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4 ways GoCardless can improve your customer retention

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Last editedJan 20223 min read

No business wants to lose customers. Customer churn is a critical metric, especially for businesses collecting recurring payments, like subscriptions, SaaS or invoice-based business models.

The cost of churn reaches beyond the initial loss of payment. It negatively impacts Customer Lifetime Value (CLV), there’s the sunk cost of customer acquisition - which is 5-25x the cost of retaining a customer, and the resulting poor customer experience.

4 frustrations businesses face with churn and how GoCardless can help you to fix them:

1. I want to improve my Customer Lifetime Value (CLV)

CLV is an important metric for any business and should be optimised to enable sustainable long-term growth. It’s critical because it generally costs less to keep existing customers than to acquire new ones. 

By keeping existing customers and improving this margin, you’ll increase revenue, make revenue more predictable and have more money to invest in other areas of the business.

How GoCardless can help you:

Because GoCardless utilises Account-to-Account payments, like direct debit, your customers don’t need to worry about updating card details when they expire, are lost or stolen. This means fewer customers are unexpectedly cut off from your products or services when a payment fails. A better customer experience makes them less likely to churn, increasing your CLV.

According to the IDC, 91% of those who purchased via bank debit with GoCardless, were retained after three months. Meanwhile, only 86% of credit card users and 75% of digital wallet users stayed.

We’ve also identified that businesses that have been with GoCardless for a year see an average of a 13% reduction in overall churn (from 10% to 8%).

Discover how much churn is costing your business and how much you could save with GoCardless.

2. I’m losing customers because their payments fail

Not all customers that churn are actively choosing to leave your business. Often a customer churns because their payment fails. This is called involuntary churn and can be driven by a variety of factors, including:

  • Credit cards expiring, being lost or stolen

  • Insufficient funds

  • Banks decline a transaction

According to Forrester, failed payments result in churn 11-15% of the time. Failed payments can interfere with the service your customers receive. Retrying these payments can be a manual and expensive process. Forrester also reported that the cost of payment recovery is usually more than 11% of the payment size.

How GoCardless can help you:

If a payment fails, there are two ways that GoCardless can recollect those payments to reduce customer churn. 

Firstly, Success+ uses machine learning to intelligently retry payments when they’re most likely to be successful, using data from previous successful payment recollection. Customers using Success+ have reduced payment failure to as little as 0.5% on the second try. 

3. I don’t know why my customers' payments are failing

Having visibility of and understanding why your customers' payments fail is essential to ensuring your customers don’t churn involuntarily. This data will enable you to make informed and automated actions that reduce the disruption to customers and provide them with a better experience, as well as improve payment success rates.

How GoCardless can help you:

GoCardless provides a range of automatic notifications, to both your business and your customers, on all aspects of the recurring payment collection process, including mandate setup, payment failures, payment retries and more.

In most cases, GoCardless receives payment failure reports from a payers' bank one working day following the charge date. This empowers you to quickly action a payment failure and retry the payment. The full list of GoCardless notifications can be found here.

4. Retrying payments is too manual and I’m losing customers as a result

If your business is growing and you’re processing more transactions, scaling your payment infrastructure and processes is a necessity. Manual reconciliation and retrying payments can take your payment teams a long time, and even slow down the process for your customers. Meanwhile, if you use multiple payment solutions it can be difficult to aggregate and see all your customers’ data easily.

How GoCardless can help you:

With GoCardless you can connect to 200+ leading software integrations to automate payment collection and reconciliation - see all of our partners. SaaS subscription software platforms like Zuora, Chargebee and Recurly complement the GoCardless payment solution and offer to help customers reduce failures with built-in dunning management and account updater services.

Alternatively, you can link your existing in-house billing software to our API to automate notifications, payments and receive information about your payouts. This reduces the chance of human error and the resulting payment failure.

Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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Over 70,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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