieving an average recovery time of 2.9 days. Customers might notice a slight delay, but this won't harm the relationship, and the subscription continues smoothly.
Some failed payments, such as invalid card numbers, require customer intervention. Automated outreach via email or SMS should be positive and encouraging, designed to motivate customers to act without damaging the subscription relationship.
Call center outreach should be a last resort due to its high cost and potential intrusiveness, which can negatively impact the customer relationship.
The Recovery Solution
Our comprehensive solution combines technical and automated outreach approaches to optimize long-term subscriber retention. The technical approach operates within the payment ecosystem, addressing failure reasons without customer visibility. This method is ideal as it maintains uninterrupted product or service delivery.
For payment failures that cannot be resolved technically, automated outreach campaigns are deployed. These campaigns use behavioral science to balance satisfaction and effectiveness, crafting messages that resonate with different customer profiles. Reminders, assistance, and urgency are tailored to encourage payment issue resolution while maintaining brand consistency.
Accounts that remain unresolved can be escalated to the customer success team for further outreach, typically via a call center.
These messages are consistent in look and tone with the merchant’s brand, customized to highlight the unique value of the product or service the organization offers.
Delivering on CX Best Practices
Subscription customers expect a seamless payment experience, and handling failed payments quickly is crucial to preventing involuntary churn. Implementing a payment recovery process that is either invisible or positively engages customers is essential for delivering the best subscriber experience.
Our solution adheres to these best practices, utilizing a high-performing technical approach to recover most fresh declines in the background. When customer involvement is necessary, our automated outreach flow collaborates with customers to reactivate payments gently and effectively.
Is your business experiencing failed recurring payments? Contact us today to explore solutions that will recover up to 80% of your failed recurring payments, increasing your cash flow and profitability.