How Effective is Your Dunning Strategy? Recurly Analytics Has the Answer.

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Churn Best Practices dunning

Churn-Management-Blog.pngAs we have discussed in the first and second blog in this series, dunning is a key process for maximizing revenue, and Recurly offers flexible tools to help you develop and manage your dunning strategy. In particular, Recurly users can set:

  • the length of their dunning cycle
  • the number and cadence of emails sent to subscribers
  • how to handle the invoice and the subscription if no payment is made by the end of the dunning cycle

While the second blog outlines general dunning best practices, there are still a lot of choices when it comes to determining your dunning settings. For example:

How do you know your dunning strategy is as effective as it could be at recovering past-due invoices?

There are several ways to measure whether you are maximizing recovery and reducing involuntary churn.

Invoice Recovery Rate
Of the invoices that go past-due, what percentage are ultimately recovered before the customer churns?

Revenue Recovered
Of the invoices that go past-due, what is the total amount of revenue recovered before the customer churns?

Subscriptions Saved
Of the invoices that go past-due, how many subscriptions associated with those invoices are recovered before the customer churns?

New Dunning Effectiveness Report provides insights

Recurly Analytics now has a report that provides insights into all three of the above metrics and helps our customers evaluate the efficiency of their current and previous dunning settings. This new Dunning Effectiveness Report report is available to Recurly customers on our Professional and Enterprise plans.

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With the new Dunning Effectiveness report, subscription businesses can answer critical questions to help reduce involuntary churn and maximize revenue, such as:

  • How much revenue is “at risk” from past due invoices each month?
  • How much of that revenue is recovered before the subscriber churns?
  • How much of this recovered revenue is due to proactive customer updates vs. Recurly’s optimized retry logic?
  • How many subscriptions are saved during dunning in each plan?
  • When, during the dunning cycle, are you recovering the most invoices? And how is this recovery impacted by the timing of  dunning emails that are sent to customers following a decline?

By having easy access to metrics that answer these questions, Recurly customers can confidently test and optimize their dunning strategy, knowing they can easily review the data to monitor  the impact of any changes.

Let’s take an example test:

  • Using the Dunning Effectiveness report, you see that your business is recovering 50% of all invoices that go past due using a 10-day dunning cycle.   
  • Additionally, you determine that you recover 10% of all past-due invoices during the last few days of your dunning cycle.

This is an indicator that your business should try lengthening the dunning cycle by a few days—because it’s possible that you are losing out on revenue that could still be recovered!

Then, using the Dunning Effectiveness Report, you’ll be able to measure the overall effect this change has on your recovery rate as well as how much revenue was specifically recovered during those extended days.

If you do see a lift in recovery due to that change, then you’ll also want to answer the question, “Is this lift in recovery more than the cost of keeping my service (or product) available to subscribers for those extra days?”   

This type of experimentation and iteration is valuable in identifying a dunning strategy that works best for your business.  

Managing declines, maximizing revenue

Managing declines doesn’t have to be a mystery. Recurly understands that preventing declines from becoming involuntary churn is crucial in order to maintain a sustainable acquisition to lifetime value ratio and keep healthy customer relationships.

It can be frustrating to see revenue lost from something that CAN be prevented. In addition to automatically taking steps to prevent or remediate declines, with the new Dunning Effectiveness report Recurly also provides visibility into the metrics crucial for setting a successful dunning strategy.

 

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