Subscription services have taken the marketplace by storm in recent years, offering unparalleled convenience, savings and personalization for consumers. But behind the scenes, many subscription businesses face a common challenge: customer churn.
One of the most frustrating reasons for churn happens when a customer’s service is canceled due to a billing error like an expired card. Billing issues inconvenience and irritate subscribers, who will often leave instead of dealing with the hassle of re-enrolling.
Luckily, you can prevent involuntary churn by investing in a credit card account updater. This tool simplifies the management of your customers’ payment information to prevent service interruptions, improve billing transactions and increase customer satisfaction.
Credit card account updaters communicate between the payment gateway and the card issuer to automatically refresh a customer’s payment information when the card they have on file expires. They do this by continuously monitoring the cards stored within the payment gateway, looking for any that have expired, been canceled or reported as lost or stolen.
When an outdated card is detected, the updater reaches out to the card issuer to request new payment information. The issuer verifies the authenticity of the request and performs the necessary checks to ensure that the request is authorized before securely transmitting the new information to the credit card account updater. The updater then integrates the new card details into the payment gateway system.
Credit card account updaters save your business valuable time and money and turn your customers into loyal, long-term subscribers.
Credit card account updaters can play a crucial role in recapturing lost revenue for subscription businesses by converting hard declines into approved transactions.
When a transaction ends in a hard decline, you can’t just try again with the same information — it’ll just result in another decline. An account updater proactively retrieves the new card details from the card issuer and updates it in the gateway system, so when the transaction is retried, it goes through. This solution effectively restores revenue before it’s lost.
Automatically updating the payment information ensures that future billing attempts are successful, too. In fact, we found that 71% of updated cards are then billed successfully. This is revenue many companies can’t afford to lose. Customers who use sticky.io’s Account Updater gain $198 million in additional revenue.
Customer lifetime value (CLTV) is one of the most important measures of customer value as a subscription seller, and credit card account updaters help you maximize it by keeping customers around.
Failed payments can lead to service interruptions, and for subscription business models, this often results in customer churn. In fact, a recent study found that 27% of subscription cancellations happen due to “avoidable failed payment” issues. These cancellations mean a huge drop in that customer’s LTV since there’s no guarantee they’ll sign up again after that inconvenience.
Credit card account updaters help reduce the risk of subscriber turnover by promptly updating credit card information to reduce payment failures. By ensuring a seamless payment experience, these tools help maintain customer satisfaction and retention, which in turn increases customers’ subscription length and LTV.
Convenience and automation are part of the draw of subscription sales, and credit card account updaters help you provide the same benefits when it comes to making payments.
Manually updating payment information is tedious and time-consuming for customers. The process requires customers to log into their accounts, navigate through various screens and manually enter new card details. And failing to update their information promptly can lead to an interruption of their subscription. What’s worse, this lack of convenience breaks the promise of automated delivery of goods that subscription commerce is built on.
Credit card account updaters eliminate this friction by automating the process. Customers no longer need to go through the hassle of updating their payment information manually. Instead, the updater keeps tabs on expiring cards and does the updating on behalf of the customer. This added convenience increases the likelihood of your customers retaining their subscriptions while preserving your recurring revenue.
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Attempting to manually get up-to-date card information from customers takes significant resources that could be better spent elsewhere.
To notify customers of failed transactions, you must write and schedule a series of emails, known as dunning emails. These emails typically include the steps to update your payment method and are sent at a regular cadence. Though you can customize your outreach, the standard notification time is over a period of 30 days.
If you don’t use an automated service to schedule these emails, that means a team member or members are responsible for crafting, sending and following up on all the notifications in your dunning process for a month or more — and that’s just for one customer. Clearly, this time investment can add up quickly.
What’s more, failed transactions still cost your company money on top of the missed monthly subscription fee. Between the money lost on invalid transactions and the time lost on employee labor, using a credit card account updater to avoid writing manual dunning emails as much as possible is a smart business move.
Credit card account updaters play a vital role in the success of subscription-based businesses. From addressing expired or declined cards to streamlining the billing process, they offer a wealth of advantages that your business can’t afford to ignore.
By automating the process of updating credit card information, you’ll eliminate the frustrations associated with failed payments, service interruptions and manual data entry, while freeing up your employees for more important tasks.
Subscription businesses that embrace credit card account updaters gain a competitive edge in the market. These tools empower businesses to proactively manage payment information, while fostering customer loyalty, leading to increased CLTV and a more stable revenue stream.
If you’re ready to add an updater to your subscription process that handles all card types, consider beginning with sticky.io. We make it easy to add Account Updater to your existing workflows, and our month-to-month payment structure means there’s no long-term commitment.
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Discover the past year’s subscription trends to inform your 2024 ecommerce strategy. Our research with PYMNTS.com covered consumer behavior for each quarter of 2023.
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Watch episode eight of The Ecommerce Minute to learn the metrics you should measure to ensure long-term success for your ecommerce business.
