How to Minimize Failed Payments with PayPal, Stripe & Authnet – Episode #33!
Welcome to Membership Site Lab - Episode #33!
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There are two types of churn - voluntary and involuntary churn. Voluntary churn occurs when your customers decide to no longer use your product or service. Figuring out the reason for cancellations and improving customer satisfaction will help you reduces cancellations that result in voluntary churn.
Involuntary churn occurs when a customer does not intend to leave!
Their subscription gets suspended or terminated because of failed payments, expired credit cards and other preventable reasons such as failing to update payment information. Businesses lose significant revenue every month due to involuntary churn. Reducing involuntary churn is actually one of the easiest ways to increase customer lifetime value.
Involuntary churn does not just impact your revenue, it negatively impacts your relationship with the customer as well because they lose access to the product or service they are actively using without even realizing that their payment failed or their subscription was suspended or terminated.
The 3 biggest causes of failed payments are:
1. Payment failure due to insufcient funds
2. Payment failure due to credit card limits
3. Payment failure due to credit card changes (e.g., expiration, replacement cards, etc.
How to Proactively manage involuntary churn !
In fact, 20-40% of churn is involuntary churn but the good news is... Involuntary churn is actually preventable!
You can easily minimize involuntary churn using the right tools and strategy. Each payment processor is different and they deal with failed payments differently.
Take a listen to this episode to learn how you can automate failed payment management that will allow you to minimize the friction customers may encounter during subscription renewals and will help drive down involuntary churn!
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