When you’re running a subscription or SaaS business with recurring payments, having some payments fail each month is a given. There is huge problem in the payment ecosystem because the card-issuing banks decline many legitimate transactions in their attempts to prevent fraudulent transactions from slipping through.
Unfortunately, many companies don’t understand how much money they’re losing each month because of failed payments. And they certainly don’t understand that it’s not just one month’s transaction that’s lost when a payment fails. They’re losing a customer.
While a company with recurring billing might have a collections team on hand to help recover failed payments, customer outreach should not be the first step in the recovery process. Most customers aren’t even aware there is problem with their payment unless they’re contacted and involving them in the recovery process creates the opportunity for them to churn.
Two Types of Failed Payments
Soft declines can usually be resolved by interacting directly with the payments system, instead of the customer. Examples of soft declines include false declines, insufficient funds, and do not honor instructions. You don’t want to involve the customer in cases like these because you’re essentially asking them to solve a problem they didn’t create. For soft declines you need to use a recovery system that happens behind the scenes, such as Flexpay’s Invisible Recovery™.
In some cases, you have no choice but to reach out to the customer, such as when there has been a hard decline and the card can’t be billed. Examples of hard declines include lost or stolen credit cards, expired cards, or invalid card numbers. To solve a hard decline, you must involve the customer because you need to get updated information from them.
When you absolutely must involve the customer, it’s imperative that you engage with them in a way that delivers a positive experience. If the experience is negative in any way, it’s very easy for the customer to simply not give you their updated information, which effectively ends their relationship with the business.
Soft and hard declines need different recovery solutions
The Importance of Empathy
The best option is to use a personalized customer outreach strategy that encourages the customer to work with you. This type of outreach uses SMS and email messaging personalized to suit the communication preferences of the customer and is delivered at the ideal time to ensure the best response rate. These messages use a tone of voice that appeals to the customer’s communication style and offer a variety of options to help them complete their payment. Treating the customer in such a positive, empathetic way will make them feel appreciated and valued, which makes them want to help solve the problem.
Introducing Engaged Recovery
FlexPay has just launched a new addition to our platform that offers a powerful solution to the problem of failed payments. The complete FlexPay platform uses both Invisible Recovery™ and our new Engaged Recovery to recover most kinds of failed payments, including soft and hard declines, and automatically applies the right recovery solution of each type of payment failure.
Our new Engaged Recovery solution delivers empathetic branded experiences that encourage customers to solve the failed payment through collaboration, avoiding the indirect churn that can come with dunning and collections methods. Using the FlexPay platform also reduces or eliminates the costs associated with employee-powered payment recovery and collections and frees up customer service teams so they can focus on maintaining positive customer relationships.
With the addition of Engaged Recovery, the FlexPay platform can now recover all types of failed credit card payments on legitimate transactions, which helps businesses with subscription and recurring billing models increase revenue and reduce customer churn.
Do you need help solving all types of failed payments? Speak with one of our payment recovery experts today to get started.