Follow-up failure usually looks like this.
You have a marketing department. You strategize, you gameplan, and you work like crazy to get a customer engaged with your company. You spend money, you analyze, you know your customer acquisition costs and every other metric associated with getting a customer in the door. The front end of your business is a well-oiled machine, and because of that, you end up with a customer who purchases your product or your service. Mission accomplished right? Until that customer’s credit card declines after just one month of subscription. You know someone needs to dig into that payment failure and figure out why, but you just don’t have the time. So you go back to doing what you do best, growing your company. You may be losing some customers out the back door, and you may be leaving some revenue on the table but hey-- that’s the cost of doing business, right? It doesn’t have to be.
The Price of Follow-Up Failure is More Than You Think
The reality is that follow-up failure is expensive. You can easily look at your failed revenue numbers and see the initial cost of your credit card declines and failed payments. But you also need to look beyond the numbers and know the total cost of your follow-up failure. Here are 3 ways that follow-up failure slowly sabotages your business.
#1- Customer Lifetime Value Declines
You paid to get your customers in the door, and you need to keep that customer in order to get a return on your investment. I don’t know how long that is, but you do. It may be 3 months, may be 4, it may be longer, but the bottom line is this: when their credit card fails you not only lose the payment that you were initially charging for, you lose all the payment that were coming in the following months as well! This is what the Customer Lifetime Value metric measures, and this what follow-up failure destroys over time.
#2- Payment Failure Accumulation
This is most evident in growing businesses. If you are adding new customers each month and you are experiencing failed payments, this can get out of hand in a hurry. Failed payments don’t feel worrisome initially. At first it’s only one here and there. But as your business grows these failed payments start to stack. It wasn’t a big deal when you lost four customers in month 7, but when you lose ten more in month 8, and fifteen in month 9 you start to feel a sense of urgency. You may not have experienced this yet if you are just getting started in the subscription based business, but I promise you will. And if this goes unaddressed, your follow-up failure will prop the back door of your business wide open with thousands of dollars of lost revenue walking through the door.
#3- Loss of Customer Engagement
The is arguably the most devastating affect of follow-up failure; losing customer engagement. You know the stats. You know that it is much easier to sell to an existing customer than it is to acquire a new one. You’re going to offer other products, you’re going to have more services, you’re going to want your existing customers engaged and locked in to what you are doing. But follow-up failure absolutely destroys customer engagement and destroys any hope of a future sale to your existing customer base.
Looking Beyond the Numbers
This why looking beyond your payment failure numbers is so important. If you are not measuring your Customer Lifetime Value, your monthly Payment Failure, or you Customer Churn, you need to start today. Check out this article to understand more about the metrics you should be analyzing.
To Keep Your Customers Checked in, You Can’t Check Out!
Our company, Gravy, can do this for you! We live in this world day in and day out. We calculate these metrics in our sleep, and we have years of experience testing and proving strategies that work to recover your failed payments, increase your customer lifetime value, reduce your customer churn, and increase your customer engagement! We can give you a full-time focus on your failed payment and eliminate your follow-up failure altogether. We’d love to talk to you about how we can help you close the back door of your business, recover your lost revenue, and start adding money to your bottom line. We work primarily off commission, so you don’t pay unless we are making you money. So what do you call a service that makes you money without you having to do any extra work? You can call it what you like, we call it Gravy!