Master dunning management to reduce recurring revenue leakage (FAQs answered)

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Subscriber churn is an unavoidable obstacle to every business that employs recurring billing, but how much does it really contribute to revenue leakage? As it turns out, quite a lot. The average subscription service loses approximately 2% of customers each month due to expired credit cards that aren’t updated. That’s a little less than a quarter of subscribers lost every year due to a one source of involuntary churn.

Voluntary or active churn occurs when a customer consciously decides to cancel their subscription, whereas involuntary or passive churn results from something outside of the customer’s control blocking their ability to pay for their subscription. Asides from expired credit cards, other factors that contribute to involuntary churn include spending limits, insufficient funds, payment gateway issues, and cancelled credit cards.  

Fortunately, there is a way to reduce involuntary churn—dunning is the process of communicating with customers to recover revenue that would otherwise be lost due to failed payments. Whether you’re trying to ramp up your monthly or annual recurring payments or implementing a SaaS billing model for the first time, effective dunning management will be key to maintaining positive customer relationships and significantly increasing your monthly recurring revenue (MRR).  

The full blog empowers you to manage involuntary churn and mitigate revenue leakage by answering the following frequently asked questions about dunning: 

  • What is dunning? 
  • What is a dunning letter? 
  • What is the difference between voluntary and involuntary churn? 
  • Why do SaaS companies need dunning management? 
  • What is pre-dunning? 
  • When is pre-dunning appropriate? 
  • What is automated dunning management? 
  • How does automated dunning management reduce involuntary churn? 

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