Looking back at the good old print times when the main product was the subscribed print newspaper, many things seemed easier. One of the things was invoicing. In Finland, it usually happened one to three times a year with a printed, posted invoice, which was usually paid on time.
Now, with digital subscriptions, payments are gathered via payment cards or digital wallets. These certainly have their advantages, but the new era of subscription payments also demands a totally new kind of know-how in the media organisation.
The involuntary churn — when recurring payments fail — is considered somewhere between 30%-40% of all churn. It typically happens due to insufficient funds, card limits or restrictions, technical failures, and other reasons beyond the customer’s choosing, resulting in suspension or termination of the subscription.
Nevertheless, many of us recognise that not all involuntary churn is actually unintentional: As a savings method, a share of consumers deliberately let their cards expire or just end all the recurring payments in their wallet solution.
Considering voluntary churn still makes up the majority of subscription churn, it is not surprising that preventing it is more likely to be prioritised. Involuntary churn can seem to be difficult to influence but it is definitely worthwhile.
When preventing involuntary churn, customer communication is obviously crucially important. The customer needs to be reminded in every channel when payment cards is about expire. Adding wallet solutions like PayPal, Apple Pay, and Google Pay to the payment selection may tackle the problem of expiring cards as consumers are more likely to add renewed card information to the wallet that is a single service.
But a lot more can be achieved with technical solutions. I guess many of us have built a retry logic to resolve temporary issues of failing payments, but even this logic needs to be checked from time to time: Is the transaction retry logic still efficient? Is it in line with card scheme policies?
Similarly automated expired card extensions can help increase approval rates for credit card payments.
In markets where the service is available, automated credit card account updates are probably one of the most efficient methods to prevent involuntary churn. Unfortunately, the service is not yet offered in every country and the cost level might be too high for a smaller media organisation.
To understand what is behind involuntary churn, one must get behind the failure codes that card schemes, payment acquirers, and service providers use. This can be jungle, but without this insight, it is hard to find the right solutions.
Overall, building and maintaining efficient recurring payment processes is a great challenge, particularly for smaller publishers. There is definite demand for knowledge share and even consultation.
Many media organisations, even with large subscription bases, are still quite small as online merchants, and it is sometimes hard to get help from payment acquirers or service providers. Tackling involuntary churn is a struggle but even small improvements over time can turn into significant gains to the bottom line.