You’ve just taken a look at your aging receivables and the situation isn’t pretty. Around 3% of your revenue is leaking away each month due to unpaid invoices.
Of course, you could cancel the delinquent accounts and forfeit those customers—and the potential recurring revenue. But it makes a lot more business sense to take a different and more proactive approach.
Enhancing your collections assurance can often come down to improving the communication between you and your customers. Its about using the right tools and language to create an optimized dunning management strategy.
Many modern billing platforms offer automated dunning communications—email and text messaging triggered by billing related events like an impending credit card expiry or a failed payment. These can help you ensure payments succeed and revenue is recovered, all without requiring your billing team to spend hours chasing down customers.
Some platforms even supply templates to work with. However, templates can’t do everything for you.
Even messages that are sent automatically need to be crafted with care and precision to ensure they’re effective.
With the right content, you can create automated dunning messages that not only help to resolve your collections issues and the resulting revenue leakage but also stave off both voluntary and involuntary churn.
After all, whether a customer leaves because they want to or because their account gets canceled, the negative impact on your monthly recurring revenue (MRR) remains the same.
Perfecting The Art of a Dunning Email
The average person gets more than a hundred emails a day. At that volume, your first challenge is creating a message that will even get opened.
To stand out, you need to make sure your subject line is grabbing enough to get noticed. Ideally, the words you choose will alert the recipient to the nature of the situation right away.
For example, “Action Needed: Payment Failure,” is a clear subject line that has a good chance of standing out against the daily deluge.
Once the customer opens the email, the contents will not only determine their odds of action but it will also likely color your relationship with them going forward. Choose your words carefully.
- Be friendly: The customer may or may not even know there’s a problem with their payment method. Either way, you want them to take action and you want to avoid damaging the relationship. You’re delivering bad news, so kindness counts. And 68% of customers feel politeness is key to great customer service.
- Make it as easy as possible: The fewer steps it takes to solve the problem, the more likely it is the customer will take immediate action. Be sure to link clearly to a self-service portal where the customer can update their payment information or make their delinquent payment. A good call to action (CTA) can increase email engagement by up to 371%.
- Make it personal: Emails sent from a real person (as opposed to a business) get opened up to 35% more often. You can significantly improve your odds of payment retrieval simply by sending your emails from a customer service representative’s account.
The Value of Dunning by Text
The best message in the world won’t matter if it never gets seen.
Text communication can be significantly more effective than email. About 98% of all text messages are opened. Of those, 90% are read within three minutes.
Additionally, an impressive 75% of people say they’re a-okay communicating with the brands they use via text.
Keep in mind there’s a 160 character limit for single SMS messages, so texts need to be short and engaging. Ideally, your message will greet the customer, alert them to the problem, include any pertinent details like the specific outstanding amount, and then direct them to where they can immediately address the issue.
In all cases, an effective SMS dunning campaign should encompass the following.
- Be built on a foundation of trust
- Include that call to action
- Stay on brand
The Transformative Effect of Good Dunning Communications
There’s a natural tension that enters into the equation where dunning is concerned. It’s very easy to perceive a failed payment as a purposeful offense. But more often than not, it’s just a mistake.
Insufficient funds, a new credit card, or any number of other facts of life can all lead to a momentary lapse in the customer’s ability to pay.
Remember that a great dunning message is worth significantly more than the outstanding amount it tries to collect. Involuntarily churning out customers that want to stay ends a relationship that might otherwise have gone on for years.
The right text or email can ensure collections happen smoothly while reducing churn and stabilizing MRR.
Quick FAQs about Dunning Message
Q: What is a dunning message?
A dunning message is a communication sent to customers to remind them of a due payment. It usually takes the form of an email or text message and is often automated by modern billing platforms.
Q: How can a dunning message help improve collections assurance?
By using the right tools and language, a dunning message can optimize communication between a business and its customers, leading to better collections assurance. It can help resolve collections issues, recover revenue, and prevent both voluntary and involuntary customer churn.
Q: What are some tips for crafting an effective dunning message?
An effective dunning message should be friendly, easy to understand, and personal. Avoid damaging the customer relationship by delivering bad news with kindness. Link clearly to a self-service portal where the customer can take immediate action. Personalize the email by sending it from a customer service representative’s account.
Q: How can the subject line of a dunning message improve its effectiveness?
Ensuring the subject line is attention-grabbing can improve the chances of the message being opened. The subject line should alert the recipient to the situation at hand, for example, “Action Needed: Payment Failure”.
Q: How does text communication compare to email for dunning messages?
Text communication can be significantly more effective than email for dunning messages. Around 98% of all text messages are opened, and 90% are read within three minutes. However, texts have a character limit and need to be short and engaging.
Q: What should be included in an SMS dunning campaign?
An effective SMS dunning campaign should be built on a foundation of trust, include a clear call to action, and stay on brand. It should greet the customer, alert them to the problem, include pertinent details like the outstanding amount, and direct them to where they can immediately address the issue.
Q: How can a dunning message help prevent involuntary customer churn?
A well-crafted dunning message can help collect outstanding payments while reducing churn and stabilizing Monthly Recurring Revenue (MRR). By addressing payment issues without ending the customer relationship, businesses can retain customers that might have been involuntarily churned out.
Q: What should a business consider when using automated dunning messages?
While automated dunning messages can save time and improve efficiency, they should still be crafted with care and precision to ensure effectiveness. Messages should not only aim to resolve collections issues but should also consider the impact on the customer relationship.
Q: Can customer service be improved with the right dunning message?
Yes, a properly crafted dunning message can enhance customer service. Studies show that 68% of customers feel politeness is key to great customer service, which can be incorporated into dunning messages.
Q: Should a dunning message include a call to action (CTA)?
Yes, a clear and compelling CTA can increase email engagement by up to 371%. It should direct customers to a self-service portal where they can update their payment information or make their delinquent payment.
