Secrets of Dunning Emails That SaaS Often Miss

Stop Customer Churn
Making your dunning emails a bit friendlier can spell the difference between recovery and churn. Read the following tips to have a higher open rate.
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Dunning emails are notorious for getting ignored in the mailbox. It’s a well-known and oft-quoted statistic that dunning software will only recover about 15% of the total number of billing failures. Most SaaS chalk this up to the cost of doing business. 

Here’s the problem with that approach. 


It doesn’t consider that beyond using other services like Gravy that uses a personalized and human approach in getting back your failed payments, there are some things that you can still do as a company in preparing dunning emails. 


Although not a comprehensive fix for your billing failures, dunning software is a great first step in fixing failed payments. 


Here are a few tips for your SaaS that might address billing failures, involuntary churn, and retention. 


What is a Dunning Process?

A dunning process is a payment recovery solution that uses an automated process to contact and remind customers about an unpaid subscription. Wikipedia says dunning is ‘the process of methodically communicating with customers to ensure the collection of accounts receivable.’ The root word of dunning is ‘dun.’ According to the Merriam-Webster dictionary, this means to make persistent demands for payments or to plague or pester. It makes sense that this task has been delegated to automation because it is very time-consuming and repetitive, not to mention a draining process.  


The dunning process starts with dunning emails. For every subscription-based business, the dunning emails are treated as the first line of defense and the automated sequence as the primary method of getting your payment back. It’s part and parcel of almost every subscription platform offered by specialty Saas companies like Recurly, Churn Buster, and Stunning.


Given that small businesses in the U.S. have around $825 billion worth of unpaid invoices and 81% of these invoices are over 30 days past-due, you can see the importance of having dunning letters, automated emails, and phone calls, or other churn-reduction software. But for the 15% of credit card failures that occur for all credit card transactions, did you know that 85% of dunning software emails remain unread, ignored, and deleted automatically? 


So what can you do to get those emails read? How can you write pre-dunning or dunning emails to retain more customers (and revenue) and even improve customer experience?


Most companies either have a scary demand letter or an obviously generated email with almost no effort to change even the subject line of the email. A common practice is just putting the company logo and signature without changing anything on the automated later. Some look like passive-aggressive written contracts that are mildly threatening, although they’re supposed to be a gentle reminder. This clinical and corporate approach might be affecting your numbers more than not sending any emails at all.


The Sender

The first quick change you can do to have a friendlier email is sending your email from a real person. Most email templates have retention@company.com or billing@company.com. Are you more likely to respond to an email from “Renee at Company,com” or “billing@company.com?” Based on a study by Pinpointe Marketing, email open rates go up to 15% higher when sent by a specific person than those sent from a generic email address. 


Companies are seen as more “human” and make your brand more trustworthy if subscribers receive emails from a name that feels like a real person. Customers are more likely to reply to this email if they have a question about their credit card payments or even how to update their billing information.


The Subject Line

The average person receives 121 emails per day, and they decide what they read with a glance at the subject line and the short preview text. Make the most of that line by using a compelling subject. 


The Body of the Email

Most people get a sinking feeling when they receive an overdue payment notification email. It’s slightly embarrassing, which is probably one of the top reasons they don’t get read. Dunning emails feel like debt collectors knocking on their doors. For those who are brave enough to open their emails, it can be even more mortifying when the email sounds like it’s been written by a humorless lawyer or, worse, a robot. 


It’s important to write empathetically and not sound accusatory. Especially, one of the biggest reasons for involuntary churn are credit card failures. 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.


Churn, payment fails, and payment failures for subscription businesses are usually caused by the following reasons:


  • Card expiry.
  • Credit card information such as card numbers keyed incorrectly.
  • The card has been reported stolen or lost.
  • The bank has blocked a transaction.
  • The bank believes that the transaction is fraudulent.
  • Insufficient funds


When asking people to update their payment details, an effective dunning email reminds subscribers that these are not just transactional emails. You are trying to reach out to them as a business owner wanting to make the process a better customer experience. Stay away from transactional messaging. Remind your clients about the benefits of your service when you’re asking to update their payment method, just in case they are thinking about cancellation or having second thoughts about renewing their subscription.


Email examples on the web briefly talk about a new feature or a customer success story. Most e-commerce businesses with subscription boxes shares blog posts with some quick tips for customer success.  Have a clear call to action with a prominent button to update their payment information. Tell people what you want them to do. As much as possible, do the heavy lifting to make it easy for customers to get their account in good standing again.


It might happen that despite your best efforts, customers don’t reply. It hurts, but send at least three follow-up emails over the course of a month. Prepare some tricks up your sleeve when making a follow-up. Change your messaging when retrying so it generates more urgency for payment such as discounts or offering things like “stay bonuses” and other deals that could help bring back a customer and improve customer relationship.


Conclusion

Dunning emails are part of life in recurring revenue businesses like Saas and subscription boxes, and following our tips will help you collect more revenue and reduce involuntary churn. You can recover those failed payments on Stripe, for example, and you can do it in a way that doesn’t sacrifice your brand, your standard of customer service, or your customer’s dignity. 


But here’s the bottom line. Your billing failure is always worse than you think it is. And if you don’t have a full-time focus on this, that is, a full-time person dedicated to relentlessly pursue any and all failed payments, then you are losing money. When you implement dunning software, it either works, or it doesn't. The software will send anything you want it to send, but if your recovery rates are low, the software will not try other solutions or tactics. It can only do what you instruct it to do. 


Gravy can help you do this. We can give you all the benefits of software, with the effectiveness of a full-time employee dedicated to recovering every single one of your billing failures. At Gravy, we don’t do automated dunning emails. We don’t sacrifice your customer lifetime value for metrics or a small recovered payment. We help you develop a sustainable strategy using proven tactics and systems to help you deal with failed payments once and for all.





Dunning emails are notorious for getting ignored in the mailbox. It’s a well-known and oft-quoted statistic that dunning software will only recover about 15% of the total number of billing failures. Most SaaS chalk this up to the cost of doing business. 

Here’s the problem with that approach. 


It doesn’t consider that beyond using other services like Gravy that uses a personalized and human approach in getting back your failed payments, there are some things that you can still do as a company in preparing dunning emails. 


Although not a comprehensive fix for your billing failures, dunning software is a great first step in fixing failed payments. 


Here are a few tips for your SaaS that might address billing failures, involuntary churn, and retention. 


What is a Dunning Process?

A dunning process is a payment recovery solution that uses an automated process to contact and remind customers about an unpaid subscription. Wikipedia says dunning is ‘the process of methodically communicating with customers to ensure the collection of accounts receivable.’ The root word of dunning is ‘dun.’ According to the Merriam-Webster dictionary, this means to make persistent demands for payments or to plague or pester. It makes sense that this task has been delegated to automation because it is very time-consuming and repetitive, not to mention a draining process.  


The dunning process starts with dunning emails. For every subscription-based business, the dunning emails are treated as the first line of defense and the automated sequence as the primary method of getting your payment back. It’s part and parcel of almost every subscription platform offered by specialty Saas companies like Recurly, Churn Buster, and Stunning.


Given that small businesses in the U.S. have around $825 billion worth of unpaid invoices and 81% of these invoices are over 30 days past-due, you can see the importance of having dunning letters, automated emails, and phone calls, or other churn-reduction software. But for the 15% of credit card failures that occur for all credit card transactions, did you know that 85% of dunning software emails remain unread, ignored, and deleted automatically? 


So what can you do to get those emails read? How can you write pre-dunning or dunning emails to retain more customers (and revenue) and even improve customer experience?


Most companies either have a scary demand letter or an obviously generated email with almost no effort to change even the subject line of the email. A common practice is just putting the company logo and signature without changing anything on the automated later. Some look like passive-aggressive written contracts that are mildly threatening, although they’re supposed to be a gentle reminder. This clinical and corporate approach might be affecting your numbers more than not sending any emails at all.


The Sender

The first quick change you can do to have a friendlier email is sending your email from a real person. Most email templates have retention@company.com or billing@company.com. Are you more likely to respond to an email from “Renee at Company,com” or “billing@company.com?” Based on a study by Pinpointe Marketing, email open rates go up to 15% higher when sent by a specific person than those sent from a generic email address. 


Companies are seen as more “human” and make your brand more trustworthy if subscribers receive emails from a name that feels like a real person. Customers are more likely to reply to this email if they have a question about their credit card payments or even how to update their billing information.


The Subject Line

The average person receives 121 emails per day, and they decide what they read with a glance at the subject line and the short preview text. Make the most of that line by using a compelling subject. 


The Body of the Email

Most people get a sinking feeling when they receive an overdue payment notification email. It’s slightly embarrassing, which is probably one of the top reasons they don’t get read. Dunning emails feel like debt collectors knocking on their doors. For those who are brave enough to open their emails, it can be even more mortifying when the email sounds like it’s been written by a humorless lawyer or, worse, a robot. 


It’s important to write empathetically and not sound accusatory. Especially, one of the biggest reasons for involuntary churn are credit card failures. 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.


Churn, payment fails, and payment failures for subscription businesses are usually caused by the following reasons:


  • Card expiry.
  • Credit card information such as card numbers keyed incorrectly.
  • The card has been reported stolen or lost.
  • The bank has blocked a transaction.
  • The bank believes that the transaction is fraudulent.
  • Insufficient funds


When asking people to update their payment details, an effective dunning email reminds subscribers that these are not just transactional emails. You are trying to reach out to them as a business owner wanting to make the process a better customer experience. Stay away from transactional messaging. Remind your clients about the benefits of your service when you’re asking to update their payment method, just in case they are thinking about cancellation or having second thoughts about renewing their subscription.


Email examples on the web briefly talk about a new feature or a customer success story. Most e-commerce businesses with subscription boxes shares blog posts with some quick tips for customer success.  Have a clear call to action with a prominent button to update their payment information. Tell people what you want them to do. As much as possible, do the heavy lifting to make it easy for customers to get their account in good standing again.


It might happen that despite your best efforts, customers don’t reply. It hurts, but send at least three follow-up emails over the course of a month. Prepare some tricks up your sleeve when making a follow-up. Change your messaging when retrying so it generates more urgency for payment such as discounts or offering things like “stay bonuses” and other deals that could help bring back a customer and improve customer relationship.


Conclusion

Dunning emails are part of life in recurring revenue businesses like Saas and subscription boxes, and following our tips will help you collect more revenue and reduce involuntary churn. You can recover those failed payments on Stripe, for example, and you can do it in a way that doesn’t sacrifice your brand, your standard of customer service, or your customer’s dignity. 


But here’s the bottom line. Your billing failure is always worse than you think it is. And if you don’t have a full-time focus on this, that is, a full-time person dedicated to relentlessly pursue any and all failed payments, then you are losing money. When you implement dunning software, it either works, or it doesn't. The software will send anything you want it to send, but if your recovery rates are low, the software will not try other solutions or tactics. It can only do what you instruct it to do. 


Gravy can help you do this. We can give you all the benefits of software, with the effectiveness of a full-time employee dedicated to recovering every single one of your billing failures. At Gravy, we don’t do automated dunning emails. We don’t sacrifice your customer lifetime value for metrics or a small recovered payment. We help you develop a sustainable strategy using proven tactics and systems to help you deal with failed payments once and for all.




Start Recovering
Failed Payments Today.
Start Recovering
Failed Payments Today.