The subscription model is a sure way to retain customers and have a continuous inflow of money. Automatic renewals bring businesses a steady income while making the life of consumers more convenient. According to estimates, by 2022, 53% of software purchase revenue will be generated through the subscription renewal process.
The problem arises when users forget to renew subscription, don’t update their billing details, or lose touch with your company in any other way. As a result, the active members of your loyalty program turn into unprofitable dunning accounts.
The good news is that several proven ways can effectively bring back customers and encourage them to renew subscription. Direct mail is one of them. These approaches both yield great results and are suitable for companies with any budget size.
Keep reading to discover:
- What are dunning accounts?
- 5 affordable ways to encourage dunning accounts to renew subscription
- Direct mail as a way to bring back customers and get their new billing details
What Are Dunning Accounts?
Dunning accounts are the accounts of customers who stopped paying for the services or products used. The reason may be anything from payment gateway issues to insufficient funds. The name comes from the word “dunning” that means communication with customers for regular collection of accounts receivable.
As for dunning accounts in medium and small businesses, this concept is mostly used in the context of automatically renewed subscriptions. Since the number of subscription services rapidly grows, inactive accounts are turning into a big deal. Companies don’t receive the projected income and need to find ways to bring back customers. Otherwise, they risk losing a large share of profit and suffering from high churn rates.
5 Affordable Ways to Encourage Dunning Accounts to Renew Subscription
Although you may have doubts about investing money in saving customers who are about to cancel your subscription, targeting dunning accounts is worth the effort. It was found that acquiring a new customer costs 500% more than keeping an old one. Moreover, a 5% lower churn rate can increase your profitability by 25-125%.
Thus, even though dunning accounts may create a lot of troubles, they deserve to be valued. The customer loyalty these customers showed subscribing to your services back then means you can still convince them to renew subscription or update payment details. It’s always a great strategy to optimize the already existing resources.
Here are a few affordable ways to bring back customers and reactivate dunning accounts:
#1. Clarify dunning account procedures on your website
Many business owners fail to explain how auto-renewals work and what happens when lapsed customers stop paying. Describe all the important details about the renewal process on your website and service policy page. It’s a proactive measure that helps to reduce the risk of the increasing number of dunning accounts in the future. You should also make customers accept or sign the subscription renewal rules to avoid any related disputes. This simple step can save you a lot of money in the long run.
#2. Find the problem and help to fix it
In most cases, users stop paying you for a reason. Sometimes, they just cannot complete the payment, other times – they are disappointed with your service. Before you take steps to bring back customers, make sure to clarify why they become inactive. This will make your communications better targeted and allow you to avoid spending money on fruitless marketing efforts. The most common issues that result in dunning accounts include payment gateway problems, lost, changed, or expired credit cards, and insufficient funds. Even if users just want to cancel your subscription, it will be easier to retain customers once you know the exact reason.
#3. Clarity is key for email and other communication channels
Emails are the classics of communication with dunning accounts. Although they don’t always attract the necessary attention, quality emails can effectively convey your core message. To create a perfect dunning account email, you need to:
- Add a clear subject line with the problem (e.g., ACTION REQUIRED: Payment to X company failed)
- Include the due amount, due payment date, and next payment attempt date
- Provide links to an alternative payment method, subscription page and settings, invoice, or other relevant resources
- Explain what will happen if the customer doesn’t complete the payment
- Include your contact information
#4. Monitor social media and reviews to bring back customers
It’s a free method to learn what payment issues your users face or why they cancel the subscription to your product or services. Be sure to regularly scan social media and popular review resources for customer feedback. Also, don’t forget to reply to reviewers and do your best to solve their problem to bring back customers. Stay kind and empathic even if someone still owes you money. It’s your brand voice and reputation.
#5. Inform customers about the upcoming card expiration date in advance
Since modern consumers simultaneously use tons of subscription services, they cannot control the payment details in all of them. Therefore, if you want them to automatically renew subscription and get your money, just send a reminder. This will make subscribers more likely to take the necessary action and help you avoid increasing churn rates. You can start with an email and if the recipients ignore it, proceed with direct mail. Since mail notifications have considerably higher response rates than digital media, they can help in the cases when emails fail. Find more about the use of direct mail for reducing dunning accounts below.
Direct Mail as a Way to Bring Back Customers and Get Their New Billing Details
Customers perceive offline communications as something more formal than emails and, hence, take action more promptly. Whereas people are very likely to delete an email even without opening it, direct mail has a 90% open rate. Therefore, you should always use offline mail as a supplement to your online communications.
For example, at first, you can try to inform customers about outdated payment information by sending an email. If it works and the people renew subscription or update billing details, great! You have managed to bring back customers.
Yet, unfortunately, emails and social media messages often fall flat. That’s when direct mail should come into play. You can send direct mail notifications several days after your emails are ignored to win back lost customers and make them renew subscription. Just be sure to start with a warm and clear postcard that briefly explains the problem without putting too much pressure on customers. BombBomb is one of the companies that use such a strategy. They started to send Inkit’s postcards to boost their credit card expiry emails and achieved a 17% increase in saved dunning accounts.
“What we saw with that was a 17% increase in saved dunning accounts. They returned to us, they updated payment information, and are still with us 9 months later. So that’s super exciting.” – JK Sparks, Director, Marketing Operations at BombBomb.
The best thing is that your online efforts to bring back customers and direct mail can be fully automated. By using Inkit’s API integration platform, you can connect offline communications with your digital channels and CRM. As a result, you’ll have a well-synchronized system that unites all customer interactions and automatically manages them. It will control the progress of auto-renewals, send relevant communications at the right time, and analyze the results. You get the global picture and optimized budget, while the software takes care of routine tasks.
Want to bring back customers as soon as possible? Subscribe to Inkit and make them hear you with effective offline communications.