We love them, we use them, we constantly optimize them, we can’t imagine business without them. Sales funnels drive our businesses, yet there is a forgotten sales funnel that goes largely unrecognized, and it is killing revenue in subscription-based businesses everywhere.
Did you know that you have a huge sales opportunity that sits at the back of your business? If you own a SaaS company, an information company, or any company that sells subscriptions, you may be leaving a lot of money on the table. Your churn rate will tell you just how much money that really is.
Your churn number is the amount of customers that opt out of your service or product each month. There can be a number of reasons for your customer to take their payment offline, but the majority of payment failures occur because of unintentional cancellations. This happens when a credit card declines. There are over a 100 ways for a credit card to decline. It could be because of insufficient funds, or an expired card, but regardless of the reason this presents a big, big problem for your business. Check out this study done by our friends at Recurly to see where your churn stacks up. The graph below is a quick look at the study Recurly did on Industry churn rates.
10-12% of all credit card transactions fail. Which means your business could be losing 10-12% of your topline revenue each year. If you knew that you could boost your sales by 10%, you would do it without question, right?! Well, that is the kind of opportunity that exists within the forgotten sales funnel.
Most businesses look at churn as a collections company would. They send short, harsh, and sometimes even threatening emails. But that is the wrong approach. You need to treat your churned customers like a marketing & sales opportunity. Here’s why. When your customer realizes that their payment has failed, this payment failure forces them to rethink their purchase, and they have to convince themselves that your product/service is worth their money. If they don’t recognize the value your business is giving them than the payment failure can become an intentional and irreversible cancellation.
So here is how to market the forgotten sales funnel. Here are 4 things you can do to give this part of your subscription-based business the attention it needs.
- Communicate The Value Of Your Product/Service: When your customer’s payment fails, your communication to them should remind them of why they bought your product to begin with. Recycle the marketing that you use on the front end, to make sure you get their payment back on-line. What problem are you helping them solve? Why do they need your product or service? Remind them that you are the answer to their problem.
- Send Personalized Communication: Automation is great. It helps us do a lot of things, but when it comes to communicating with churned customers, and recovering failed payments it is not the best option. Remember that your churned customer is now rethinking their decision to buy your product/service. The failed payment has forced them to reconsider the value of the subscription you offer. Do you really want to leave that delicate situation to an automated email? You shouldn’t. Personalized communication will help you to open a dialogue with your churned customer who will be far more likely to respond to personalized communication than any automated communication you could send.
- Don’t Be Pushy: Failed payments are frustrating. It can choke cash-flow, and be a real inconvenience. But your goal should be to keep this as only an inconvenience and not a permanently lost customer. The latter is worse by far, and can sink your profits. Be empathetic and remember to treat this as a new sales opportunity, instead of having a ‘collections’ mindset.
- Make It Easy To Get Back Online: You would never make it difficult or confusing for a lead to become a customer on the front-end of your business. The same principle applies to the back-end of your business as well. Keep it simple for them to renew, or update their credit card. Provide links, accurate payment information, and do as much of the work for them as you possibly can. This will dramatically increase your chances of saving the payment and keeping the customer you worked so hard to acquire.
Changing your mindset and embracing your failed payments as a marketing and sales opportunity will pay off big-time for your business. Learn to see your customer churn as new sales funnel and you will begin to add significant revenue back to your bottom line.
If you would like to learn more about this strategy, or if you think this strategy would be beneficial for your business, we’d love to talk with you about implementation. Book a free strategy call below, and let’s connect