Most companies treat dunning emails like written contracts. This no-nonsense, corporate approach could be doing more damage than not sending any emails at all.
It’s important to note that dunning emails shouldn’t be your first line of defense. The best way to proactively fight churn is with a data-driven retry strategy like ours. Dunning emails come in after that, as a failsafe.
In this post, we are sharing six tips for how you can write dunning emails to retain more customers (and revenue) and even improve customer experience.
In our glossary article, we define dunning as:
“the process of methodically communicating with customers to ensure the collection of accounts receivable. In other words, it’s the process of retrying unsuccessful payment transactions. This can be done automatically or manually, and might involve a “dunning discount” (which a merchant grants a customer in exchange for the balance being paid off, instead of being left unpaid).”
Most business owners think failed payments are intentional because customers don’t want to pay their bill. However, this is usually not the case. There are dozens of reasons why a card is declined. Most failed payments are accidents, happening because of things like:
- An expired debit or credit card
- Got a new credit card, but forgot to update it on their account
- Their credit card was lost or stolen
- New billing address
- Hit their credit card limit
- Simply forgot (i.e. vacation, got busy, etc)
Did you know the average person receives 121 emails per day? Most people decide whether or not to open an email based on the subject line and preview text – i.e. the one line of text that shows up in your inbox.
Here are a few tips on how you can make the most of that space:
- Use a compelling subject line
- Optimize preview text
- Tell people what you want to do, such as the two examples above from Amazon and GoDaddy
Are you more likely to respond to an email from “Bob at Company XYZ,” or “firstname.lastname@example.org?”
According to a study by Pinpointe Marketing, companies that send emails from a specific person – such as Bob at Company XYZ – see email open rates that are 15% higher than ones sent from a generic address or worse, a “no-reply” email.
When customers receive an email from a real person like Bob, it makes your brand seem more accessible and builds trust. Because they know the email was sent from a real person, they will be more likely to reply to this email if they have a question.
Receiving an overdue payment notification email can be embarrassing, and that feeling isn’t helped when the email has a robotic or corporate-sounding tone.
As you may recall, the biggest reasons that dunning occurs are involuntary, like an expired credit card or a new billing address. The more friendly and empathetic you can be in your email, the more likely the recipient will respond positively and stick around as a paying customer.
It is helpful to remind people of the benefits that they are receiving whenever you ask them to re-input their payment information to keep them from having second thoughts about renewing their subscription.
Use the P.S. section at the bottom of an email to include a quick tip or key benefit such as:
- Talking about a new feature
- Including a link to a customer success story
- Sharing a blog post with some quick tips
With any email, the clearer the call-to-action (CTA) is, the more likely someone will complete it. Dunning emails are no exception.
Here are some good rules-of-thumb:
- Include a prominent CTA button to update their payment information
- Provide short, how-to style instructions right within the email body
- If for some reason, this process will take someone longer than a minute to complete, set the proper expectations within the email copy.
If you don’t hear back right away, send at least three follow up emails over the course of a month. The first follow-up email should be a few days later.
With each follow-up email, you can change up your messaging to employ more urgency and FOMO (i.e. fear-of-missing-out) tactics.
The simplest way to do this is to add urgency in the subject line like this example from StrongVPN.
However, a more creative and less abrasive approach would be to consider sending some of the follow-up emails from the founder or CEO’s email address. You can even ask for feedback within these emails.
We often refer to churn as a hole in your business’ bucket that customers can leak out of. If that’s true, then strong dunning emails catch those customers as they leak and put them back in the bucket. Dunning emails are part of life in a recurring revenue business, and following our six tips will help you collect more revenue and reduce involuntary churn.
The best approach to churn is one that also attempts to plug the hole in the leaky bucket, before the customers have a chance to exit. Want to learn how? Download our free Retry Strategy guide and learn exactly how to use data like decline codes and card types to decrease churn and increase your customer lifetime value by a minimum of 43%.
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