Do have a subscription based business? Do you have payment plans? If so, then you know how big a problem failed credit card payments can be.
Most CEO’s and business owners who operate subscription based businesses or recurring revenue models understand that credit card payments fail regularly. In fact, it is well documented that credit cards and debit cards fail at an average of 12% regardless of the industry. But what most CEO’s and business owners don’t know is exactly how much money their company is losing every month because of these declines. We talk to alot of business owners and we ask this question all the time. “How much money are you losing to failed credit card payments?” And the response is usually always the same, they’re not sure. When we dig into the numbers what we find is that the problem is always more significant than they initially thought.
If you were asked the same question, “how much money is your business losing to failed credit card payments?” What would you say? Could you answer with a dollar amount right away? If not, don’t worry you’re in good company. But that doesn’t mean it’s okay. You need to know how much money is walking out your back door!
So here are 3 things you need to implement into your business right away to solve your failed credit card payment problem once and for all:
Failed Credit Card Payment Fix #1: Measure The Right Things
You have to know the numbers. The first step in solving this problem is visibility. Specifically you need to be evaluating what the total dollar amount of your failed revenue is every month. Once you have that data you begin to evaluate how much of that total amount you are recovering. For some of the business owners we talk to, that answer is $0!! But regardless of how much you are currently recovering you need to know where you stand. And last thing you should be measuring is how your recovery rate compares month over month. This will help you identify if your system and strategy is actually working. If you are going to win in the game of failed credit card payments you have to know the score. And that all starts with visibility.
Failed Credit Card Payment Fix #2: Put Someone In Charge Of This
Who owns this metric in your company? Your in good company if your answer is “no-one.” Most businesses don’t. But if you really want to solve this problem and if your really want to keep money from walking out the back-door then you have to have someone owning this aspect of your company. This problem is always more significant than you think and the amount of money that you are losing almost always warrants a full-time employee focused solely on failed payment recovery.
Failed Credit Card Payment Fix #3: Pick A Good Strategy
There are a few strategies you can implement to combat this problem. Dunning software is a good start. Recurly, Churn Busters, and Stunning are a few platforms that we like. Dunning software will help you set up an automated email sequence that will help you to recover at most 15% of your failed revenue. Leaving 85% of your failed revenue on the table isn’t great, but at least you are recovering something. Another strategy is to hire a full-time employee. This approach will maximize the revenue you are able to recover, but this is a really expensive option. When you factor in a full-time salary and benefits it may not be the best strategy for your company. A third option would be to outsource this to a company who combines both software and the full-time focus of an employee, to do this for you.
We started Gravy to fix this problem for small businesses. Just like you, we owned a small business that operated with subscription revenue. We discovered that failed credit card payments were a big problem for us, and we just didn’t have the time or the capital to solve this problem well. Our options were very limited and most of the options available to us were just too expensive. Gravy is committed to giving you all the results of a full-time revenue recovery team of employees, for a fraction of the cost. We can close the back door of your business and start adding money to your bottom line today.
Book a call below to see how we can start helping your business today.