A ubiquitous problem plagues subscription commerce: transaction declines. Say a customer signs up and pays $25 for a monthly subscription box on February 15. The transaction approves, the customer receives the box a few days later and all is well. Then on March 15 when it’s time to charge the customer for the next box, the transaction declines even though the customer’s payment information is unchanged from February.
Trying to charge the customer’s credit card again is the obvious move, but the provider incurs a fee for every rebill attempt. So, subscription merchants should rebill when there’s the greatest possibility of transaction approval. But how can merchants pinpoint the ideal time to rebill a customer? The answer is Smart Dunning.
Smart Dunning is a tool ecommerce merchants use to automatically reattempt to bill declined transactions at optimal times. These times are based on customer historical behavior and other factors — increasing the chance of a successful rebill.
The team at sticky.io developed machine learning algorithms to predict the best time for a rebill attempt. For example, one algorithm reveals the probability of rebill success for each day and for every single transaction that declines in our platform. Another algorithm shows the best hour to retry a transaction. It’s extremely beneficial because certain banks and geolocations have a higher probability of declining a transaction during specific times, like between midnight and 6 a.m.
Smart Dunning enables merchants to create a specific rebilling strategy based on unique aspects such as product price, consumer behavior, payment type, payment provider and more. And since Smart Dunning uses machine learning, the rebilling process becomes more successful over time because the system is constantly analyzing and optimizing new data.
At a high level, Smart Dunning helps subscription brands reduce involuntary churn. Merchants using Smart Dunning have a lesser chance of losing a customer because of insufficient funds, the customer’s location, credit card expiration or a myriad of other issues unrelated to the customer’s overall satisfaction.
Smart Dunning can also improve the following areas:
Subscription profit — Retrying a declined order at arbitrary times can significantly reduce subscription profit. For example, if it takes six retry attempts because the merchant isn’t using Smart Dunning to pinpoint an optimal retry time, and each attempt costs $1, a merchant is spending $6 just to recover the order. That can significantly diminish profit, especially if the merchant is only charging $20 a month.
MID health — Trying to rebill a customer after several failed attempts (think 10 to 15 times, not one or two times) can negatively impact the relationship between a merchant and a payment processor. The payment processor might even shut down a merchant ID (MID) if there are excessive rebill attempts. That’s why it’s so important to retry at an optimal time because merchants cannot risk losing a MID because they tried to rebill one customer dozens of times.
Overall customer lifetime value — Smart Dunning mitigates disruption for subscription customers, which can enhance the overall brand experience and extend customer lifetime value. Most customers don’t even realize their payment originally declined. Keep them focused on your brand and let Smart Dunning monitor and manage declines.
sticky.io customers using Smart Dunning recover approximately 20% or more revenue compared to traditional recovery methods.