How to Write an Effective Dunning Email

Failed payments are annoying. 

Recovering failed payments can be frustrating. 

But not recovering failed payments will be devastating. 

No one gets into business to send payment recovery (i.e. dunning) emails, but if you don’t send these types of emails, you probably won’t be in business for very long. 

Dunning emails don’t have to be unpleasant— for either you or your customer. Below, we share tips on how to create effective dunning emails to ensure that you get paid. Let’s get started. 

First of All, What Is Dunning?

Dunning is the process of asking your customers to pay what they owe you. It’s debt collection.

For SaaS businesses, the dunning process begins when payment failure happens. This prompts the SaaS to send an email, in-app message, or text to collect payment. 

By the way, your dunning email should not be your first step in recovering the failed payment. The dunning email should happen after you’ve retried payment.

(Stunning automatically does this for you by intelligently retrying failed payments at the best times for recovery over the course of 21 days. Learn more about Stunning’s robust set of features here.)

Change the Way You View Dunning Emails

How to Write an Effective Dunning Email

Your immediate goal may be to recover failed payment, but your ultimate goal is to retain that customer. Instead of creating a dunning email that’s devoid of personality and compassion, an effective strategy is to infuse empathy and a sense of cooperation into your emails. Here’s how to do it:

Approach Customers With Empathy

Don’t assume that failed payments mean that the customer intentionally doesn’t want to pay. This assumption will sour your dunning communication with your customer and they will detect your hostility.   

Remember that payments can fail for a variety of reasons, some of which have nothing to do with the customer’s negligence. Perhaps there was a problem with your payment processor. Perhaps the customer’s credit card company flagged the transaction for fraud and automatically denied it without the customer’s knowledge. Other reasons include:

  • Reaching their credit card max for the day/ month
  • Reporting their card lost/ stolen
  • Getting a new credit card and forgetting to add it to their account

Whatever you do, don’t blame the customer. Your goal should be to work with the customer to correct the issue, not to point fingers or assign blame. 

How to Send Effective Dunning Emails

Now, let’s discuss how to create a dunning email that gets results:

Start With the Subject Line

The goal of your subject line is to get your customer to click on your email. For this reason, your subject line needs to stand out from the sea of other emails in your customer’s inbox. (I have over 22,000 emails in my inbox and I’m not proud of it. How many other emails does your customer see in their inbox?)

Grab their attention with heart-stopping words like “declined” or “failed.” Those words will immediately elicit negative emotions, which is what you want. You want to get the customer to react immediately. That’s what gets their attention and causes them to open your email. 

It’s also crucial that you add a two-word phrase to your subject line: “Action required.” While this may seem obvious to you, it’s not to your customer. The phrase “action required” raises the stakes and activates the customer. It tells them that this is not just a notification email but an email that requires their engagement.

Here’s a list of best practices to follow when crafting your dunning emails.

Send From a Real Person at Your Business

Your subject line and your sender name are two of the most important parts of your dunning email. If you don’t get these two right, your email won’t get opened.

We’ve already talked about the subject line, let’s talk about the sender. Choose a sender name that’s recognizable and human. Yes, human. Compare the difference in sender names:

Tom @ Your SaaS vs Noreply@YourSaaS.Com

Which one do you think your customers will trust?

Don’t just create a dummy email account for your dunning emails. It’s important that you send from an active email that your customer support team actually checks. This is important because sometimes, customers reply back to dunning emails. If they don’t get a response from a real person, you may lose them for good. 

Keep it Short

Be brief and to the point. You’re not trying to take them on a journey, you’re just taking them to the next step, which is to update their payment information. 

Your dunning email should explain what happened (payment failure) and what needs to happen next (update their payment information). Keep it to 100 words or less for two reasons: To keep a singular focus and to convey a sense of urgency. 

Don’t Forget Your Personality

It’s tempting to take a “Just business, nothing personal” tone here, but be careful. Your customers chose you, in part, because of your brand’s personality. It would be a mistake to throw away your personality in favor of a more standard debt collection tone.

Who says you can’t be friendly in your attempt to recover failed payments? Remember that payments fail for a lot of reasons. It makes sense to adopt a friendly and cooperative tone in your email. “Let’s work together to correct this” is more trust-building and effective than “you better pay up now or else.”

Give the Customer Reasons Why Their Payment Failed

Because payments fail for a variety of reasons, your dunning email may surprise and confuse your customer. They may not have any idea why their payment failed. You can provide them with a list of common reasons for payment failure. They may then review the list, recognize what went wrong with their payment, and correct it right away.  

Include Only One Call to Action

Strip your email of any competing calls to action (such as “follow us on social media” or “check out our blog”). Eliminate distractions so that you can focus the customer’s attention on the one action you want them to take: Update their payment information. 

Make It Easy to Pay

How to Write an Effective Dunning Email

Hooray! Your dunning email works and the customer has decided to correct the payment. They click on the link to pay and then…

They’ve got to run an obstacle course to update their payment information. First, they have to sign on. What if they’re signing on from a different computer or device and they forget their password? Next, they have to locate their account information. That’s not always a straightforward process, and may require multiple clicks. Then, they have to update their credit card information, and that process may not be intuitive.

While this process may only take five minutes in real-time, it can be the reason why you’re not recovering the failed payment. Some customers may be turned off after an incorrect password and decide to try again later when they’re at their primary computer. But later never comes because they forget to do it. This eventually leads to customer churn.

Instead of asking your customers to jump through all those hoops, make payment easy. Send them to a payment update link directly from the email, allowing them to bypass any obstacles or distractions.

What If You Need to Send More Than One Dunning Email?

You will likely need to send multiple emails. 

While some customers will respond immediately to your first dunning email, other customers won’t act right away.

When that happens, send another email. In fact, you can send multiple dunning emails to your customers in an attempt to fix their payment issue. 

But when you send multiple dunning emails, don’t send out the same, exact, word-for-word email. If it didn’t work the first time you sent it, it likely won’t work the second time, either. Vary the content of your email so you can use different motivators.

Give Them a Grace Period (And Let Them Know About It)

Instead of immediately blocking access to your service, consider giving your customer a grace period to sort out their payment. This can generate positive sentiment and improve your customer retention rate. However, be transparent about your grace period policy. Give them a deadline and encourage them to act before their account is closed or deleted. Send one email at the beginning of the grace period and another email at the end of the grace period. Set up those parameters in Stunning.

What Happens If the Customer Doesn’t Respond to Any of Your Dunning Emails?

Humans are procrastinators by nature (some more than others). Inevitably, you’ll have a customer who reads your dunning emails but doesn’t act immediately. Perhaps, they just aren’t motivated to act right away because they still have access to their account. But, of course, that can’t go on forever.

When they’ve come to the end of their grace period and it’s time to cancel their subscription, send your customer another email as a head’s up. Don’t skip this step. This is one of the most important dunning emails you will send because it’ll motivate your customer to act immediately in order to avoid the consequences.

Final Thoughts

Dunning emails can be awkward and ineffective — but that’ll only happen if you don’t follow the above tips. Write better dunning emails and recover more of your payments with Stunning. Start your free, fully functional 15-day trial here.

Don’t forget to download this list of best practices for writing effective dunning emails.

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