What is the importance of Dunning feature in subscription billing?

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Answer
Prince Saini
Prince Saini
  • Answer written
  • 2 Years ago

Dunning is a simple yet cost effective process of automatically sending reminder notifications to your customers about past due accounts (aka dunning letters). It improves the efficiency of your business by helping you mitigate the time and resources lost from manually checking up on those delinquent accounts. Businesses with subscription billing tools automate this process and retry the card for a maximum of three times after the initial attempt to charge the card fails. After the third retry is unsuccessful, the subscription may be cancelled or left active and marked as unpaid. It is completely up to the business to decide what to do when a payment attempt fails and when to stop payment retries.

Dunning management refers to the ability of a recurring billing solution to manage complications of card payment declines. When the billing solution comes across a charge decline at an account, it will automatically send a notification to the customer informing him or her of the failed charge. Depending on the billing system that you are using, a charge may be retried again after a number of pre-determined days before the customer’s account is frozen. Dunning management is critical especially if you have or are anticipating a large user base.

Dunning Management for Your SaaS Business saves time on checking accounts with declined charges and increases the efficiency of your business. Instead of spending hours counter-checking and sending email reminders to customers whose credit cards have been declined, the billing system will do this for you.

Most recurring billing solutions in the market allow users to customize the actions that the billing software will take when a charge is declined at an account. You can customize the email communication that will be sent to the users of the affected accounts.

SaaS and other subscription based businesses know that reduced declined credit card errors result in lower customer churn. This is a key metric in any SaaS business and a good recurring billing software should optimize error/decline dunning prices to increase your revenues. Automatic charge retries lower your churn and increase revenues. Dunning management enables automatic charge retries of a declined card based on the settings you have chosen. For example, you can have a declined card re-tried after 3 days before you suspend a customer’s account.

Drafting an email to every customer with a declined charge can be time-consuming and is prone to mistakes. For example, think of the scenario where you have 100 emails to send and you mix them up? Customers will think you are unprofessional and this can hurt your current and future conversions. Dunning management will make your SaaS company appear professional by ensuring emails are delivered to the right accounts and at a time that you have scheduled.

Dunning management helps you keep records of the state of accounts and tells you the number of declined charges, renewed subscriptions, upgrades or suspended accounts. This helps you in your overall business strategy such as offering discounts or add-ons to customers.



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