August 25, 2022 | Authored by: Rubi Cohen
The more your business grows, the more you lose?
No risk, no reward.
That’s a golden rule of life, and business.
For subscription businesses, there is no escaping it. The fact is, the more you grow your subscriber base, the more transactions you have, and that means you’ll have more failed transactions too. Particularly in today’s challenging market, when all players are focused on one thing – selling more – who gives a second thought to losing more? But it’s a simple fact, and you can’t sugarcoat the numbers. Credit card declines happen.
There’s no reason to be afraid of it though. Rather, it’s about understanding why transactions fail (because they inevitably do), and how to reduce the problem, so you can minimize the risk and maximize the reward.
Why transactions fail
Payment transactions fail for a variety of reasons. The customer’s credit card is out of date, and they haven’t yet updated their subscription account with the new numbers. Or perhaps there is an error in the credit card information they entered, such as the wrong expiration month. Another reason could be insufficient funds in the customer’s credit card account, because they switched banks, or rerouted the direct debit to another account, or perhaps they are simply strapped for cash. Another reason why payments fail is because a charge appears suspicious to the card issuer, and they reject the transaction due to possible fraud. All of these, and more, can and do happen on a daily basis to customers and businesses all over the world. There is nothing sinister about it, and it’s no one’s “fault.”
But it’s a big problem for subscription companies – both on the finance side and the marketing side – and it must be dealt with to maintain a healthy brand image and revenue stream.
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Beyond money troubles
For the finance side of the business, it’s pretty obvious why failed transactions are such a thorn. When a transaction fails, that’s less revenue in the bank right now, and it is also a block against future revenue. It’s an immediate problem that has to be dealt with, and it happens every day, over and over again. But there’s another side to failed transactions, one that plagues the marketing side of the business. Failed transactions can seriously hurt your brand.
Failed transactions are a brand fail
For CMOs, failed transactions are not just a money problem but a branding problem. Customer experience and expectations are part of the brand ecosystem. In short, a failed transaction is not a good look. Customers want to feel safe, secure, and taken care of. They want subscriptions to be easy and hassle free. They don’t want to think about paying – the automated nature of the subscription transaction is one of the reasons it is so comfortable and convenient. For the marketing side of the business, it is such a shame to spend so much time, energy and budget building up brand awareness, carefully crafting a strong brand image, and securing your brand position in a tough marketplace, only to have that work torn down because of an outdated credit card number.
Failed transactions are a fact of life. Let’s deal with it together.
Every subscription executive wants their customers to stay connected. Every CRO wants transactions to go smoothly and ensure the revenue stream they’ve worked so hard for. And every CMO wants to offer the very best customer experience, and that includes the payments and transactions too.
Recurring failed transactions, also called “passive churn,” are a fact of business, Vindicia Retain is designed specially to recover lost revenue from those failed transactions. Reward comes with risk. At Vindicia, we know the risks of failed transactions, and we know how to solve them. And we can help you face them and overcome them too.
How to retain subscribers in today’s post-pandemic environmentDownload