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:

1. Retry Logic:
   • Immediate Retry: Attempt to charge the card immediately after the first failure.
   • Subsequent Retries: Schedule multiple retries over a period 
2. 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:

1. Transparent Communication: Clearly explain the issue and the steps needed to resolve it.
2. Self-Service Options: Provide easy access to update payment information through a user-friendly portal.
3. 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:

1. Personalisation: Address users by their names and mention specific subscription details.
2. Clarity: Use simple and direct language to explain the issue.
3. Call-to-Action: Include a prominent link or button to update payment information.
4. Frequency: Start with gentle reminders and gradually increase the urgency.
5. Segmentation: Tailor messages based on user behaviour and engagement.

Email Set-Up

To ensure your emails are delivered and not marked as spam:

1. DKIM and SPF: Implement DomainKeys Identified Mail (DKIM) and Sender Policy Framework (SPF) to authenticate your emails.
2. Monitor Bounce Rates: Regularly clean your email list to remove invalid addresses and reduce bounce rates.
3. 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:

1. Reduction in Passive Churn: Companies can see a 10-30% reduction in passive churn by implementing effective dunning strategies.
2. Recovery Rate: Track the percentage of accounts successfully recovered through dunning efforts.
3. Retry Success Rate: Measure the success rate of payment retries to optimise retry schedules.
4. 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. 

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