Uh-oh. Your customer’s payment has failed. And now you’re in a tough spot. What do you do?
A) Assume a fetal position and start humming “Amazing Grace” to yourself
B) Lock your customer out of their account until they pay their bill
C) Send a series of dunning emails to recover failed payments
The correct answer is C, but it’s a tough choice, isn’t it? Especially when it’s so tempting to go with A.
In a perfect world, all of your customers would pay on time every time. But, in this shattered world, we must confront some of our customers from time to time and remind them to kindly pay what’s due.
That can be really awkward.
But it doesn’t have to be.
In this post, we’ll share tips on how to create an effective dunning email sequence that gets you paid.
Let’s get started.
What Is a Dunning Email?
Before we discuss how to create a dunning email sequence, let’s talk about what a dunning email actually is.
Dunning is the process of reaching out to customers with the goal of collecting payment for a debt. It can come in the form of a letter, email, mob visit, etc.
Every business has to create a dunning strategy, or else they won’t stay in business very long.
To create an effective dunning strategy, you must understand this:
Payments fail for all sorts of reasons, not just insufficient funds. The error could even be on your end (with a payment gateway failure, for example). It could also be that your customer’s credit card has expired and they haven’t updated their account with a new card number.
Whatever the reason for the failed payment, you must create a plan of action to remedy that problem.
Because you run a subscription service, you don’t have the immediacy of a face-to-face interaction with your customers. You’ve got to reach out to them in the next best way—and that’s through email.
Fortunately, the right email can get results. But what qualifies as the right email?
Things to Keep in Mind When Crafting Your Dunning Emails
Let’s discuss how to create a series of effective dunning emails.
Wait—Why Send Multiple Dunning Emails?
Some of your customers may respond to your first dunning email, but not all of them will. And that’s for many reasons. Three common reasons are:
They may not see your first dunning email. It’s easy for a singular email to get lost in a crowded inbox.
They may have seen your email but something prevented them from acting right away and now they’ve forgotten all about it. (Maybe they were distracted by another email).
They may be procrastinators and simply think they have more time to resolve the issue than they do.
As you can see, there are too many what-ifs to settle on sending just one dunning email.
[tweetthis] There are too many what ifs to settle on sending just one dunning email. [/tweetthis]
Instead, send multiple emails to gently and progressively guide your customer towards correcting the payment issue.
It’s important to note that not every payment is declined due to negligence or inability on the customer’s side. For example, banks decline payments to protect against fraud, and may only notify the customer after the fact (if at all).
When you reach out about the payment issue, your customer may be embarrassed and will definitely be startled to receive your dunning email.
Use empathy when reaching out to your customer, or you risk alienating them. In other words, be a human and not a business, and put yourself in your customer’s position. What type of email would you like to receive if you were in that same position? That’s the type of email that you should write when crafting your dunning emails.
Don’t Start Off by Cancelling
Because the failed payment may not be the customer’s fault, don’t immediately cancel the customer or block access to their account.
Extend a grace period. Give your customer a chance to correct the payment issue before you do anything that can potentially damage the relationship you’ve built.
By the way, sometimes payment failure can be predicted ahead of time. For example, if your customer’s credit card is set to expire, you can use Stunning to automatically retrieve updated billing and, if that doesn’t work, send out a series of pre-dunning emails to prevent a future failed payment. Learn more about Stunning’s failed payment recovery features here.
Strike a Cooperative Tone
Instead of acting like a debt collector, adopt a cooperative “let’s work together” approach. Your customer isn’t your enemy so your goal shouldn’t be to make the customer feel bad or scared.
Change the Content of Your Dunning Emails
Earlier, we discussed why it’s a good idea to send out multiple dunning emails. But don’t just send the same email over and over again. A repeated email loses its bite and makes it easier for customers to ignore your pleas for prompt payment.
Switch up the content of your emails. Here’s what to include in an effective dunning email series:
First Dunning Email: Announce Payment Failure
In your first email, keep it simple. Notify your customers that there’s a problem with their billing and then give them a set of directions on how to fix it.
Link directly to the payment page (instead of your homepage or their account settings). This minimizes steps and frustration and ensures that they complete the action.
Remember to adopt a helpful, friendly tone. Also provide a way to reach you if they have any questions or concerns.
Second Dunning Email: Use Urgency to Provoke Immediate Action
In your second dunning email, dial up the urgency. Provide a fast-approaching deadline for when you need payment by.
Use fear-based language to make them pay attention. For example, include a phrase like “don’t wait because you may lose your ability to…”
Always include a direct link to the payment page and a way for them to reach out to you with questions.
Third Dunning Email: Remind Customers of What They Stand To Lose
In your third dunning email, remind your customers why they signed up for your service. It’s a good idea to remind them of why your service is amazing. This way, your customer can consider all of the wonderful features that they’ll lose access to and, fingers crossed, decide to pay right away.
Fourth Dunning Email: Give Them Options
In your fourth dunning email, consider giving your customer the option to downgrade or pause their plan. While this option is never ideal, sometimes it’s the right choice for customers who unintentionally end up in a tough spot. You may not be able to profit from the customer in the short-term, but you will be able to keep them on your email list and continue to nurture them back to you.
Fifth Dunning Email: It’s Done
In your fifth and final dunning email, let your customer know that you’ve cancelled their account due to non-payment.
But don’t slam the door. Give them the option to pay and regain access to their account. This email should have a mix of friendliness and urgency. Send it out 24 hours before your grace period ends.
By the way, you can send the above dunning email series over the course of 30 days (which is the standard grace period for most SaaS). Feel free to tweak that time period based on what works best with your customers.
Craft the Perfect Subject Line
When writing your dunning email series, pay special attention to the subject line. If your subject line doesn’t grab them, they won’t click.
What is the best subject line for dunning emails?
- It’s short. It’s five words or less.
- It piques their curiosity. It causes them to ask, “What’s going on?”
- It elicits their emotions. It uses strong words like “don’t wait” or “hurry” or “Uh-oh. Problem With Your Payment.”
Drive your customers to open your email by creating a stand-out subject line.
Get the Sender Name Right
Almost as important as your subject line is the sender name. Your customers use both the subject and the sender to screen the validity and importance of an email.
Instead of sending from a corporate-sounding account like billingdepartment@YourCompany.com, send from a human like John @ Your Company. This instantly makes your email feel more personal. Customers are more likely to open an email from a fellow person than from a corporation.
Another reason to send from an actual person is so that you can readily accept emails.
One of my pet peeves is receiving an email that says “do not reply.” It might as well kick you in the stomach, too. Why can’t I reply? What if I have questions? How do I reach a human?
A “do not reply” email address is cold and impersonal. It makes the customer feel helpless. What if they are truly blindsided by the dunning email and want to reach out for clarification? What if they’re in a financial bind and want to get an extension without losing their data?
Just like you’ll make it easy for customers to pay you, also make it easy for them to contact you with any concern. It’s the best way to demonstrate that you’re a stand-up business that truly cares about your customers.
Sure, they can hunt down your contact information. But, if you ask them to do that, you risk them not reaching out to you at all. They may just shrug it off and decide to go with your competitor.
Instead, encourage them to reach out to a specific email address or phone number that you include in your dunning email. This will show your customers that they can trust you.
One of the best things you can do for your business is to create a series of dunning emails. This can rescue failed payments and reduce churn. Sign up for a free trial of Stunning to start creating your dunning email series now.