Enhancing SaaS Retention: Dunning Strategies to Minimise Passive Churn
In the video streaming subscription business, retaining customers is as crucial as acquiring new ones. Passive churn, often caused by failed payment methods, can silently erode your customer base. Addressing this issue with effective dunning strategies can significantly enhance retention rates and boost your bottom line. This blog post explores passive churn optimisation, focusing on dunning retry strategies, the user journey, email communication, and key metrics.
Understanding Passive Churn
Passive churn occurs when customers unintentionally stop using a service, often due to payment failures. Unlike active churn, where users voluntarily cancel their subscriptions, passive churn is usually a result of mainly insufficient funds or expired credit cards. Addressing passive churn can save a substantial portion of revenue without the need for aggressive marketing or customer acquisition efforts.
Dunning Retry Strategies
Dunning refers to the process of retrying failed payments and communicating with customers to resolve payment issues. Effective dunning strategies can reduce passive churn by up to 30%. Here’s how to implement them:
- Retry Logic:
- Immediate Retry: Attempt to charge the card immediately after the first failure.
- Subsequent Retries: Schedule multiple retries over a period
- Communications:
- Pre-Dunning Emails: Notify users before their payment method expires.
- Post-Failure Emails: Send a series of emails after a payment fails, starting with a gentle reminder and escalating to more urgent language.
- Payment Success Notification: Confirm successful payments after retries.
The User Journey
Optimizing the user journey during the dunning process involves clear communication and a seamless experience:
- Transparent Communication: Clearly explain the issue and the steps needed to resolve it.
- Self-Service Options: Provide easy access to update payment information through a user-friendly portal.
- Support Access: Offer quick access to customer support for users who encounter difficulties.
Effective Email Content
Email communication is crucial in dunning processes. Here are tips for crafting effective emails:
- Personalisation: Address users by their names and mention specific subscription details.
- Clarity: Use simple and direct language to explain the issue.
- Call-to-Action: Include a prominent link or button to update payment information.
- Frequency: Start with gentle reminders and gradually increase the urgency.
- Segmentation: Tailor messages based on user behaviour and engagement.
Email Set-Up
To ensure your emails are delivered and not marked as spam:
- DKIM and SPF: Implement DomainKeys Identified Mail (DKIM) and Sender Policy Framework (SPF) to authenticate your emails.
- Monitor Bounce Rates: Regularly clean your email list to remove invalid addresses and reduce bounce rates.
- Track Open and Click Rates: Use analytics to measure the effectiveness of your emails and adjust strategies accordingly.
Statistics and Impact
Applying these dunning strategies can have a significant impact on your SaaS business. Here are some key statistics and metrics to consider:
- Reduction in Passive Churn: Companies can see a 10-30% reduction in passive churn by implementing effective dunning strategies.
- Recovery Rate: Track the percentage of accounts successfully recovered through dunning efforts.
- Retry Success Rate: Measure the success rate of payment retries to optimise retry schedules.
- Email Engagement: Monitor open and click-through rates of dunning emails to gauge their effectiveness.
Optimising passive churn through strategic dunning retry processes is essential for maintaining a healthy subscription service. By focusing on transparent communication, personalised email content, and effective email setup, businesses can significantly reduce passive churn and improve retention rates. Magine Pro provides a set of tools, that allow for configurable retry strategies, and fully customisable dunning emails to manage your brand and user call to action.
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Interested in diving deeper into reducing churn? Download our latest white paper, ‘The Profit Playbook,’ for valuable insights into strategies that reduce churn and ensure long-term revenue maximisation. Additionally, explore ‘The Essentials of OTT Monetisation,’ our e-guide that delves into the intricacies of subscription, transactional, and advertising models.
If you’d like to discuss monetisation models further or explore the capabilities of Magine Pro’s advanced billing engine and dunning feature, connect with our experienced team. Visit our blog for more resources and explore our entire collection of white papers available for download. Stay updated with the latest news, events, partnerships, and product announcements by subscribing to the Magine Pro e-newsletter.
Takeaways from CES 2024 for video service providers
The annual Consumer Electronics Show (CES 2024) always grabs global headlines with eye-catching new gadgets and ever-expanding TV screen sizes. This year was no different, with acres of coverage for LG and Samsung’s new transparent TV screens, the latest virtual reality concepts, and robots that will make you anything from a cocktail to a stir-fry.
But, like the bright lights and razzmatazz of the host city, Las Vegas, the show-floor glitz of CES 2024 is largely a temporary distraction for the video entertainment industry. Behind the scenes, there are serious conversations about the future of streaming. So what were video service providers really talking about at CES 2024?
Magine Pro’s Sales Director, Neil Fender, at CES 2024.
Interest in AI is becoming more targeted
Just as we saw at IBC and NAB in 2023, Artificial Intelligence (AI) continued to be a major buzzword. Our CEO, Matthew Wilkinson, touched on this important topic in his recent blog on Large Language Models and Generative AI. But the partners and customers (both current and future) that I spoke to in Las Vegas are increasingly focused on the practicalities of deploying this constantly evolving technology. They’ve gone beyond wondering how AI might revolutionise the industry in the future, to looking at very specific use cases that will advance their short-term goals, not just their longer-term planning.
With consumers around the world becoming increasingly cost-conscious, churn is a massive area of focus for every streaming service, no matter what combination of business models they’re using. The video services I spoke to are looking for a strong and immediate return on investment for any foray into AI. In particular, they want it to keep consumers engaged so they’re less likely to look elsewhere for content. The benefits of offering personalized content recommendations are the most often-cited strategy for growing engagement, so it was a pleasure to be able to talk about the AI-powered recommendation capabilities in Magine Pro’s end-to-end OTT streaming platform .
I was also happy to talk through some of the tactics that have paid dividends for our existing customers when tackling churn. For example, the “dunning” functionality in our advanced billing engine enables them to systematically communicate with consumers whose payment methods have expired or failed. This proactive strategy prevents passive involuntary churn, minimising customer loss and ensuring a positive user experience. Another proactive approach is to automate “win-back” strategies. This means offering targeted discounts to certain users who have recently churned, or shown signs of being a flight-risk, to help keep them on-board.
We’ll have more about these tactics in our upcoming e-guide on advanced OTT monetization strategies. Register now to be among the first to get the guide, which will also explain some of the reasons we champion hybrid monetization models.
No moving out of the FAST-lane
I don’t think anyone was surprised to find that FAST – another of the biggest streaming trends of 2023 – was still a hot topic at CES. The low barriers to entry mean that FAST channels continue to be the most popular route into the streaming market for content owners, particularly in the US market.
The FAST trend I heard most about at CES, however, was those who’ve dipped a toe into streaming with FAST channels via aggregation platforms like Roku, Amazon, LG, and Samsung and now want their own suite of streaming apps to build a direct relationship with consumers. We had some excellent conversations at CES with technology partners and customers about how we can help them make that ambition a reality with the Magine Pro OTT platform because it’s quick and easy to launch, but also customizable so it can grow with their business.
Want to know more?
If you weren’t able to make it to CES 2024, you can book a meeting with our team to talk about how AI recommendations could improve your engagement, or how Magine Pro can elevate your content distribution and monetization strategies.