Protect Your Renewal Revenue
Companies with subscription-based businesses often unnecessarily lose money because their payment processing practices are not robust enough to support their business. In fact, according to Mastercard, decline rates for recurring card billings average 25-30%. And our experience has been companies are leaking at least 12-20% of recurring revenue potential if they are not following best practices for processing payments.
A fifth of your revenue? That’s a lot of money down the drain. Here are five strategies you must implement today to reduce churn, get your payments processing in order, and plug the drain.
1. Use a Card Refresher Program
If your business offers automated payments, you’ve probably already patted yourself on the back for your billing system. Automated payments are a huge timesaver, preventing you from emailing customers to track down their monthly subscription dues. But what happens when their cards expire, get canceled, or are reissued with a new number?
If you don’t have a card refresher system in place, suddenly you’re facing a log jam. When your system automatically declines the payment, maybe you notice, and maybe you don’t. If you do, you email the customers to update their information. Maybe they do, and maybe they don’t. Worst case scenario: you lose subscribers simply because they don’t take the time to fix their card information.
But with a card refresher program, credit card companies automatically update account changes through merchants, relieving the burden from both you and your customers. Luckily, Visa, Mastercard, Discover, and American Express all offer a card refresher service of one kind or another so that you can implement an automatic renewal program right away.
2. Hire a “Card Recycling” or “Decline Salvage” Service
Even with a refresher program in place, your customers’ payments will still be declined from time to time for a variety of reasons: a typo in their expiration date, insufficient funds, a sensitive fraud prevention service, or something else entirely.
Decline salvage programs help you recover those lost transactions by examining what caused the declines and then removing the obstacle that made it happen so customers can process their payments. You can rest easy, knowing your service is doing the hard work for you and fixing those transactions behind the scenes. You’ll save time—and retain more of your recurring customers.
3. Send a Renewal Email Before the Actual Renewal
No matter how awesome your service is, some of your customers will decide to cancel their service at one time or another. That’s okay! It happens to the best of us. (And the worst of us. It happens to all of us.) But as you’ve probably experienced yourself a time or two, it most often occurs immediately after your service has just renewed. Either you get a receipt in your inbox, or you check your bank statement, and you think, “Oh, shoot! I meant to get rid of that. Maybe they can still give me a refund…”
Make sure you’re only charging the accounts you’re supposed to by sending your customers a friendly email reminder a few days before you process the renewal. This kindness will prevent you from wasting time processing refunds or, worse, getting fined for chargebacks. Plus, it’s just proper, ethical customer service.
4. Include an Upsell Offer in Renewal Emails
Thankfully, your renewal email has the power to do a lot more than simply remind people to cancel their service. It’s a marketing opportunity for the customers that intend to stick around!
Include an upsell offer in your renewal emails to move customers through the funnel of your loyalty program and boost other, more exclusive revenue streams and, ultimately, your bottom line.
5. Minimize Your PCI Compliance Liability With Transparent Redirect
The Payment Card Industry Data Security Standard (PCI DSS) applies to companies of any size that accept credit card payments. There are 12 requirements you must meet for compliance that cover a variety of security goals, from maintaining a secure network to protecting cardholder data and more.
A transparent redirect prevents payment data from going through your own servers, sending them through a service like PayPal instead. This process boosts your customer’s security while reducing your business’s personal liability for protecting their private information. You stay PCI compliant without hurting your customers in any way (and without sticking out your neck too far).
Want to Learn More?
Subscription Insider is hosting a Payment Boot Camp in NYC on May 8. They’ve arranged a full day of actionable speeches on payments best practices, so you reduce churn and increase recurring revenue.
We have obtained a special rate with our friends at Subscription Insider for Sterling Woods subscribers and fans. Use the promo code “SterlingWoods20” when you register.
(Sterling Woods does not receive any compensation for this. I just think it’s a good idea!)
How The Sterling Woods Group Can Help
Sterling Woods is well-versed in the practices of increasing recurring revenue, and when we work with clients, we close any payment processing gaps for them. Want a free 30-minute consultation? Contact us at firstname.lastname@example.org.
About the Author, Rob Ristagno
Rob Ristagno is the founder of The Sterling Woods Group and partners with companies to drive rapid digital revenue growth. Prior to creating Sterling Woods, Rob served as a senior executive for several niche media and e-commerce companies. Rob started his career as a consultant at McKinsey and holds degrees from the Harvard Business School and Dartmouth College. He has taught Product Strategy at Boston College.