The Revnue lost of Payment Failures: Maximizing Revenues, Minimizing Churn

Jake V.

Sep 1, 2024

In today’s competitive market, attracting and retaining customers is more challenging than ever. Payment failures may seem like a minor disturbance but play a major role in your relationship with your customers. Experiencing payment issues simply because the credit card has declined is a frustrating experience for the customer but even more so for businesses. Even businesses with a fairly low payment failure rate could lose millions in revenue every year. Having said that, many businesses accept the loss and count it as a risk of using certain payment methods.

Costs of Payment Failures

Failing to collect payments on the first attempt results in losses in more ways than just missing money in the bank: it drains your revenue, wastes your team’s time as they chase down payments, and may even drive away customers who still want to use your products or services. Consequently, businesses can face significant revenue losses annually, even with relatively low payment failure rates. A closer examination of payment failures reveals that many of these losses can be prevented.

Preventing Payment Failures

Payment method

Selecting the appropriate payment method affects the success rate of payment collection directly. Certain payment methods have much higher failure rates compared to others.

Payment recovery method

When a payment fails, handling the recovery process efficiently can significantly reduce its impact on your business. Manually attempting to recollect payments often consumes time and resources, with success rates remaining relatively low and many payments remaining unrecovered. Additionally, unsuccessful recovery efforts can lead to customer churn. Forrester reports that 11-15% of failed payments can result in customer churn.

Businesses must adopt new technology to recover payments that fail on the first attempt and should focus on automating this process as much as possible. Solutions like FlyCode represent a new wave of innovation, using powerful machine learning and AI tools, marrying data science with business strategy to create tangible results.

Conclusion

Failed payments present a significant challenge for businesses on the first attempt and can result in more than just lost revenue: it can drain resources, consume valuable time, and drive away customers who still wish to engage with your products or services. By addressing payment failures proactively and automating payment recovery using advanced solutions, businesses can significantly mitigate the impact of failures, reduce costs, and minimize customer churn.