Customer churn is costing U.S. businesses around $136 billion a year. Furthermore, it costs businesses about five times as much to get a new customer as it does to keep a current one.
This data alone tells you why service-based businesses should do everything in their power to improve customer retention.
Today, we’ll share some ways you can increase customer retention by making certain changes to your billing system, like offering multiple payment options, leveraging a customer portal, being transparent, and others.
- Personalize the Customer Experience
- Keep Involuntary Churn to a Minimum
- Offer Flexible Payment Options
- Be Transparent With Terms and Conditions
- Provide a Self-Service Customer Portal
- Invest in a Good Security System
- Leverage Your Self-Service Portal for Nurturing
Personalize the Customer Experience
According to data from The Rockefeller Group, 68% of customers who leave a service do so because they believe the company doesn’t care about them.
Source: Visual Capitalist
One of the best ways to show customers that you care is to create a personalized billing experience.
For instance, sending them personalized invoices and enabling them to pay when and how they prefer will display your ongoing dedication to their satisfaction.
You could write a note on the invoice telling them how thankful you are for their business, and include information on how to pay using their preferred payment method, whether that was PayPal, credit card, or direct bank debit.
Take opportunities to personalize every touchpoint of their experience, even your dunning emails.
If a customer is late on a payment, consider beginning your email by mentioning something you’ve learned about them to show you view them as a valued person.
For example, you might start the email with, “I understand being VP of Finance and a mother of a newborn probably has you busy”, to express empathy before jumping into your request for their payment.
If you make your users feel valued through personalization in your billing activities, you’ll likely experience a happier and more loyal customer base.
Keep Involuntary Churn to a Minimum
Involuntary churn occurs when a customer wants to pay for your product or service but can’t because of technical issues or failed payment attempts.
Below is an example of how a customer might churn involuntarily:
Essentially, a customer’s credit or debit card might fail because the card expired, the balance is empty, or the bank has blocked the card.
And that failed payment can lead to the customer losing the subscription unintentionally if you don’t have measures in place to prevent it from getting to that stage.
To combat involuntary churn, start by ensuring that you’re making paying online as easy as possible for your customers.
That means enabling them to pay directly on your website without having to jump to another page that may take a while to load.
Also, ensure that your billing system offers automatic retry and multiple payment options if a customer’s primary method should fail.
Automatic retries are crucial because many of your customers likely use credit cards for recurring payments.
And according to Gravy Solutions, about 12% of monthly credit cards for average customers will fail.
With automatic retries, your system will retry the payment the next day to see if it goes through.
Some businesses do three days straight of retries before involving the customer, only reaching out to them if the payment is really not working.
If it gets to a point where you need to involve the customer to fix the payment situation, you should send them an email that informs them of the failed payment and that also offers them a link to a page where they can update their billing information.
If you take these measures, you can drop your involuntary churn, which will, in turn, minimize your total churn and increase customer retention.
Offer Flexible Payment Options
Customers enjoy being able to pay using their preferred payment method, be it credit card, check, or direct bank account transactions.
According to a YouGov survey published in the Retail Technology Review, 50% of shoppers cancel a purchase if their preferred payment option is unavailable.
Businesses can therefore improve customer retention by offering multiple ways to pay.
This is especially true if your business is going global, since different countries have different popular payment methods.
Below is a list of the most popular payment options in different countries, according to the payment platform Adyen:
In addition to accommodating your customer base’s varying payment preferences, it’s also best practice to allow for personalized payment plans, especially if you charge a high price for a service, regardless of whether that’s an online course or a group trip.
That way, you can work with each client to come up with a payment plan that works with their specific schedule and budget.
An automated billing tool like Regpack makes it simple to offer this to customers. Here is an example of three potential payment schedules:
In this example, the customer can select between paying in full, in two installments, or in four installments over the course of four months.
This makes your purchasing process easier, which will make you stand out from the competition.
Aside from enabling all your customers to easily pay for your services, flexibility for how and when customers pay will improve your customer relationships because they’ll know you have their best interest at heart.
Be Transparent With Terms and Conditions
Customers want to know the specifics of the business agreement into which they are entering.
In fact, 75% of customers will pay more to buy from transparent brands, and 65% stay loyal to brands they perceive as genuine.
If you provide transparency in your terms and conditions, customers will more easily trust you and become repeat buyers who rarely, if ever, complain about your service’s price tag or other service specifics because you’ve forewarned them and clearly stated the nature of the agreement.
Before buying, service customers want to know refund policies, subscription cancellation rules, prices (including other fees), plan and schedule changes, and any other pertinent information that will help them feel comfortable making the purchase.
They’ll also want to know what exactly they’re purchasing.
While it’s important to have all the legal information on your terms and conditions page, you can’t write it all on the checkout page.
Therefore, save that space for the most important information, the stuff you want your customer to know before buying.
It’s best to use this space to preemptively answer common questions your customers have about your service.
For example, you may get a lot of questions about refunds.
If so, it’s best to highlight your refund policy upfront before they buy so that customers know what the risk is and won’t hold policies like “no refunds” against you.
It’s important to write these terms in clear and direct language, and link out to important documents where customers can learn more. Income School’s online course checkout page serves that purpose:
Source: Income School
If you want to pull back the curtain even further for your customers, you can show them why your service costs what it does, as Everlane has done:
Source: Bailey Brand Consulting
Everlane tells their customers the cost of every individual part that goes into their products.
Customers are then better able to understand the price and empathize with the seller, especially when they see how much lower Everlane’s markup is compared to the other sellers in the market.
Southwest Airlines provides us with another example of transparency, this time in regards to additional fees:
Across industries, many companies advertise prices that don’t include hidden fees, which will upset the buyer once they’re billed for them.
Showing them your true cost upfront will prevent any indignant feelings from your customers.
If you use your billing system to create transparency for your buyers, they’ll become more faithful to your brand and certain that you would never mislead them for a profit.
Provide a Self-Service Customer Portal
According to 66% of Forrester’s respondents, valuing a customer’s time is the most important thing a business can do to provide top-notch customer service.
And self-service customer portals are some of the best time-savers around.
Such a portal is an online place where customers can make all of their transactions and find answers to their questions.
When companies offering installment payment plans enable them to use self-service portals, customers can easily make and track their payments, as you’ll see below in Regpack’s portal:
Your portal should also offer information that your clients often look for.
Consider including a knowledge base with suggested articles, FAQs, terms and conditions pages, and methods for contacting customer support if the written information is insufficient to help them solve their issue.
In light of the fact that 72% of customers these days prefer handling their issue online over calling a support rep, it’s important to make your self-service portal as helpful and comprehensive as possible.
Invest in a Good Security System
There has been a rise in cyberattacks over the past decade, and unfortunately, many of them are against small businesses.
A Health of Cash Study by Cardtronics found that around seven out of ten customers make payment decisions based on which payment method is most secure.
Therefore, if you’re collecting online payments, you should invest in a high-quality security system to make your customers feel comfortable engaging in payments and transactions with your business.
And, of course, merely giving the perception of safety to influence a purchase isn’t enough. You need to adopt a system that actually prevents cybercriminals from accessing your customers’ payment data.
A security breach can hurt your customers, severely damage your reputation, and increase customer churn.
When choosing a payment software solution, look for one that is cloud-based and PCI-2 (payment card industry) compliant, meaning the company abides by the security measures and regulations outlined by the PCI Security Standard Council.
One such payment tool that meets the aforementioned criteria is our own solution, Regpack, which enables you to create forms that collect payments securely on your website.
And it will also store customer data in a safe, online location.
Aside from purchasing a secure payment solution, there are some other steps you can take to improve online security, from getting an SSL certificate on your website to using two-factor authentication.
As far as customer retention tips go, this one is up there as one of the most important.
If you can give your customers peace of mind about their critical payment data, they’ll be more likely to work with you in the long run.
Leverage Your Self-Service Portal for Nurturing
Self-service portals are great for enabling customers to quickly make payments and troubleshoot issues, but that’s not all.
You can also use them to nurture your clients and influence upsells and cross-sells, thereby growing the relationship and increasing overall customer retention.
For starters, you can post real-time updates about new features or services that your customers might enjoy, so that when they log in, they’ll be able to see what’s new and potentially make a purchase.
You could also share alerts for webinars or upcoming events your company is hosting:
Source: Girl Scouts of America
In addition to sharing updates, use your portal as a sort of directory for your articles, white papers, how-to guides, and other resources that help your customers get the most out of your service or learn new skills that help them achieve their goals.
The more you teach your customers, the more they’ll see you as a valued advisor.
Lastly, consider hosting a form on your portal that customers can fill out with their own suggestions and recommendations.
Put a big headline above it asking them for their feedback.
This simple act does two things for your company. First, it further proves to your customers that you care about their opinions and aim to provide top-notch service.
Second, it gives your team more ideas for how to improve your service.
Service-based businesses can improve their customer retention rates by enhancing their billing system with personalization, customer portals, and other additions that make their customers happier and more secure.
If you make any of the above changes to your billing system, it’s important to measure how specific adjustments affect your customer retention by tracking these customer retention metrics.
Only then will you know which of your improvements are most effective. And you’ll be able to make better data-driven decisions regarding what change to prioritize going forward.