Running a SaaS app is filled with problems. First you’re trying to turn a need that you’ve seen in the world into a product. Then you’re trying to figure out how best to reach your potential customers. Then you’re trying to get as many of them to convert to paying customers as possible. Then you’re trying to keep them around as happy customers. But there’s some low-hanging fruit: How you handle billing issues. What happens when cards expire, or when they can’t be charged for some other reason?
First of all, you have notifications that get sent to your customers when their billing card has issues, right? That’s the dunning process, and you *need* these. If you don’t, you’re just letting money fly out of the door after you’ve done so much of the work to get customers in the first place. Not having a dunning email sequence is the equivalent of watching your customers silently cancel their accounts for no good reason.
If you do have dunning emails set up, let’s talk about how you can make them better.
You should be sending a series of emails over time. The goal is to find a balance between giving the customer enough time to update their billing information, but not enough time that they forget to do so. What’s worked best for my apps for the past 5 years has been to send 3 emails over a week’s time. That’s a good starting point, but only after experimentation will you be able to figure out what works best for your app. Just keep in mind that you’re writing these emails for people, not robots. You want to write in a way that will convince them that they need to update their billing information.
A great reason to send a series of emails instead of just one is that the highest response rate to dunning emails is usually not after the first email. In my experience, it’s the second or third email that gets the customer to actually update their billing information. That may seem counter-intuitive, but when you consider that your email is one of several that your customer will receive in a given day, and that it might get lost in their inbox, it starts to make sense. The first email is important, because you’re warming them up (similar to warming up a sales lead). Then, when they see your second and third emails, they know what you’re emailing them about and will respond better to them.
These are the guidelines that I’ve used in my dunning emails to retain over $100,000 in recurring revenue.
- Make sure that you’re sending the email from an address that can receive replies. That way, if they have any questions and reply to the email, you’ll get those replies.
- Your subject line matters. Make the reason for the email clear.
- Use the customer’s name, if possible. You’ll get a much better response if you personalize the email.
- Remind them of what your app does, and if possible how you’ve provided value for them (if you’ve saved them money, time, or you can remind them how they’ve used your app recently, that can help greatly). After reading your email, they should be thinking, “I don’t want to lose access to this service!”
- Let them know why their payment failed (card expired, charge declined, etc)
- Give them a direct link to update their payment information that doesn’t require them to log in. Once your customer decides to update their billing information, you don’t want there to be any roadblocks in their way.
- Let them know when you’ll try to collect payment again, and what will happen if payment fails when you do.
- Escalate your language over the series of emails to instill a sense of urgency, but always be kind. Never demand that they update their billing information or make threats.
Now let’s look at some examples! Feel free to use these in your own dunning emails.
Subject: [Stunning] Please update your billing information. Walt- We just tried to charge your card for the Stunning Pre-Dunning plan (at https://bestunning.net), but it failed because "Your card has expired". This past month, Stunning has saved 12 customers for you, so it's important that you keep your account active to avoid any interruptions. Please update your payment information and keep your account active by going to https://payment-page within the next 7 days or your account will be cancelled. Thanks for using Stunning. Richard Felix Lead Developer Stunning
Subject: [Stunning] Second Notice: Please update your billing information. Walt- We just retried the charge on your card for the Stunning Pre-Dunning plan (at https://bestunning.net), but it failed because "Your card has expired". Please update your payment information and keep your account active by going to https://payment-page. We'll try to bill you again in 3 days, so please make sure to update your billing information before then. Thanks for using Stunning. Richard Felix Lead Developer Stunning
Subject: [Stunning] Final Notice: Please update your billing information. Walt- We just tried to charge your card for the Stunning Pre-Dunning plan (at https://bestunning.net), but it failed because "Your card has expired". Please update your payment information as soon as possible by going to https://payment-page. We'll try again in 3 days. If billing fails once more, your account will be cancelled. Thanks for using Stunning. Richard Felix Lead Developer Stunning
Once you get some good dunning emails going, you’ll be well on your way to keeping more of your customers around, automatically!
At the end of the series of dunning emails, you should also send out a cancellation email if the dunning process reaches its end and they still haven’t updated their billing information. Some people will call your bluff and won’t update their billing information until you actually cancel their account.
Here’s one that we use:
Subject: [Stunning] Account Cancellation: Your Pre-Dunning account has been cancelled. Walt- We've tried to charge your card several times recently for your subscription to Stunning Pre-Dunning, but we were unsuccessful. We haven't received updated billing information from you, so your subscription has been cancelled. Please reply to this email if this happened in error and you'd like to reactivate your subscription, otherwise you won't hear from us again. Thanks, Richard Felix Lead Developer Stunning
After that, you may want to start adding some other features to your emails:
- Fancy HTML templates that match your brand
- Tracking that lets you know when your emails are opened, and/or when someone clicks on your payment page links
- The last 4 digits and type of the credit card on file
- How many times you’ve attempted to bill them unsuccessfully
- The amount of the attempted charge
Following the steps above can (and most likely will) dramatically increase your SaaS app revenue. Happy dunning! And of course, if you want to add dunning to your Stripe-based SaaS app in no time, try Stunning!