Unfortunately, for subscription-based businesses, customers who have had missed payments or billing issues can contribute to your churn rate.
The good news is that by employing the right dunning process, you can reduce the number of lost customers. If you are a business owner using a subscription-based model, read on for our essential tips of creating dunning messages that hit the right note.
What is Dunning?
Dunning refers to the process of recovering a missed credit card payments or multiple payments from a customer. Sometimes referred to as collection management, dunning is an essential business process of chasing outstanding payments and increasing the likelihood of recovering funds.
Unfortunately, businesses often find the dunning process to be an unpleasant customer experience of trying to work out the best way to recover payments. Meanwhile, customers might see dunning as an intimidating sort of debt collection – particularly when it's poorly done.
By being thoughtful and considerate of your customers, you can send out a series of personalized emails that let customers know when their accounts are behind, and how they can make a payment on their account or update their payment details.
Who Is Your Customer and Why Have They Missed a Payment?
The first thing to remember in the dunning process is that you are contacting an established customer who has signed up for your service. When a payment doesn't go through, it can be an inconvenience for you, but remember that many customers often aren't aware that a payment has failed.
The most common reasons for this include:
- Card expiry
- A lost credit/debit card
- Insufficient funds
- Customer is away on holiday
- Customer has a new card but hasn't updated their details
For this reason, you must treat customers with respect and empathy when you contact them regarding missing payments. If you send blunt or harsh-sounding dunning emails requesting funds immediately, customers will be put off.
Instead, use this as an opportunity to show that you are a business with excellent customer care.
What Should You Include In Your Dunning Message?
Start With the Essentials
When creating a dunning letter, or dunning letters, the first step should be to make sure that you include all of the necessary information. This is to make sure that the customer has confidence in your business and understands what they need to do to keep their subscription. You should:
- Clearly state the name of your company and the reason for your email
- Let them know how much they owe and when it's due
- If you're going to attempt another withdrawal of funds, tell them the date
- Provide a link to their settings/invoices/ payment options, so they have an easy route to rectifying the issue
- Offer further contact information for your business
Personalize Your Email
Your customer needs to trust that this is a genuine email aimed at them and their account. People are aware now more than ever of scam emails and phishing attempts, making them wary of clicking on links in emails that are asking for their card details.
To counteract this, personalize your dunning message! Make sure that you include their name and establish trust by consistently branding your emails each time you contact them.
Sample Dunning Email Format
Take a look at this dunning letter sample to see how you could successfully recover payments. This example is clear and to the point without being rude.
You can take 4 great tips from this dunning email:
- The strong branding makes it clear who the email is from and what it is about, as well as promoting the company.
- It uses empathy rather than blame. Phrases such as ‘to give you time' let the customer know that you get it, and you care about their custom.
- A casual tone is used to avoid putting the customer off and stops them from feeling ashamed or angry about their missed payment.
- It clearly states the reason that payment has failed and what the customer can do to remedy this without explicitly requesting money.
To make this dunning message even stronger, you could:
- Include the customer's name to make the message more personal and ensure the customer knows it is clearly intended for them.
- Add the relevant dates to the main content. This lets the customer know when you might attempt to take another payment, and/or when they need to pay funds by.
- Offer additional contact details alongside the social media links, in case the customer wants to get in direct contact regarding their subscription or payment.
Another Dunning Example:
Consider Your Timing
Don't assume that just one email will do the trick. You should be sending at least three emails, spaced out over 2-3 days. Ensure that each email is different, as the customer may assume that they have already seen the email and skip or delete it.
While they should be different emails, ensure that the branding and formatting are consistent. This is not only to promote and build your brand but to gain your customer's trust as a credible brand. They'll be less likely to doubt the legitimacy of the email if the branding is consistent.
When creating your dunning emails, the most important thing to remember is that the message should be clear and to the point, covering all the essential billing information, but without being blunt or impersonal.
Dunning Software Helps
Business owners can always get additional help with the dunning process with dunning management tools.
Shopping carts such as SamCart and ThriveCart offer features like built-in dunning software to help manage missed payments and payment failure attempts for subscription businesses. The only difference between both dunning shopping carts is that ThriveCart charges a one-time price while SamCart charges monthly price at a minimum of $49/month.
This can be particularly useful if you're operating an online subscription service. Other dunning tools will usually cost $100+ per month for their recovery rate features and collection options.
Use Dunning to Show Customers That They're Valued
While the main reason for undertaking the dunning process is generally to recover funds and restart a subscription, you can also use this as an opportunity to show customers that you care.
Instead of disgruntling customers and potentially losing their business by sending harsh or blunt messages, convince them that you care about them as a customer and want to keep their business. You can do this by reminding the customers of the benefits that they get from your service.
How to Evoke the Right Emotions
While it's important not to be too demanding and pushy in your dunning messages, you shouldn't use a neutral tone either. People receive neutral emails on a daily basis, so they often filter them out and forget about them. You want to sound both unique and like a real person for the best results.
Aim to show empathy in your dunning email. Customers may feel angry, frustrated, or even ashamed when they receive a message telling them that they owe money. By being empathetic, and not placing blame, customers will be better placed to deal with these feelings, and get the sense that you value their business.
They will be grateful for the reminder rather than angered by the inconvenience if you approach dunning in this way.
If you stick to these rules, you'll avoid sounding like a debt-collection agency that makes phone calls and be more likely to keep your subscription customers happy. By treating dunning as a positive customer service experience, you'll find plenty of additional benefits to the dunning process. Your customer base will appreciate you for it too.
It's a great way to form positive customer relationships, and they'll want to stay subscribed to your service.