I have a confession to make: I almost lost one of my favorite SaaS products because of a failed payment.

It was a tool that I used every day for my work, and I loved it. But one day, I got an email saying that my subscription had been canceled due to a billing issue.

I was shocked and confused. How could this happen? I checked my bank account and saw that I had enough money. I checked my credit card and saw that it was valid and not expired.

But then I realized: it was an old card that I had replaced months ago. And I had forgotten to update it on the tool’s website.

I felt stupid and guilty. How could I be so careless? How could I let this happen?

I quickly logged in to the tool’s website and updated my card information. Luckily, they had a grace period of 30 days before they deleted my account. So I was able to restore my subscription and continue using the tool.

But what if they didn’t have that grace period? What if they deleted my account right away? What if they didn’t send me that email?

I would have lost all my data, all my settings, all my preferences. And I would have lost a product that made my life easier and happier.

That’s how serious failed payments are for your SaaS business. They can cause you to lose customers who love your product and don’t want to leave.

And they’re not just a rare occurrence: they can account for up to 50% of your total churn.

But don’t despair: there’s a way to stop this leakage and keep more of your hard-earned customers. It’s called automated failed payment recovery.

What is automated failed payment recovery?

Automated failed payment recovery is the process of using software tools to automatically retry failed transactions, send email reminders to customers with expired or invalid cards, and offer alternative payment methods if needed.

The goal is to reduce involuntary churn (or passive churn), which is when customers leave your product not because they don’t like it or need it anymore, but because of billing issues.

Involuntary churn is the easiest type of churn to prevent since these customers are still happy with your product and don’t intend to cancel. They just need a gentle nudge (or sometimes a friendly shove) to update their payment information and resume their subscription.

Why should you care about automated failed payment recovery?

Automated failed payment recovery can have a huge impact on your bottom line. According to Churn Buster, a leading tool for recovering failed payments:

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Up to 70% of failed payments can be recovered automatically by retrying them at optimal times and frequencies.
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Another 10-20% can be recovered by sending well-designed and timely email campaigns that remind customers to update their cards or switch to another payment method.
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The remaining 10-20% can be recovered by offering incentives such as discounts or free months for updating their cards or contacting support.

That means that if you have 100 customers who fail to pay every month (which is not uncommon for SaaS businesses), you could potentially save 80-90 of them by using automated failed payment recovery tools.

That’s a lot of revenue that would otherwise be lost forever.

How do you implement automated failed payment recovery?

There are two main ways to implement automated failed payment recovery:

  1. Use a billing platform that has built-in features for handling failed payments
  2. Use a dedicated tool that integrates with your existing billing platform

The first option is simpler and cheaper but may not offer as much flexibility and customization as the second option.

Platform Smart Dunning Email Notifications Card Updater Multiple Payment Gateways Account Updater
Chargebee Yes Yes Yes Yes No
Recurly Yes Yes Yes Yes Yes
Stripe Billing Yes Yes Yes Yes No

Some examples of billing platforms that have built-in features for handling failed payments are:

  • Chargebee: A subscription management platform that offers smart dunning (retry logic), email notifications, card updater service (automatically updates expired cards), multiple payment gateways (Stripe, Braintree, PayPal etc.), and more.
  • Recurly: A subscription billing platform that offers dunning management (retry logic), email notifications, card updater service (automatically updates expired cards), multiple payment gateways (Stripe, Braintree etc.), account updater service (automatically updates customer information such as address and phone number), and more.
  • Stripe Billing: A billing platform that offers automatic card retries, email notifications, card updater service (automatically updates expired cards), multiple payment methods (credit cards, ACH, Apple Pay etc.), smart invoices (generate invoices based on usage or events), and more.

The second option is more complex and expensive but it may offer more control and personalization over the recovery process.

Some examples of dedicated tools that integrate with your existing billing platform are:

Tool Optimized Retry Schedules Customizable Email Campaigns Landing Pages SMS Notifications Human Intervention
Churn Buster Yes Yes Yes Yes Yes
Stunning Yes Yes Yes No No
Baremetrics Recover No Yes Yes No No
  • Churn Buster: A tool that specializes in recovering failed payments by using optimized retry schedules, customizable email campaigns, landing pages (where customers can update their cards without logging in), SMS notifications (for urgent cases), human intervention (where Churn Buster’s team contacts customers on your behalf), and more.
  • Stunning: A tool that helps you prevent and recover failed payments by using smart retries, email notifications, in-app notifications (where customers can see their billing issues inside your app), push notifications (for mobile apps), dunning pages (where customers can update their cards without logging in), and more.
  • Baremetrics Recover: A tool that helps you reduce churn by recovering failed payments using email campaigns, in-app messages (where customers can see their billing issues inside your app), dunning pages (where customers can update their cards without logging in), and more.

Which option should you choose?

The answer depends on your specific needs and preferences. Here are some questions to consider when choosing between a billing platform with built-in features or a dedicated tool for failed payment recovery:

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How much control do you want over the recovery process? Do you want to customize the retry logic, the email templates, the landing pages, etc.?
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How much personalization do you want to offer to your customers? Do you want to segment them based on their behavior, their plan, their location, etc.?
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How much integration do you need with your existing systems? Do you want to sync data with your CRM, analytics tool, email service provider, etc.?
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How much support do you need from the tool provider? Do you want to have access to a dedicated account manager, a customer success team, a 24/7 chat support, etc.?

There’s no one-size-fits-all solution for automated failed payment recovery. You have to weigh the pros and cons of each option and decide what works best for your business.

Failed payments are a silent killer of SaaS businesses. They can cause up to 50% of your total churn and cost you thousands of dollars in lost revenue every month.

But they don’t have to be. You can use automated failed payment recovery tools to save and keep most of these customers happy and loyal.

Whether you choose a billing platform with built-in features or a dedicated tool that integrates with your existing platform, you’ll be able to plug this revenue leak and grow your business faster.

Don’t let failed payments ruin your marathon. Take action today and start recovering more revenue from your SaaS customers.