The biggest motivator for looking at payment recovery tools is the lost compounding revenue due to failed payments. If you are recovering payments in-house or DIY, your cost can vary depending on the staff time and resources spent contacting members or researching and resolving the payment issue. Be aware that if you are manually retrying payments with no logic, each time you reprocess the payment, you are most likely raking up charges with each swipe, even if it is unsuccessful at recovering the payment. Even a small business with 100 members and each membership costs $50 a month with only a 5% churn rate can result in losing $250 a month or $3,000 lost per year. That doesn’t include the cost of acquiring new members.
Now that we are already on the following topic, churn, we can see how significant churn is to businesses. When we look at the churn rate, it goes along with the total revenue that a member is projected to generate for a business during the membership lifetime. Looking at our churn rate, we can calculate a monthly rate, quarterly, or yearly. Once we do that, we can make intelligent and strategic decisions to improve the churn. Reducing churn is critical for businesses with recurring payments and having an excellent churn rate leads to increased revenue, more members, and a thriving business.
Your failed payments can significantly impact your cash flow. Your business did not receive the funds that were expected, which can cause a snowball effect. If you notice your cash flow decreases, you should look into an intelligent failed payment recovery process. Recovering up to 80% of failed payments with no additional costs to your business in staff time or salaries is doable. Failed payments can also lead to additional costs in staff or processing fees.
There are many strategies and tools to recover failed payments, but you want to utilize the tools that offer the best recovery rate and stay consistent. Handling your failed payments the same way your customers know what to expect also improves the customer experience and prevents members from canceling their memberships. Each month your steps to recover failed payments should include proactively updating lost, stolen, or expired cards consistently with a tool called Account Updater. An intelligent payment recovery tool will consistently give your business the best results, typically 80% successful in recovering failed payments.
Using a CRM software that integrates with your payment processor is key. Doing this can automate your entire payment recovery process. This will improve your recovery process and recovery rate. Linking together allows your business to track and manage member information and payment history. This will make it easier for you to identify and resolve payment issues and re-establish future recurring payments. Streamline your billing system by integrating your CRM and payment processor, ensuring you stay up to date on key information in real time. You will see better customer relationships which impact your customer service.
Payment recovery can be a complex, costly, and time-consuming process, but it doesn’t have to be. By looking at these categories, we can see the necessary steps to improve recovery rates and grow your membership base simultaneously. If you don’t already have an intelligent failed payment processor check out www.ecardtranactions.com