Failure Is Not An Option: Why Failed Payments Are Especially Harmful For Subscription Businesses

Just because failed payments are considered an inevitable cost of doing online business doesn’t mean that they should be taken lightly.

As Recurly’s recent study shows, the consequences can be numerous, expansive, and create various degrees of pain, part of a consumer experience as critical as any other on the subscriber life cycle.

“Hard consequences directly impact the business,” the report says in differentiating the hard consequences and soft consequences that its survey respondents faced from failed payments. “They include decreased customer lifetime value (65%), lost revenue (61%), and increased operational or technical costs to recover failed payments (31%). The soft consequences may be harder to measure but cannot be ignored.”

According to Recurly and Forrester’s survey of 163 brands, soft consequences included damaged subscriber relationships (which 53% reported), more challenging acquisitions (52%), and damaged reputation for the brand (45%). 

“Optimizing subscription business often means adapting payment and billing to different consumer needs or behaviors,” the report says, highlighting a lack of flexibility as the largest barrier with current subscription management technology. “This means that personalizing offers (a key component of any consumer subscription) is more difficult.”

(Source: Recurly)

69% of those surveyed said the lack of flexibility was their biggest challenge, followed by friction with multigateway orchestration (63%), lack of churn management capabilities (56%), lack of scalability (55%), and limited analytics (52%).

Subscription management software like ChargeBrite helps bring flexibility and automation to subscription services, with analytics and reporting capabilities tied directly to Mirabel Technologies’ AI-driven CRM platforms. Because, as Recurly’s report points out, customer relationships are on the line as much as revenue when failed payments are encountered and, worse, ignored.

“We know the moment of payment is emotionally charged, but it’s not about the payment itself,” says Recurly CMO Lina Tonk. “The most successful businesses know it’s about the consumer experience and the value being provided. Choosing a strategic and mature billing and payments partner is imperative to nurturing subscriber relationships and fortifying subscription growth.”