For many websites and SaaS providers, subscription-payment models have turned out to be highly profitable and reliable. Subscription models ensure monthly reoccurring revenue (MRR), which in turn provides predictable, dependable income.
Of course, “predictable” and “dependable” need to be taken with a grain of salt. Any organization running off a prescription-based model will already know that rebill payment fails are a serious issue. Large companies often deal with thousands or more failed rebill payments per month.
Declined credit cards can be a serious problem.
A rebill payment fail occurs when you try to charge the customer’s credit card or other payment method and it is declined. This isn’t a cancellation, the customer hasn’t gone through your normal cancellation process. Instead, everything seems on the up-and-up but when you go to charge them, something goes wrong.
There are many reasons that a charge may fail to be processed:
- The credit card has expired
- The card has been canceled
- The user has reached their credit limit
- Corporate spending limits have been reached
So on and so forth. In many cases, the customer wants to continue with their subscription and they may not even realize that it has been canceled. That’s why we created our “Subscription Saver” feature, which is an automated program you can use to “save” as many subscriptions as possible.
Here’s How the Subscription Saver Works
As we mentioned above, many people aren’t trying to cancel their subscription when the rebill fails to go through. Many may also not realize that there is something wrong with the payment method. So the problem then is a lack of information. This, in turn, can be rectified with communication, which is where our Subscription Saver feature comes in.
Our Subscription Saver tool will automatically email customers when their bill payment fails to be processed. These emails will let customers know that they have to update their payment method. In practice, a simple email is often enough to get people to continue with their subscription.
Our subscription saver at work.
We’ve found that sending several emails scheduled over the course of a week helps maximize the number of subscriptions saved. We generally recommend the following email schedule:
- One day after the payment fails, send the customers a notification that the payment failed to process and let them know they need to update their payment.
- After three days, send the customers another email, again letting them know that they have to update their billing information.
- Send yet another email at the five-day mark, urging customers to update their billing information.
- On day seven, send a final email reminder that their chosen payment method isn’t working. If they don’t respond, PayKickstart will cancel the subscription.
If a customer changes their payment method and successfully pays for their subscription at any of the above steps, PayKickstart will stop sending reminders. We only nudge people when they fail to make a payment. In our experience, quite a number of people simply need a reminder.
By the way, the above email schedule is only a recommendation. We’ve found this email campaign to be effective. However, you can also set your own email campaigns to see if you can find a schedule that’s more effective for you.
For example, you might use the above email campaign, but also send out another reminder on the 30-day mark. Maybe a customer was just having a financially tight month.
So Does the Subscription Saver Feature Actually Work?
Short answer? Yes. Long answer? We conducted a study over a four-month period to examine how effective our subscription saver program is. The results were very promising, to say the least.
First, we found that our customers were losing a lot of subscriptions due to rebilling problems. In fact, our clients faced 9,094 rebilling issues during the four-month period alone. Yet by using our subscription saver feature, we were able to recover 2,057 of those subscriptions.
That’s good for roughly 22 percent of the lost subscriptions. More importantly, those subscriptions were worth a total of $197,749 dollars. So simply by using a free feature, our customers were able to save nearly two hundred thousand dollars worth of lost revenue within a matter of months.
Anyone who relies on subscriptions for revenues should set up our subscription saver. Given how affordable our shopping cart is, you may quickly find that it’s paying for itself and then some.
Subscriptions Are Vital for Monthly Reoccurring Revenues
Many companies have come to realize that one-off sales simply aren’t profitable and reliable enough to be sustainable. If your business is relying on one-off sales, you’re going to struggle month-to-month to maintain your revenues. By using subscriptions, however, you may be able to ensure healthy, sustainable monthly reoccurring revenues.
Even big companies that have traditionally relied on one-off sales, like Amazon, have been turning to subscriptions in order to create more reliable revenue streams. Not only can you subscribe to Amazon Prime, for example, but you can also subscribe to shipments of dish soaps, over-the-counter medications, and other products you regularly use.
Amazon will even cut you a discount because they recognize how important reliable revenues are. If you’re not using subscriptions, you should examine your business to see if there is an opportunity. Monthly reoccurring revenues can be a benefit for any company.
Did you know you can subscribe to coffee through Amazon and save money?
Let’s go over what we mean by monthly reoccurring revenues (MRR). MMR refers to the amount of money you can expect to receive in a given month. Your total MRR is made up of many different types of MRR, including new MRR for new customers, and churned MRR, which refers to lost customers. You can learn more about MRRs in our dedicated blog post.
Failed payments can be included in churned MRR. At the end of the day, it doesn’t make a difference to your bottom line if the subscription is canceled because a customer forgot to update their credit card or because they consciously wanted to end the service. Lost revenue is lost revenue.
Our subscription saver will help you reduce your churned MRR. This means your total monthly recurring revenues will be higher. In turn, that’s more money you can invest in yourself, payout to employees and investors, and otherwise put to good use.
Take Away: Everyone Should Use Subscription Saver
If you offer subscriptions, you should be using subscription saver. The lifetime value of a single subscription can easily be worth hundreds or even thousands of dollars. So if there is a billing issue, you need to do everything you can to save the subscription. Fortunately, PayKickstart makes that easy!