11 Ways to Reduce Churn Rates by Keeping Customer Card Data Up to Date
Losing a customer can be devastating for any business. Losing them because of a credit card decline that comes from outdated information is just plain frustrating. Keeping credit card information current is a necessity for all business owners, yet it is a task that gets little attention.
With the expansion of e-commerce, customers can make online purchases quicker and easier than ever before. When credit card declines occur, customers need to be able to update and input information quickly. You should stay on top of their expired information and update it regularly to ensure all purchases go through seamlessly when your customer wants to buy.
Below, 11 entrepreneurs from YEC share their strategies for minimizing credit card declines and increasing online revenue.
1. Send Email Reminders
Have multiple payment options available. For customers who pay using their cards, send out friendly reminder emails in case the card is about to expire, ideally one month before the expiry date. If the account shows outdated information, remind them well in advance. Give them a grace period, if really necessary, to update their account information. Customers will feel appreciated.
2. Provide Other Payment Options
By offering other payment methods, such as digital wallets, e-cash, peer-to-peer payments, ACH and e-checks, there are ways to get around such churn rates. Plus the more payment methods offered, the more likely you are to retain and attract new customers, increasing your online revenue.
– John Rampton, Calendar
3. Encourage Digital Wallets
Encourage customers to use a digital wallet feature so they can update all their information across all companies they buy from in one action. This will keep them from returning and shopping with outdated account information.
4. Use a Payment Method Updater
Visa and MasterCard offer a service that automatically updates card information. Due to security measures, new cards are issued more frequently than ever before, making it inconvenient for your customers to constantly update card information. A payment method updater (PMU) can stop declined payments from happening, but this could still creep out your customer so get their permission first.
5. Use Recurly to Do the Work for You
Recurly has saved us thousands of dollars (and tons of following up). It’s a simple app that integrates with all e-commerce systems. When you sign up with Recurly, all of your repeat customers will be notified automatically when their cards are expiring. It’s a simple platform for customers, and anyone who intends to do business with you will find it easy to keep doing so.
– Aaron Schwartz, Passport
6. Give Them a Call
From my personal experience, the most effective way for a company to reach out to me and to get me to update or confirm my billing information is for them to give me a call. Email reminders are great too, but a phone call is even more effective.
7. Use Stripe
Stripe and some other payment processors have largely solved the problem of outdated cards. Stripe works with MasterCard, Visa and other credit card providers to ensure that customer cards still work after the card has been replaced. The system has limitations, but it takes care of many outdated card issues.
8. Fix the Problem Before It Happens
Fixing the problem before it happens is the only true way to avoid those declined cards. Reaching out to your customers before their cards expire will help you retain repeat customers for much longer than if you allow cards to be declined. Use payment technology that alerts merchants when a card stored in the system is about to expire, making it easy to update records and get paid.
9. Set Automated Expiration Date Detection Functionality
Have a basic script set up that automatically detects what cards are about to expire and sends the customer an email reminder to update their credit card information via a direct link. If you do not have this functionality, there are third-party solutions that provide similar functionalities. We use this with our e-commerce clients who have recurring products or orders.
10. Ask for a Backup Credit Card
Ask your customers for a backup credit card to keep on file in the event that charges cannot be put through on the primary card. Savvy companies like Google and Amazon asked me to input a backup credit card when I signed up for services such as Google AdWords and Amazon Prime. All recurring revenue businesses can and should be equally astute.
11. Offer Financing to Customers
A simple solution for avoiding failed credit card payments is to utilize services like Affirm or PayPal Credit. These services take on the credit risk and you receive the total order price upfront. The advantages to these services are that you decrease your accounts receivable and save time by not having to dedicate an employee to track down customers to update their credit card information.
Reduce Churn Rate by Implementing these Expert Tips
No one likes the thought of churn rates and the real numbers behind companies and how much money they are losing with subscribers or recurring subscription drops. However, this is part of the business industry and it’s something that needs to be addressed. If you are currently ignoring drop off rate within your company, be sure to implement some of the expert tips above while also checking out their recommended tools and solutions.
If you enjoyed this expert round up, I highly recommend you take a look at this roundup with 83 online marketing experts and their best advice on “How Do I Start a Successful Blog?“. If you don’t already have a website or blog of your own, follow my blogging guide to getting started with one today.
Wait... before you leave, consider these top resources: