What is a SaaS Payment Recovery Strategy?

A SaaS payment recovery plan is a comprehensive plan to recover lost revenue from failed or missed payments caused by issues like expired cards or insufficient funds.  The strategy works by first identifying a failed payment, then using an automated approach (like email reminders) to engage the customer, and finally resolving the issue by guiding them to update their payment information for a successful retry.

Involuntary churn, specifically unintended subscription cancellations, is observed to correlate with instances of failed SaaS payments.  This happens when a simple payment issue goes unresolved. 

You can prevent this with better billing practices, such as: 

• Sending reminders to customers regarding upcoming card expiration dates. 
• Using payment processors with auto-update features to get new card information automatically. 
• Implementing dunning strategies with varied retry times for failed payments may correlate with changes in payment processing outcomes. 

Automation tools are key to making payment recovery efficient and scalable.  They address routine tasks, which may lead to a decrease in manual labor and could affect success rates. 

Specifically, these tools: 

• Automated processes handle the sending of payment reminders and notifications. 
• Employing machine learning to manage retry schedules may affect the likelihood of successful completion. 
• Implement workflows with customizable features to enable the selection of accounts for prioritized attention.  

The process involves three direct steps: 

1. Notify the Customer: Immediately let them know about the failed payment and the risk of suspension. 
2. Offer Solutions: Provide a direct, secure link where they can update their information and offer multiple payment options. 
3. Retry and Reactivate: Once their information is updated, automatically retry the payment to recover the amount and instantly reactivate the subscription. 

For customers with multiple SaaS subscriptions or for managing widespread card updates, use a combination of technology and customer-focused strategies. 

• Automate notifications to prompt users to update their details via a single secure link. 
• Use account updater tools that work with banks to proactively refresh card information. 
• A payment system integrated with your CRM can facilitate the centralized observation of interactions and update attempts. 

To know if your SaaS payment recovery strategy is working, you must track the right metrics. 

The most important Key Performance Indicators (KPIs) are: 

• Recovery Rate: The percentage of failed payments that are successfully recovered.  This is the primary measure of your system’s effectiveness. 
• Reduction in Rotatividade Involuntária: Compare your involuntary taxa de rotatividade before and after implementing the strategy to see its direct impact on Retenção de clientes. 
• Time to Recovery: The average number of days it takes to collect a failed payment.  A shorter timeframe is associated with fluxo de caixa.
• Valor da Vida Útil do Cliente (LTV): Tracking the LTV of recovered customers demonstrates the long-term revenue impact of your efforts.